Outbreak causes SET jitters, but rubber gloves bounce

A fresh round of Covid-19 infections in Bangkok has sparked fears of a prolonged lockdown, causing the SET Index to plunge 1.46% or by 23.10 points, closing at 1,556.56 points in trade worth 108 billion baht on Wednesday, propelling investors towards safe-haven assets like gold.

However, Asia Plus Securities executive vice-president Therdsak Taveeteeratham said the government would not announce a curfew. The brokerage expects authorities to control the situation.

Mongkol Puangpetra, executive vice-president of KTBST Securities (Thailand), said despite the surge of infections in Bangkok, the city’s governor has already issued several measures to control the zones with high infections.

Mr Mongkol believes the measures should be adequate to prevent a new outbreak. However, if the outbreak grows out of control, there is a chance the government will impose a curfew, he said.

• China hits Alibaba with record $2.78bn fine
• Not in the mood
• 4,000 at THAI fail screening to keep jobs

“I think the current measures to curb the outbreak are enough without declaring a curfew. The outbreak in Samut Sakhon was also quite severe, but the government was able to manage it. Moreover, providing vaccines to people in high-risk areas will also help decelerate the spread,” said Mr Mongkol.

During each round of outbreaks, the stock prices of Sri Trang Gloves (Thailand) (STGT), Thailand’s largest rubber glove producer, and its parent company Sri Trang Agro (STA) always rally. Stock prices of tourism-related companies such as airlines and hotels plunge.

“The stock market falls for a short duration immediately after news of an outbreak is published,” he said.

“However, when the government announces clear control measures, the market will bounce back.”

Mr Therdsak said the government would not announce a curfew as the situation is not yet severe. Instead, he expects the government to force closures in some areas where infections have been found.

Trinity Securities’ research stated STGT and STA will benefit from the new surge in infections as both stocks have several positive factors supporting their prices.

They are expected to report strong performances in the first quarter this year and will be added to the SET50 Index in the next round of selection, said the research.

Trinity projects STGT and STA’s dividend payments will rise to 4.8% and 3.7% respectively, with both stocks to be marked with an XD (excluding dividend) on April 12, 2021.

Shares of STGT rose 2.75% to close at 44.75 baht in trade worth 5.04 billion baht on Wednesday, while STA rose 4.79% in trade worth 3.9 billion.

Airports of Thailand (AOT) dropped 3.66% in trade value worth 2 billion baht.

Source – https://www.bangkokpost.com/business/2096715/outbreak-causes-set-jitters-but-rubber-gloves-bounce