The Stock Exchange of Thailand's index took a sharp dip early in the afternoon session before rebounding to close down 2.41% or 36.46 points to 1,478.49 on Monday.
At 3pm, the index started sinking fast to hit the day's low of 1,375.99, down 9.17% from Friday's close at 1,514.95. A half hour later, it began to pick up, forming a V-shape to close slightly lower than in the morning session.
Trading value was heavy, at 102.66 billion baht. Foreign investors, brokers and local institutions were net sellers of 4.19 billion, 2.56 billion and 829.28 million baht respectively. Local individuals were sole net buyers of 7.58 billion baht.
Energy companies slumped on a rout in crude and investors speculated this year's rally was excessive relative to earnings prospects.
Prime Minister Prayut Chan-o-cha said the sharp decline in the stock market was fuelled by both external factors and "unspecified rumours", declining to elaborate.
"But I understand that the market has since returned to normal," he added.
PTT Exploration & Production (PTTEP) dropped for a seventh day, while its parent PTT, Thailand's biggest energy company, tumbled 4.85%. The two stocks represent about 10% of the SET Index by weighting.
"Thai stocks have been hit by foreign selling as investors pull out from emerging markets," said Mixo Das, an Asia ex-Japan equity strategist at Nomura Holdings Inc in Singapore. "A large listed oil-and-gas sector and expensive valuations relative to history are adding more pressure."
Brent crude traded near $60 a barrel in London after the United Arab Emirates said Opec will refrain from cutting output even if prices slumped to as low as $40. PTT, PTTEP and PTT Global Chemical (PTTGC) account for a quarter of the SET's 161-point decline in the five days. The SET Index is still up 11% this year and trades at two times net assets, compared with 1.4 times for the MSCI Emerging Markets Index.
The head of the Thai bourse said earlier today no measures were needed to shore up stocks and investors shouldn't panic.
"We will need to monitor the market closely, but I don't think we need any measures yet," Kesara Manchusree, president of the Stock Exchange of Thailand. "I believe most companies will benefit from lower oil prices. This should also help the economy to grow without inflationary pressure next year."
Emerging outflows
The sell-off came as some investors who had bought stocks on margin are being forced to unwind positions, said Teerawut Kanniphakul, the deputy head of retail research at CIMB Securities (Thailand) Co.
Investors withdrew more than $2.5 billion from US exchange-traded funds that buy emerging-market stocks and bonds last week, the biggest outflow since January, according to data compiled by Bloomberg. The MSCI Emerging Markets Index dropped 0.5% today in a seventh day of declines.
Asia Plus Securities said apart from plummeting world oil prices, Thai energy policy makers also met today to restructure fuel prices and the Oil Fund, a move that could raise the diesel levy on par with that of petrol.
Forced selling on some stocks which have declined for a while also added to the pressure.
"The steady oil price decline has led to to a trimming of profit projection of listed companies by 30-40 billion baht next year," the research said.
