Thailand’s SET Stocks Surges After Virus Cases Ease

Stocks at Thailand SET surged boosted by rising optimism about a waning COVID-19 coronavirus outbreak and the new economic stimulus.

The benchmark SET Index rose 6.7% as of 4.58pm in Bangkok, poised for the highest gain since March 11. The gauge has advanced almost 19% from its low on March 23.

The Thai government is planning new borrowing of 1 trillion baht for its latest stimulus package. Above all to counter the economic impact of the coronavirus outbreak. The package is worth about 1.9 trillion baht overall as it also includes 900 billion baht of measures by the Bank of Thailand, according to Finance Minister Uttama Savanayana.

“Market has a positive view on the stimulus package,” said Mayuree Chowvikran, Deputy Managing Director at Yuanta Securities (Thailand) Co in Bangkok. The baht’s strength may also indicate the return of some foreign funds into Thai equities or momentum stocks, she told Bloomberg.

Local authorities on Tuesday reported the smallest number of new coronavirus cases in about three weeks, saying restrictions on daily life are containing the spread of the disease. Prime Minister Prayut Chan-o-cha has imposed a state of emergency, curfew and a broad lockdown.

Stocks Rally, Baht Debt

The new debt will largely be baht-denominated, although other currencies are possible, the finance minister said.

The administration announced the details of the latest stimulus program on April 3. On Tuesday, it said the initiative is worth about 9% of GDP, adding that a heavily oversubscribed cash-handout program is being extended by three months.

The public debt-to-GDP ratio is expected to reach 57% in 2021, below the limit of 60% under fiscal rules, Uttama said. The central bank has predicted a 5.3% economic contraction this year, but Uttama said the latest stimulus should help prevent the outcome being that bad.

The Bank of Thailand steps are:

• Cheap funds for banks so they can extend 500 billion baht of loans at a 2% interest rate to small and medium-sized firms
• A six-month debt moratorium on principal and interest for such businesses, for loans not exceeding 100 million baht
• Setting up a 400 billion baht corporate bond liquidity stabilization fund to backstop the bond sector
• Cutting the contributions that commercial banks make to a financial bailout fund to 0.23% of deposits from 0.46%

Bank of Thailand Governor Veerathai Santiprabhob said the central bank is ready to do more as necessary to cushion the economy, including assistance for the secondary market for corporate bonds.