Equity sell-off continues amid global contagion fear

Equity sell-off continues amid global contagion fear

The Stock Exchange of Thailand index ended in the red after the morning session on Monday. (Photo by Pornprom Satrabhaya)
The Stock Exchange of Thailand index ended in the red after the morning session on Monday. (Photo by Pornprom Satrabhaya)

Asian stocks fell across the board amid rising cases of the Covid-19 outbreak outside of China, with the Stock Exchange of Thailand (SET) index among the casualties of deteriorating confidence.

The SET index fell by 36.25 points or -2.42% to close at 1,458.84 points when the morning trade session ended, in turnover worth 35 billion baht.

Foreign investors were the sole net sellers of 2.8 billion baht worth of shares. Foreign equity outflows in Thailand totalled 32.8 billion baht year-to-date.

Investor sentiment is being knocked after South Korea saw a 20-fold increase in virus cases in five days and Italy cancelled some public events after coronavirus infections rose to 140, Bloomberg reported.

“Increasing cases of Covid-19 infection outside of China are the main reason pressuring stock markets worldwide in the shor-term,” said Somchai Amornthum, executive vice-president of strategic asset allocation at Krungthai Asset Management.

“If the situation worsens over the next two weeks, the equity sell-off momentum could amplify.”

Retail stocks have begun to feel a pinch from dejected investment sentiment seen earlier in tourism and hospitality-related equities.

Newly SET-listed shares of Central Retail Corporation Plc (CRC), Thailand's largest retailer and the retail arm of Central Group, fell the most when the morning trading session ended. CRC shares declined by 12.7% or -5.25 baht to 36 baht, down from its IPO share price of 42 baht per share.

Retail stocks have experienced a spillover effect from the battered tourism outlook as lower visitor arrivals are tantamount to lower revenue streams, which subsequently curb consumers’ purchasing power, said Mr Somchai.

With no end in sight for the virus epidemic, the tourism sector and Thailand’s macroeconomic growth outlook are poised to reel from the adversity, with fears of a technical recession beginning to grow.

Tourism and Sports Minister Phiphat Ratchakitprakarn said the number of international tourist arrivals during Feb 1-9 fell by 43.4% year-on-year to 730,213 as the number of Chinese tourists plunged 86.6%.

The Bank of Thailand predicts foreign tourist arrivals will slide considerably in the first quarter, possibly leading to a contraction for the period.

Foreign travellers average 3-4 million a month, of whom about 1 million are Chinese.

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