Stocks slip on second-wave virus worries

Stocks slip on second-wave virus worries

Recap: Emerging market shares tracked the global downturn in sentiment yesterday over growing fears of a resurgence of coronavirus infections, exacerbated by the sharp and steady rise in cases in India and Latin America.

The SET index moved in a range of 1,353.31 and 1,454.95 points before closing at 1,382.56, down 3.7% from the previous week, in heavy turnover averaging 93.42 billion baht a day.

Retail investors were net buyers of 12.2 billion baht and brokerage firms purchased 11.96 million. Institutional investors were net sellers of 10 billion baht and foreign investors offloaded 2.2 billion worth of shares.

Newsmakers: The global economy will contract at least 6% this year, with the unprecedented loss of income and "extraordinary uncertainty" caused by measures to contain the coronavirus outbreak, the OECD said.

  • Vietnam ratified a free trade agreement with the European Union on Monday that will cut or eliminate 99% of tariffs on goods traded between the Southeast Asian country and the 27-nation bloc, and provide Vietnam with a much-needed post-pandemic boost.
  • Saudi Arabia's share of the oil market is set to rise this decade to its highest since the 1980s as investment in production elsewhere dries up in the wake of the coronavirus crisis, JP Morgan said in a report.
  • Japan's lower house of parliament approved an emergency budget worth nearly US$300 billion Wednesday, doubling the scale of measures to pep up the world's third-biggest economy.
  • North Korea will cut military and political communication links to "enemy" South Korea on Tuesday, state media said, after threats over activists sending anti-Pyongyang leaflets over the border.
  • Brazil's government resumed publishing coronavirus death figures on Tuesday, after facing accusations of trying to hide the magnitude of its raging health crisis.
  • New Zealand lifted all domestic coronavirus restrictions on Monday after its final Covid-19 patient was given the all-clear.
  • Indonesia posted a record number of coronavirus infections on Wednesday, sparking calls from health experts for the world's fourth most populous country to slam the brakes on easing restrictions.
  • Hong Kong retained its place atop the rankings for a third straight year as the world's most expensive city for expats, according to the latest Mercer annual report Tuesday.
  • Cathay Pacific announced a HK$39-billion (US$5 billion) government-led bailout plan on Tuesday as it battles a crippling downturn caused by the coronavirus.
  • Honda plants in Turkey, Brazil and India have halted operations as the Japanese carmaker battles to recover from a cyberattack that affected several factories worldwide.
  • A South Korean court on Tuesday declined to issue an arrest warrant for the heir to the Samsung empire over a controversial merger of two business units seen as a key step to his succession.
  • The baht has surged past 31 per US dollar on the back of net foreign inflows into local equities and bonds, despite Thailand's sputtering economic outlook.
  • The World Bank has slashed Thailand's GDP outlook for 2020 to a 5% contraction, a drastic cut from 2.7% growth projected previously, as supply chain disruptions and lockdown measures have triggered a sharp downturn.
  • Hotel operators are underwhelmed by an aid measure to waive the 40-baht-per-room operating fee for a year, calling the remedy trivial in the face of financial devastation caused by the pandemic. They are requesting a revival of the 5,000-baht domestic tourism rebate to encourage people to travel.
  • Civil servants and other state officials will be prohibited from travelling abroad this year in order to promote domestic meetings and strengthen consumption at home, says Deputy Prime Minister Anutin Charnvirakul.
  • Phuket's property market will take at least two years to recover because the fallout from the coronavirus is hitting one of the world's top tourist destinations harshly, says the Phuket Real Estate Association.
  • The Securities and Exchange Commission has floated an idea to set up a fund to help issuers of non-investment-grade corporate bonds ride out the challenges posed by the pandemic.
  • With its current capital buffers, the country's banking sector is expected to be able to withstand bad loans of up to 11% of loans outstanding, according to the head of Krungthai Bank.
  • The Government Savings Bank expects net profit this year to plunge by two-thirds from last year's 30 billion baht as bad loans continue to rise.
  • Bangchak Corp Plc (BCP) estimates its oil sales will decrease by 10% this year because of air travel restrictions, work-from-home measures and business shutdowns over the past three months.
  • The Joint Standing Committee on Commerce, Industry and Banking supports the move to make Thailand a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to boost the nation's international trade in the post-pandemic period.
  • Smartphone imports fell 20.6% year-on-year to 3.6 million units in the first quarter, chiefly because of the coronavirus pandemic, according to IDC Thailand, the local unit of the global research firm.
  • Siam Commercial Bank (SCB) is looking to roll out its own food delivery platform next month with an aim at offering more digital experiences to customers.
  • Thai AirAsia will ask regulators to change the rule requiring airlines to keep middle seats open, aiming to increase capacity ahead of a domestic tourism promotion next month.
  • SET-listed Eastern Polymer Group Plc (EPG), Thailand's leading plastic moulder, estimates its revenue will drop by 10% to 9 billion baht in the 2020-21 fiscal year because of lockdowns that led to travel restrictions worldwide.

Coming up: Britain will announce May unemployment figures on Tuesday, with Germany will release June ZEW economic sentiment and the US will, update May retail sales.

  • Japan will release May trade figures on Wednesday, while Britain and Canada will release May inflation data the same day.
  • The Bank of England will announce its interest rate decision on Thursday and Japan will release May inflation data on Friday.

Stocks to watch: Capital Nomura Securities recommends focusing on domestic plays such as BEM, BAM, CPALL, ADVANC, BDMS, BCH, HMPRO, DOHOME and GLOBAL. It also likes mid- and small-cap equities for which share prices remain low, such as PYLON and SEAFCO.

Tisco Securities recommends the food sector, with CPF and RBF as suggested picks. Recommended fundamental stocks are DTAC, INTUCH and TRUE. Stocks benefiting from baht appreciation include EGCO, PTT, PTTGC, TOP, COM7 and SYNEX. Its stock picks for June are AMATA, BCH and CK.

Technical view: Capital Nomura Securities sees support at 1,348 points and resistance at 1,408. DBS Vickers Securities Thailand sees support at 1,350 and resistance at 1,430.

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