SET extends losses as virus fears batter sentiment

(Bangkok Post file photo)

Share prices dived on the Thai stock exchange on Thursday morning after the World Health Orghanization declared a global Covid-19 pandemic and the US banned the entry of travellers from mainland Europe.

The Stock Exchange of Thailand (SET) index plunged 109.84 points to end the morning trading session down 8.8% at 1,140.05 points in turnover worth 53.8 billion baht.

The bourse tanked by 9.5% at one point to 1,131.70 points, nearly triggering a circuit breaker.

There are two stages for a circuit breaker. The first occurs if the SET index falls by 10% from the previous day's close. All trading in listed securities is halted for 30 minutes.

The second stage occurs if the index falls by 20%, or another 10%, from the previous day's close. Trading in all listed securities is halted for one hour.

BAM shares were battered the most during the intraday trading session, tumbling 12.8%, followed by GULF (12.5%), AOT (11.6%), PTTEP (11.1%) and BTS (11%).

Power generation stocks continue the sell-off from Wednesday on the back of government measures to lower electricity costs, Finansia Syrus Securities said in its daily focus note.

The government will cut the fuel tariff rate by 11.6 satang per unit and decrease electricity prices by 3% for all types of users for three months, from April to June.

"Although the whole world has poured in stimulus packages, both monetary and fiscal measures, if the coronavirus continues to spread widely we expect the global economy to shrink this year. Meanwhile, crude remains volatile and may continue to fall,” Finansia Syrus Securities said.

If the Covid-19 outbreak in Thailand worsens and enters the third stage of containment in mid-March, foreign tourist numbers could fall 37% to 25.2 million, with a steep fall by 90% year-in-year from March to May, said Pragrom Pathomboorn, senior vice-president at KGI Securities.

An escalation in the oil price war could further derail investor confidence as the United Arab Emirates, Opec’s third largest producer, said it was positioned to boost supply to 4 million barrels per day (bpd), according to oilprice.com.

Saudi Arabia’s oil giant Aramco also said it would begin increasing its maximum sustainable capacity from 12 million bpd to 13 million.

If average crude prices remain at US$40 for 6-7 months, this could cause Thailand’s annual headline inflation to contract by 0.5% this year, according to Kasikorn Research Centre.