Tourism-related stocks, particularly airlines and hospitality operators, fear the worst following the spread of the new Omicron variant. Investors and traders are concerned that the new variant will potentially lead to tighter travel restrictions and city lockdowns.
The Stock Exchange of Thailand (SET) index dropped over 30 points to its three-month low last Friday. The drop was due to massive sell-offs after the Omicron variant was first reported in Southern Africa.
As of Monday's morningsession, Airports of Thailand (AOT) fell further by 4 per cent and the hospitality company, Minor International (MINT), also dipped by 2.6 per cent.
"Omicron will create pressure for the SET index until the outbreak seems to be under control," analysts at KTB securities said in a research note, mentioning tourism as the most vulnerable sector.
"There is a high chance that the Omicron will spread in Thailand," KTB noted.
If analysts are correct, tourism and economic activities will likely suffer again. It's regrettable timing for the industry as the country has only been opened to vaccinated visitors for about a month.
For strategic play, SCB Securities suggested inventors to sell stocks in the reopening theme ahead of the disruption of the new variant. The list includes MINT, ERW, CENTEL, AOT, BA, TU, BEM, BTS, and BTSGIF.
However, there were some stocks that benefited from the outbreak and saw their price rise despite concerns induced by the Omicron variant.
The glove maker Sri Trang Gloves Thailand (STGT) rose over 4 per cent, while healthcare service provider Bangkok Chain Hospital (BCH) and Ekachai Medical Care (EKH) gained 4.30 per cent and 5 per cent, respectively.
Worst case scenario
Isara Ordeedolchest, an analyst at Krungsri securities, predicted the worst case scenario. He suggested that Thailand may shut its borders to high-risk countries for three to six months in 2022 as vaccine manufacturers will take another 100 days to develop new vaccines that could be effective against the new variant.
"There is limited downside in the near-term but we would monitor the situation closely," the analyst added.
Supattanapong Punmeechaow, the Energy Minister, told reporters at the Government House on Monday that initially Omicron would not impact the reopening plans.
He added that the current list of countries exempted from quarantine does not include African countries.
However, from December 1, Thailand will ban travel from eight African countries including Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa and Zimbabwe.
Those who arrive before December 1 will be subjected to a 14-day quarantine.