GBS Expects SET to Move Sideway Down amid Covid Spikes, Recomm. Hospital Plays

Globlex Securities (GBS) forecasts a sideways down in the SET Index this week (July 19-23, 2021) as rising Covid-19 cases put huge pressure on the Thai market. After weeks of daily infections exceeding 10,000, the government tightened Covid lockdowns and expanded restrictions to three more provinces.

Meanwhile, in May 2021, Thailand’s national debt was approximately 8.69 trillion baht, or 55.42% of GDP, nearly breaching the country’s fiscal sustainability framework, which limits public debt to 60% of GDP.

Foreign factors, also, continue to depress the Thai stock market, including the following: 1) the US sees that country’s inflation rate is likely keep climbing over the next several months, eroding the people’s purchasing power; and 2) the European Union (EU) removes Thailand from the safe travel list of countries permitted to enter the union during the ongoing Covid-19 outbreak.

Additionally, Goldman Sachs has cut Southeast Asia and Thailand GDP forecasts amid rapid spread of Covid-19 delta variant. The US investment bank lowered its 2021 economic growth projections for Thailand to 1.4% from the previous forecast 2.1%. And OPEC+ agreed to raise the production limits by 2 million barrels per day by the end of this year.

The SET Index this week is expected to move in the range of 1,520-1,580 points.

The following are the key highlights to watch: 1) the bank stocks’ second-quarter results report; 2) the July US housing market index. 3) the Chinese central bank announces new interest rates on LPR loans; 4) the Bank of Japan (BOJ) releases meeting minutes; 5) The US releases weekly oil stock data; 6) the European Central Bank (ECB) meets to discuss monetary policy and interest rate resolutions; 7) the United States releases weekly unemployment claims; 8) US’s June Nationwide Economic Activity Index, and 9) US’s June second-home sales.

As a result, GBS recommends Hospital Plays, which will release its second-quarter financial results in mid-August. CHG, EKH,BCH,VIBHA,SMD, and TM are likely to gain.