Thai tourism and shares start to catch the Coronavirus Effect

The Stock Exchange of Thailand’s key index fell last month almost 100 points, after earlier reaching its highest point of 1,604.28 and then falling 96.92 points, or 6%.

Industrial stocks have fallen nearly 10% due to a slide in petrochemical stocks, followed by commercial bank stocks which fell 8.7%. Technology and construction stocks lost 4% during January. But some stocks are defying market sentiment and have risen against the trend – agriculture by over 6%, finance and securities by 3%+, food and beverages by 2%t, and property funds by just over 1%.

Some analysts are speculating that February’s stocks will continue to fluctuate because many uncertainties still exist- not the least the Coronavirus.

The Monetary Policy Committee of the Bank of Thailand in also expected to cut the key policy rate to help debtors pay instalments on time, on February 5. There’s also a major bidding event for the country’s 5G broadband network on February 16, so the market will be watching if there will be new competitors and how intense the competition will be.

Meanwhile, Asia Plus Securities predicts that earnings per share growth of listed companies have many negative factors, which may lead to the reduction of net profit forecasts, such as the slowdown of commercial banks, petrochemical, hotel and aviation businesses and the TFRS 16 accounting standard for leases which will affect financial statements and financial structure, according to The Nation.

On a broader front, the increasing numbers of new coronavirus cases is expected to take a wide-reaching impact on the Thai economy, not just tourism, but also manufacturing, exports, retail and agricultural sectors also feeling the pinch.

Anusorn Tamajai, director of the Economic and Business Research Centre at Rangsit University, is warning that the impact of the coronavirus outbreak is expected to be significant as countries close borders, impose travel restrictions and businesses shut down factories in an attempt to contain the spread of China’s new coronavirus.

“The impact will go beyond the tourism industry to manufacturing, exports and the agricultural sectors. It is likely to alter the global geopolitical setting.”

Thailand currently exports agricultural products valued around 900 billion baht to China annually. The impact of the virus outbreak is expected to reduce these exports by at least 2%.

“The anticipated export slowdown is expected to depress the prices of some farm products in the next few months, he noted. As multinational firms close their plants and offices in China, the impact would be felt by supply chains worldwide in the fields of high-tech, electronics, auto and parts.”

Meanwhile, the World Health Organisation is warning that hasty travel bans will disrupt the global economy. The WHO warns that a travel bans may not be effective in combating the coronavirus from spreading and people may “go underground” from the fears travel bans and border closures encourage. It suggests that countries step up screening people to find infected people rather than imposing entry bans.

SOURCE: The Nation