A spike in the death toll from the new coronavirus strain originating in China has rattled investor confidence and led to a sharp correction in Asian bourses, with Thailand's hospitality and aviation sectors taking a beating.
Growth prospects are bleak for revenue streams generated by Chinese tourist arrivals after China banned outbound group tours to stem the spread of the virus.
Tourism has been one of the integral drivers of the Thai economy, contributing more than 10% of the country's GDP amid flagging exports and stagnating public investment.
Visitors from China, Thailand's biggest source of tourists, rose by 4.4% year-on-year to 10.99 million in 2019, according to the Tourism and Sports Ministry. Tourism revenue generated from Chinese tourists totalled 504.2 billion baht as of November last year.
"The Stock Exchange of Thailand index could plunge below 1,500 points if the Chinese government cannot control the epidemic, and Thailand's economy will face direct and indirect repercussions over the next 3-6 months," said Wikij Tirawannarat, senior vice-president of Bualuang Securities.
"The number of tourists from China will decrease, with hotel and tourism businesses taking the brunt," he said. "Thailand's GDP growth will eventually be affected, while Thai exports to China will drop due to weakening demand."
The number of Chinese tourist arrivals is estimated to fall by at least 8% year-on-year in the next 1-3 months amid the ban on group tours, said Maybank Kim Eng Securities Thailand (MBKEST).
Chinese visiting Thailand via group tours totalled 3.1 million in 2019, making up 28% of total inbound Chinese tourists in Thailand, according to the Association of Thai Travel Agents.
With some independent Chinese tourists expected to cancel travel plans, Thailand could lose as many as 600,000 Chinese tourists a month, with total numbers down 20% year-on-year, said the Tourism Authority of Thailand.
The death toll from the deadly viral outbreak rose to 81 yesterday as Hubei province, the outbreak's epicentre, suffered 24 new fatalities. Total confirmed cases surged to 2,827 in China.
LOWER PROFITS IN SIGHT
The outbreak has fuelled panic-selling among investors. Although many Asian stock indices were closed for the Lunar New Year holiday, the Stock Exchange of Thailand index was not among them and the bourse suffered a 3% plunge at one point during intraday trading hours.
The SET index closed yesterday at 1,524.15 points, down 45.40 or 2.9%, in trade worth 69.2 billion baht. Other Asian bourses were also in the red, with Japan's Nikkei 225 tumbling 2% and Indonesia's Jakarta composite index sinking 1.8%.
Shares of aviation and hospitality firms listed on the SET plunged amid fears of lower inbound tourist arrivals from China.
Erawan Group's net profit is expected to be affected the most, as earnings are mainly generated by hotels located in Thailand, the securities firm said in a research note. Asset World Corp, Minor International and Central Plaza Hotel will be hit by a lesser degree.
Airports of Thailand Plc will see an impact as lower Chinese arrivals deal a blow to passenger service facility charges and parking fees, MBKEST said.
