A $45 Billion Manager Says Thai Stocks Face Hurdles Over Worst Virus Outbreak

Anuchit Nguyen, Bloomberg News

A Grab food delivery courier waits by his motorbike on Khaosan Road in Bangkok, Thailand, on Monday, April 19, 2021. Thailand banned the sale of alcoholic beverages in restaurants and closed schools for two weeks to stem the nation’s biggest outbreak of coronavirus, likely delaying plans to further reopen borders to foreign tourists. Photographer: Andre Malerba/Bloomberg , Bloomberg

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Thai equities face new hurdles as the country’s worst Covid-19 outbreak will further squeeze corporate earnings and delay an economic recovery, according to Thailand’s second-biggest private money manager.

Investor optimism over prospects for a return of foreign tourists has been eroding amid a new wave of the virus that took hold this month, said Vasin Vanichvoranun, executive chairman at Kasikorn Asset Management Co., which manages about $45 billion. The firm’s current forecast for the benchmark SET Index to reach 1,650 points this year may be out of reach if Thailand can’t contain the spread, he said.

“Peoples’ biggest fear of the country facing a new outbreak has resurfaced,” Vasin said in an interview Monday. “That’s dampening optimism about the return of tourists and normal business in the near future.”

Prime Minister Prayuth Chan-Ocha is mulling new business and social restrictions for Southeast Asia’s second-largest economy. Authorities in Bangkok closed dozens of businesses such as cinemas, gyms and convention centers for two weeks starting Monday. It will take two to three months for the situation to “return to normal,” according to Deputy Premier and Health Minister Anutin Charnvirakul.

The SET Index has dropped 1.7% this month, the worst among Asia’s main markets after Japan, which has declared a new state of emergency in Tokyo, Osaka and two other prefectures, and India, which is recording the highest number of cases anywhere in the world. International investors have so far this month sold a net $155 million of Thai equities, with the outflow poised for a fourth straight month, according to data compiled by Bloomberg.

Vasin’s benchmark stock index forecast would be a 5.8% increase from Monday’s close and the highest level since September 2019. The estimate is based on the expected reopening of border to tourists and the nation’s vaccine roll out in the second half, Vasin added.

Thailand has seen its total Covid-19 cases nearly double since the beginning of April with the resurgence of an outbreak tied to entertainment venues in Bangkok that has since spread to most of the nation’s 77 provinces. The country reported its biggest one-day jump in new infections on Saturday and record fatalities on Sunday, with total case count now about 58,000.

Vasin’s other viewpoints include:

Thai equities are losing appeal to foreign investors because of limited supply of technology stocks
Kasikorn Asset has adopted more artificial intelligence tools for making investment decisions to improve fund performance
Firm is adding and expanding selling channels for its funds via online platforms to attract young investors
Individuals should expand their overseas investments into health care, e-commerce and “edutainment” sectors for post-Covid 19 holdings
Kasikorn Asset targets the growth rate of assets under management at 7% in 2021