Although the severity of the new COVID-19 strain omicron has yet to be fully determined, it appears to be slightly less than that of the Delta, the current dominant global strain, according to top US infectious disease expert Dr. Anthony Fauci.
The White House chief medical adviser on Sunday said preliminary data indicates that the omicron variant is “clearly highly transmissible,” even more so than Delta, and appears to evade some of the protection provided by vaccines, but that at least booster shots seem to help increase efficacy against the variant. Additionally, he noted earlier that a booster targeted particularly for the variant may not be essential.
The Macroeconomic Strategist at Maybank Kim Eng Securities (Thailand) (MBKET) said that concerns over the omicron variant seemed to be fading from the market. In South Africa, the first country that discovered this new strain, early hospital data revealed that only 31% of COVID-19 patients hospitalized during the most recent wave linked to the omicron are suffering severe illness, compared to 67% during the early phases of the delta waves.
Besides the COVID-19 outbreak, the market is also dominated by the US inflation rate, which increased 6.8% over the year in November. Price increases were seen across many sectors, including gas, food, housing and energy. This would be damaging to economic recovery and could result in stagflation.
On the other hand, this demonstrates the strength of manufacturing sectors. Despite the fact that rising inflation from energy prices, which is deemed the primary cost in the manufacturing sector, would slow economic recovery, if looked into the details, it can be found that demand has returned. Additionally, it may be a favorable indicator for Thai businesses to have a potential to rebound significantly as well.
As concerns about omicron and inflation subside, cyclical stocks become more attractive and may outperform the market, which is now genuinely afraid of an interest rate hike arriving sooner than expected. Top Pick are KBANK, TTB, CPN, SPRC and WICE.