Thai and global stock markets slumped yesterday after the emergence of a new and likely more contagious Covid-19 variant called B.1.1.529 that triggered a risk-off sentiment.
Scientists warned the new strain may be more transmissible and resistant to vaccines than the Delta variant.
The Stock Exchange of Thailand Index plunged 37.85 points, or 2.3%, to close at 1,610 points on Friday, with a trade value of 123 billion baht. Share prices of Airports of Thailand, Kasikornbank, and Siam Commercial Bank were down 5.62%, 3.06%, and 2.68%, respectively.
Share prices of Sri Trang Gloves Thailand rose 9.82%, while Bangkok Chain Hospital rose 4.5%.
Meanwhile the Nikkei 225, the index for the Tokyo Stock Exchange, hit a one-month low of 28,622.51, down 877.13, or 2.94% from the previous day. Hong Kong's Hang Seng Index dropped by more than 2%.
As of 10.58am, West Texas Intermediate Crude Oil for January delivery was down US$2.08, or by 2.65%, at $76.31 a barrel, while gold rose to $1,800 an ounce.
Nuttachart Mekmasin, executive director of research at Trinity Securities, said global stock markets, including Thailand, fell more than 1% on concerns over the new strain, which is suspected to be able to evade vaccine immunity. If this is the case, it may lead to another global lockdown, which would slow the world's economic recovery.
The World Health Organization scheduled an urgent meeting on Friday to assess the situation and the efficacy of existing vaccines in preventing infections from the new variant.
"If the vaccines are effective in preventing transmission of the variant, it shouldn't be worrisome. Mutations are possible for modern diseases," Mr Nuttachart said.
But if researchers find the virus can evade every vaccine on the market, it will have a huge negative impact on the global economy and complicate its recovery, he said.
Many countries such as the UK have issued bans on entry from seven African countries.
Hong Kong detected the variant and is not too distant from Thailand, though it is uncertain if the Thai government will implement preventative initiatives, said Mr Nuttachart.
Investors will be less concerned with strict measures, but excessively stern restrictions will slow the economy, he said.
Prime Minister Prayut Chan-o-cha announced a short-term measure that bans travellers from Africa entering Thailand.
Tourists' routes could be hard to check because some may have recently been to Africa but transited from other continents.
The emergence of the latest Covid-19 strain comes on top of concerns over the prospect of global central banks tightening their monetary policies and hiking interest rates. With this combination of factors, the stock market is expected to correct in the short term, said Mr Nuttachart.
He is advising investors to focus on sectors with upsides during the pandemic, such as hospitals, rubber glove manufacturers, and exports, and avoid stocks expected to benefit from Thailand's reopening, including tourism and airlines.