Investors squeamish on Thai bourse

Investors squeamish on Thai bourse

The Thai bourse recorded massive outflows as foreign investors offloaded 32 billion baht worth of Thai shares in 45 days, while Thai investors' trading value dropped to 60-80 billion baht per day amid soaring infections and growing economic uncertainty.

The government announced the extension of the lockdown in 13 provinces with the highest infection rates for another 14 days as cases continue to soar in the North and Northeast.

Another 16 provinces were added to the lockdown list and the measure is effective from today.

Chanchai Panthatanakij, a technical investment analyst at Asia Plus Securities (ASPS), said the surging infections is a major factor undermining investor confidence.

He expects the pandemic will make a significant dent on economic growth and the profit of listed companies in the second half this year.

The number of daily new cases has exceeded 18,000 per day, while the number of patients reporting no symptoms after infection was only 10,600.

Mr Chanchai said the number of infections may continue to increase because positive test results via antigen test kits still haven't been included.

ASPS's previous forecast expected infections to peak between the third and fourth weeks of July.

The brokerage's new forecast estimates if the lockdown is extended for one month from July 19, the infection peak would be at the beginning of October. If the lockdown is extended for two months, the peak is forecast at the end of November.

The analysis suggests the peaks begin long after the lockdown and consequently have a greater and longer impact on the economy.

Economists are expected to further downgrade their GDP forecasts for this year as the Fiscal Policy Office already slashed its outlook from 2.3% to 1.3%.

Mr Chanchai said a prolonged lockdown would have a heavy impact on the tourism, transport, construction, entertainment and retail sectors.

Prompt and extensive vaccine rollouts remain the most important solution for the country, but vaccinations are still delayed and are likely to miss the target of 100 million doses administered this year.

ASPS estimates 87 million doses will be distributed this year.

He said the vaccination pace should begin to improve from the fourth quarter after Thailand is able to procure new and more efficient vaccines, including Pfizer and Moderna, projected at a total of 24 million doses.

Combined with 18 million doses of AstraZeneca, the country should have 42 million doses for distribution in the fourth quarter, said Mr Chanchai.

The negative factors pressuring the economy should be partly alleviated in the fourth quarter, and investor confidence will improve when the pressure eases, he said.

UOB Kay Hian Securities estimates the SET Index will fluctuate based on reports of listed companies' earnings and news of the lockdown extension.

Asian stocks and emerging markets are still lagging based on the intensifying pandemic situations, while the US reported second-quarter GDP of 6.5%, lower than the market estimate of 8.5%, but still higher than that of Asia.

"In the short term, beware of lockdown extensions," stated UOB Kay Hian research.

"The Public Health Ministry is expected to propose a 1-2 month lockdown, according to studies from the Epidemiology Division, to reduce the death toll from about 500 to less than 200 deaths per day."

The lockdown is expected to be extended until the end of September, corresponding to the extension of the emergency decree until the same period, said UOB Kay Hian.

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