Analysts See a Buying Opportunity amid Market Panic over New COVID Variant

The Stock Exchange of Thailand, or SET, fell sharply on Friday. The index closed at 1,610.61 points, down 37.85 points or 2.30%, in the same direction as global markets on concerns about the acceleration of new COVID-19 variant, now named the Omicron variant, which was first reported in South Africa and has already spread to Europe, coupled with the lingering high inflation rates and faster-than-expected rate hikes.  

Capital Nomura Securities (CNS) said that a crash in the Thai market last Friday (November 26) was due to two major factors: concerns over new Fed monetary policy potentially deteriorating liquidity faster than expected, and the fresh COVID-19 variant “Omicron”, which was first detected in South Africa and might evade immune protection from vaccination. However, CNS forecasts that these will weigh on the stock market in the medium term, but will have to closely monitor the situation.

Given the World Health Organization’s declaration of the Omicron as a “variant of concern,” CNS anticipates the SET Index will fall below the 1,600-point support level this week. The index might hit 1,590-1,570 points and then correct for two to four weeks. Recommend “Buy on Weak.”

CNS suggests mid-sized hospital stocks (BCH, CHG), export stocks (KCE), and COVID-19 plays (XO, STGT) for short-term investment.

Maybank Kim Eng Securities (Thailand) (MBKET) stated that the market decline was consistent with global markets, with the Dow Jones closing down more than 900 points, in response to concerns about the new COVID-19 variant spreading faster than other species and being resistant to existing vaccines. COVID-19 is now showing more significant concerns, putting huge pressure on stock markets.

Additionally, the market is under pressure from rising inflation and fears about interest rates increasing more rapidly. Due to the market crash caused by a new strain of COVID-19, selling pressure escalated, sending Thai stock indexes below the support line, a decline of more than 2%.

MBKET expects the Thai market to be in a somber mood this week (Nov. 29 – Dec. 3), with a support level of 1,600 points and a resistance level of 1,630 points. Also, MBKET recommends that investors track the MSCI Rebalance, as well as the US, European, and Chinese PMI indexes for manufacturing and services.

MBKET points out that this is a time to accumulate stocks when the market corrects. JMT, ASK, DTAC, TTB, and BCH are all recommended.