The Stock Exchange of Thailand (SET) Index is expected to rebound to between 1,675 and 1,680 points on Friday as regional stock markets recover from sharp falls on Thursday, Krungsri Securities said.
It added that the 7-per-cent growth in US fourth-quarter GDP last year would help boost the index.
“However, uncertainty over Russia-Ukraine tensions after the Russia invaded Ukraine, as well as rising Covid-19 cases in Thailand, would pressure the index,” Krungsri Securities said.
It recommends the purchase of the following as an investment strategy:
• KBANK, BBL, TTB, KTB, SCB and BLA will benefit from news of the US interest rate hike.
• PTTEP, TOP, SPRC and BCP will benefit from the rising price of oil and gross refining margin.
• BDMS, INTUCH, ADVANC and HTC, which are defensive stocks that offer stability.
The SET Index closed at 1,662.75 on Thursday, down 33.73 points or 1.92 per cent. Transactions totalled 126.55 billion baht.
The baht opened at 32.48 to the US dollar on Friday, strengthening from Thursday’s close of 32.60.
Krungthai Bank forecast the Thai currency would move between 32.35 and 32.65 during the day.
The baht was likely to fluctuate in a wide range due to the Russia-Ukraine crisis and the Omicron situation, it said, adding that investors are also waiting to buy gold when the price goes down.
However, the bank advised investors to monitor the effect on foreign inflows of a heightened risk-on state in the US.
It added that foreign investors are poised to speculate on the baht if it nears a key resistance level in the short term. The key resistance level will be 32.80-32.90.
The bank said large-scale selling of assets is causing the currency market to fluctuate and return to a risk-off state.
The Digital Economy Promotion Agency (DEPA) is promoting projects to transform the fresh market into the modern era, combining digital networks, startups and digital service providers with SME entrepreneurs, shops, hawkers, and stalls.
Asst Prof Nattapon Nimmanphatcharin, director-general of the agency, revealed that the Transform Fresh Market Project has been implemented to promote and support SME entrepreneurs, hawker shops, stalls in six pilot provinces – Bangkok, Nakhon Sawan, Nakhon Pathom, Chainat, Sing Buri and Lop Buri.
The project aims to provide 30,000 entrepreneurs with access to digital technology and bring the store into the platform of distribution and delivery channels
At the same time, there is also a plan to expand the project to four provinces – Pathum Thani, Nonthaburi, Samut Sakhon and Samut Prakan – after the latest success in Bangkok’s Ying Charoen Market.
A military conflict between Russia and neighbouring Ukraine is boosting demand for gold, which is considered a safe-haven asset.
In global markets, the price of the precious metal is likely to touch the benchmark of US$2,000 (THB64,575) an ounce if the situation worsens, with domestic prices expected to test the range of 30,450-30,650 baht per baht weight, said Siriluck Pakotiprapha, vice president of Hua Seng Heng Gold Futures’ Research Department.
She said domestic gold prices have been on the increase after price hikes in the world market.
Russia’s invasion has led to many investors offloading their risky assets to purchase gold, which is considered a safe-haven investment, she added.
Global gold prices per ounce have outshone the $1,950 level, the highest in nine months, with domestic prices seeing a series of fluctuations on Thursday alone. At 11.45am, for instance, the price of a gold bar was 29,650 baht per baht weight, while gold jewellery cost 30,150 baht.
Siriluck said that if the situation worsened and expanded into a full-blown conflict between Russia and Ukraine’s Western allies, the global gold price could hit $2,000 an ounce.
If that benchmark is reached, domestic gold prices could rise to test the barrier of 30,450-30,650 baht, under the assumption that the Thai currency ranges from 32.20-32.40 per dollar.
Finance Minister Arkhom Termpittayapaisith on Thursday expressed concern that Thailand’s exports and tourism would be affected by the ongoing conflict between Russia and Ukraine.
He said if the conflict escalates into a full-scale war, it could also affect global oil prices, consequently impacting the Thai government’s efforts to fix diesel oil price at not higher than Bt30 per litre.
Western media reported that Russia on Thursday had launched a multipronged attack against Ukraine. They said the assault followed an announcement by Russian President Vladimir Putin that Russia has started a military operation for the “demilitarisation ad denazification” of eastern Ukraine.
Arkhom said the Energy Minister and the Oil Fuel Fund could manage to retain diesel oil price at Bt30 per litre when the current global oil prices were about $90 to $100 per barrel. But if the crisis escalates, global oil prices would rise because Russia is a major oil exporter to Europe.
The finance minister said Thailand would have to monitor the global oil price situation closely.
Arkhom said both Russia and Ukraine are Thailand’s key trading partners and a lot of tourists from the two countries visit Thailand. As a result, if the conflicts worsen, Thailand’s exports and tourism would be affected, the minister added.
The Stock Exchange of Thailand (SET) Index is expected to fluctuate between 1,690 and 1,705 points on Thursday due to tensions between Russia and Ukraine, Krungsri Securities said.
However, it predicted that the rising oil price and mass buy-ups of company shares that are expected to grow based on business turnover last year would help boost the index.
It also advised investors to monitor Thailand’s January imports and exports as these would indicate whether the economy would recover or not.
It recommends the purchase of the following companies’ shares as an investment strategy:
• KBank, BBL, TTB, KTB, SCB and BLA, which would benefit from news of a US interest rate hike.
• PTTEP, Top, IVL, SPRC and BCP, which would gain from the rising price of oil and the gross refining margin.
• PSL and TTA, which would benefit from a rising freight rate.
The SET Index closed at 1,696.45 on Wednesday, up 5.33 points or 0.32 per cent. Transactions totalled 87.66 billion baht with an index high of 1,700.35 and a low of 1,686.09.
Thailand’s economy is expected to recover gradually but still faces difficulties due to the Covid-19 crisis, global energy prices and the increasing cost of products and services, the Bank of Thailand (BOT) reported on Wednesday.
It said recovery in each economic sector is different, and it would take time to recover to pre-Covid levels.
“The Covid-19 situation is still worrisome even though the Omicron variant is expected to cause less impact on the public health system,” BOT said.
“Hence, it is necessary to gain vaccine efficiency, monitor the overall virus spread and continue with measures to contain the spread of the virus both domestically and overseas as it would affect tourism recovery.”
BOT went on to say that private sector consumption is likely to recover despite the Omicron outbreak and a decline in government Covid-19 relief measures.
“However, it is necessary to follow the recovery in each economic sector and the impact of high living costs on household debt and income, which has not fully recovered, as this would affect private sector consumption,” BOT said.
It expected inflation to be higher than the target, at 3 per cent in the first half of this year, as energy and fresh food prices have risen.
BOT pointed out that energy prices would remain at a high level in the long term due to geopolitical factors, adding that the government oil fund will help relieve the impact of rising energy prices “a little bit”.
“We did not expect inflation to increase continuously as demand was still low in line with recovering incomes and purchasing power, causing limited cost ‘transmission’,” BOT said.
“However, it is necessary to closely monitor global energy prices as it would cause the price of products and services to increase and put pressure on labour incomes.”
BOT also said low-income households were affected by rising food prices rather than fuel prices, while high-income households were affected by rising fuel prices rather than food prices.
“In addition, high living costs have caused a severe impact on the self-employed and employees in the service sector as their incomes are recovering slowly,” BOT acknowledged.
It said labour income is likely to recover slowly in the next one to two years due to slow tourism recovery, employers’ move to limit employment amid the Covid-19 crisis and the departure or relocation of labourers.
“These factors would affect recovery of the economy and the labour market,” BOT added.
It advised the government to promote measures related to debt restructuring to maintain financial stability.
The baht opened at 32.30 to the US dollar on Thursday, weakening from Wednesday’s close of 32.27.
The Thai currency is likely to move between 32.20 and 32.40 during the day, Krungthai Bank market strategist Poon Panichpibool predicted.
Poon said the baht was likely to fluctuate in a wide range due to the Omicron situation as well as Russia-Ukraine tensions.
However, the Thai currency will not weaken much, he said. If war breaks out, the gold price is likely to increase, which will force investors to sell, especially if the precious metal reaches 1,950 dollars per ounce.
The support level for the Thai currency will be from 32 – a level importers are waiting for so they can purchase dollars – while its key resistance level will be 32.50 – a level eyed by exporters so they can offload their dollars, he said.
Russia-Ukraine tensions are keeping investors in a risk-off state as they aim to decrease possession of risky assets.
The Thai Ethanol Manufacturing Association (TEMA) opposed Energy Ministry guidelines to reduce the benzene-ethanol ratio to E10 from E85 and E20 to relieve the expense burden on benzene users.
The opposition came after an Energy Policy and Planning Office discussion on Tuesday. However, the office has not reached a conclusion on the issue yet.
TEMA president Phiphat Sutiwisesak said he disagreed with the Energy Ministry guidelines, adding that the association would submit a letter to the ministry because it was unclear how the guidelines would benefit benzene users.
“The reduction in the benzene-ethanol ratio will impact the ethanol supply chain, starting from farmers to ethanol plants. If we use only E10, fuel demand will drop by up to 30 per cent from the current approximate 4 million litres per day,” he claimed.
Phiphat said Thailand’s ethanol price was 25.60 baht per litre due to cheap agricultural product prices.
He also urged the government to pay attention to the impact on farmers, claiming the US and Brazil have bought agricultural products at prices that are cheaper than in Thailand.
Phiphat added that it is up to the government whether the excise tax on benzene should be cut or not.
Experts on Wednesday advised the government to keep an eye on Russia-Ukraine tensions, as it could affect Thailand’s economy.
Amornthep Chawla, head of Research Office at CIMB Thai Bank, said tensions between Russia and Ukraine should be monitored closely even though it was likely there would be negotiations rather than a battle between the two countries.
He said the tensions had caused short-term volatility in financial and capital markets, and it would affect Thailand’s economy if the situation prolonged, including impacting inflation, exports and tourism.
He warned that inflation would be the biggest threat to Thailand’s economy because Russia is the world’s largest oil and natural gas exporter.
“If Europe imposes sanctions on Russia and turns to other alternative energies, oil price would soar to US$120 [Bt3,900] per barrel,” he said, “This will cause inflation to rise sharply in Thailand and other countries.”
He expects the situation to persist until the second quarter of this year.
Amornthep said that even though Thailand’s exports to Russia were worth less than $1 billion, the country’s exports would be hit if Europe suffers an economic slowdown as a result of the tensions.
“Meanwhile, the number of Russian and European tourists visiting Thailand would drop due to the impact of the tensions,” he added.
Dr Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Securities, said the battle between Russia and Ukraine is likely to continue as Russia believes that it is an important gateway to Europe and the global economy.
“We believe that Russia has already prepared plans if Europe imposes sanctions on the country,” he said.
He did not think that Russia-Ukraine tensions would have a severe impact on Thailand, but it would cause investors to turn to safe-haven assets due to high volatility in the financial and capital markets.
Chao Kengchon, managing director of Kasikorn Research Centre, said Russia-Ukraine tensions will not lead to the use of force.
“If western countries impose sanctions on Russia, Thailand’s economy would be affected a little bit due to Russia’s economic slowdown,” he said.
He added that Kasikorn Research Centre’s outlook on Thailand’s economy had not changed yet despite the Russia-Ukraine tensions.
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