Thailand's stock market witnessed more turbulence, triggering another circuit breaker yesterday, as recent monetary easing and a soft lockdown in Bangkok did little to change depressed sentiment.
Share prices of SET-listed companies where operations are tied to shopping malls saw a significant dip as the Bangkok Metropolitan Administration on Saturday ordered a soft lockdown in the capital and adjacent provinces.
Starting on March 22, malls and markets in Bangkok and adjacent provinces, except those selling food and essential consumer goods, have been ordered to close for three weeks to slow the spread of the Covid-19 outbreak.
The share price of Central Retail Corporation Plc (CRC), Thailand's largest retailer, fell by 15% to 21 baht, a far cry from its IPO price at 42 baht per share.
A heavy sell-off in the retail and commerce sectors pulled down the Stock Exchange of Thailand, as these sectors have been reeling from lower tourism revenue and an economic slump.
"Revenue generated from supermarkets makes up only 10-20% of total revenue for malls. Some small vendors might not rent spaces at these malls again because of this outbreak," said Jitipol Puksamatanan, head of markets strategy at SCB Securities. "Small malls are not expected to withstand this shutdown as their larger counterparts have been feeling the pinch across the board."
Sorrabhol Virameteekul, senior vice-president at Kasikorn Securities, said the key factors weakening the bourse yesterday were rising Covid-19 cases in Thailand and India, supply disruption in the US and the high yield spread of the US energy sector, which implied that energy debentures could default or not rollover on the back of low crude prices.
"The market is worried the lockdown of department stores will not be temporary and could escalate nationwide if the outbreak cannot be controlled," said Mr Sorrabhol.
The SET index fell by 102.78 points or -9.12% to close at 1,024.46 points in turnover worth 60 billion baht. Foreign investors will continue selling high-risk assets to hold the US dollar as a safe haven, he said.
Net foreign outflows totalled 109 billion baht as of March 23, while return on the SET index fell by 28.7% year-to-date.
The Bank of Thailand's Monetary Policy Committee cut the policy interest rate by 25 basis points to a new record low of 0.75% last Friday, aiming to reduce the burden of interest on borrowers affected by the coronavirus outbreak and alleviate strains on liquidity in the financial markets.