FETCO is concerned that the coronavirus could cause Thailand's GDP growth in 2020 to fall below 3%. It notes that every 10% decrease in tourism revenue will lead to a 1% drop in GDP. The virus is expected to affect the economy for one quarter. It is recommended to adjust investment portfolios during this time, focusing on holding cash and avoiding stock investments.

 


       

        Mr. Paiboon Nalinthrangkun, Chairman of the Federation of Thai Capital Market Organizations (FETCO) stated after the stock market closed down 45.77 points, or nearly 3%, this morning, which is more than the regional average, following the worsening outbreak of the coronavirus. He indicated that the current situation remains highly uncertain. Despite numerous measures from China, no one knows how long this situation will last, which impacts the tourism and aviation industries that the Thai economy heavily relies on for exports and tourism revenue. In 2019, tourism accounted for 11% of GDP, with 40 million foreign tourists visiting Thailand, of which Chinese tourists made up 25% of the total foreign visitors, making them the largest group of tourists in Thailand. Compared to 2014, tourism's contribution to GDP was only 7%, showing continuous growth.

         All parties expect that the disease can be controlled, as seen in the past during the SARS and MERS outbreaks, which impacted the Thai stock market for about one quarter. However, the current situation has significantly affected Thai stocks. Preliminary assessments suggest that if the situation drags on, tourism revenue will decline, with every 10% drop impacting Thai GDP by more than 1%. This could lead to a contraction in the Thai economy this year, with GDP expected to be around 2%, down from the previous forecast of 3%. Further assessments of the impact will be necessary.

         Meanwhile, if the situation does not worsen, it is likely that the stock market will not decline significantly, affecting the Thai stock market only in the short term. It is believed that ultimately, ways to cope with the outbreak will be found, but there will be more selling pressure than buying in the short term. Support and resistance levels will depend on the economic outlook. The sectors likely to be affected by these factors include tourism, hotels, airlines, and consumer-related stocks such as department stores due to the decrease in tourist numbers.

     Therefore, during this period, it is recommended to avoid investing in stocks or to choose stocks that are not affected by the coronavirus and offer dividends. The trend for gold prices remains interesting throughout the year, so it should be included in portfolios, and holding cash is advisable to mitigate risks.