Stock market volatility is likely to heighten this week as a delay in the US presidential vote count could happen because of the persistent Covid-19 outbreak, analysts say.
Passakorn Linmaneechote, head of research at Kasikorn Securities (KS), predicts former vice-president Joseph Biden will win the election and the Democratic Party to take over the majority of both houses of Congress.
However, a large portion of voting has been done by mail, which could delay counting in some states such as Pennsylvania, North Carolina and Texas until after election day on Nov 3.
"We estimate the election results have a chance of being delayed, or in some states, a court may request new vote-counting approvals," he said. "This could lead to volatility in the stock market during the week, if the election results come out in a manner that we initially assessed."
As president, Mr Biden is expected to advocate new shutdowns in some states and cities to prevent the spread of Covid-19, and Biden's policies may pressure US stocks downwards, especially given his plan to increase the corporate tax rate.
In this case, Mr Passakorn expects to see fund flows into Asia.
KS reviewed statistics and found after US elections, value stocks tend to rise significantly compared with their historical average growth of 3.5%.
For its view on the SET, KS has projected three possible cases based on the turbulence of the ongoing political situation.
If the nationwide pro-democracy rallies turn violent, KS assesses a downside range of 1,140-1,170 points, and advises investors to bypass domestic plays based on public investment.
In the event of protracted but non-violent rallies, the index will likely stay in the 1,190-1,210 range, and KS suggests speculation on food exports.
Shorter protests, with a reduced frequency of rallies and opening of talks to amend the constitution would lead to an upside of above 1,240 points. If this happens, KS suggests investing in banks.
An analyst at Asia Plus Securities who requested anonymity estimates the SET index will likely not increase over 1,200 points as investors focus on the results of the US presidential election on Nov 3.
"We want to wait and see regarding the election and the ongoing pandemic in Europe and the US. These factors will put pressure on crude oil prices and energy stocks, limiting the upside of the SET," said the analyst.
