Global and Thai stocks extended their losses on Monday as concern persisted over the highly contagious Covid-19 Omicron variant that could knock the global economic recovery off course.
The SET Index dropped 25.93 points, or 1.58%, to 1,615.80 in trading worth 82.4 billion baht.
The ongoing spread of Omicron cases worldwide has continued to sap market sentiment after many European countries reintroduced restrictive measures to curb infections, suggesting a new global economic slump if the variant becomes widespread.
In addition to Omicron, other factors triggering a risk-off sentiment are the Federal Reserve's tapering of its quantitative easing (QE) and the possibility of interest rate hikes.
For the Thai market, an additional negative factor is the looming domestic tax on share sales.
Prakit Siriwattanaket, managing director of Merchant Partners Asset Management, said the spread of Omicron was currently the biggest investment risk, as investors feared rising infections in their countries would lead to more travel restrictions and lockdowns, and consequently affect the profits of listed companies.
Mr Prakit said a domestic outbreak of Omicron in Thailand is inevitable because the country is now fully open to tourists.
If the government needs to reintroduce lockdown measures, businesses will have to bear the brunt, he said. Investors should closely monitor the situation, said Mr Prakit.
Omicron's impact on the stock market has been compounded by negative news from the Fed after it announced its plan to double the pace of its QE tapering, reduce its balance sheet by the end of the year, and raise interest rates three times in 2022.
Tighter monetary policies will reduce liquidity in the stock market and push investors to sell risky assets, causing the market to enter a slump, he said.
Goldman Sachs on Monday trimmed its forecast for US GDP growth in the first quarter of 2022 to 2%, down from 3%; the second quarter to 3%, from 3.5%; and the third quarter to 2.75%, from 3%.
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