The Stock Exchange of Thailand (SET) faces continued pressure as US shares and oil prices drop on Thursday.
Dow Jones dropped by 1.9 per cent and S&P 500 fell 2.2 per cent, making it their worst day since April 1. The drop on the indexes came as investors absorb the news that US retail sales fell by 8.7 per cent in March, the largest decline since the record began in 1992.
US companies’ first quarter results are not looking optimistic as Thursday’s focus will be on US jobless claims, which have reached a record high of 6.6 million in the week ending April 12. The US market now expects a smaller number of approximately 5 million claims this week.
Oil prices have also slumped as the international benchmark, Brent crude, dropped by more than 5 per cent to US$28 per barrel. The US benchmark, West Texas Intermediate, is now trading at less than $20 per barrel, its lowest in 18 years. The drop came after the International Energy Agency (IEA) announced that the US reserve is now at 19.2 million barrel for the week of April 10, the highest on record, while oil demand will be the lowest in 25 years.
CGS-CIMB Securities (Thailand) said the SET will face pressure due to the outlook of US shares and the drop in oil prices, while Thai investors are beginning to sell for profit after the market recovered by more than 30 per cent in April. The selling will be more intense on Thursday as investors try to lower risk before companies’ first quarter results come out, they added.
One positive news is that Prime Minister Prayut Chan-o-cha said there is a possibility that the State of Emergency (SOE)’s lockdown orders could ease by the end of April, which would allow for some businesses to resume activity.
At the same time, the outbreak is also beginning to improve as the number of new confirmed cases has dropped from around 100 per day to around 30 per day since the lockdown began on March 26. The firm sees the index in the range of 1220-1262 on Thursday, following Wednesday’s closing at 1236.10 points, down 20.25 points or 1.61 per cent.
An important development to note is the meeting between the National Broadcasting and Telecommunications Commission with providers to discuss potential discounts to customers on Thursday.
Avin Sony, head of Institutional Sales at Asia Plus Securities, said a 1 per cent drop in average revenue per user (ARPU) would reduce ADVANC bottom line by 2.5 per cent, DTAC by 8.7 per cent and increase TRUE’s net loss by 51 per cent.
But if the request for discount is not materialized, it could provide an attractive buying opportunity for ADVANC and its parent INTUCH, he added.
