Thai shares plummeted 4.97% on Tuesday, the largest single-day percentage drop this year, on fund repatriation after the US received a credit outlook upgrade from Standard & Poor's, boosting the odds that the Federal Reserve will taper its stimulus in the coming months.
The benchmark Stock Exchange of Thailand index fell to the day’s trough of 1,447.65 points, down by 5.3%, before paring losses and closing at 1,452.63 in brisk trade worth 64.9 billion baht. PATIPAT JANTHONG
The benchmark Stock Exchange of Thailand (SET) index, the worst performer in the region, fell to the day's trough of 1,447.65, down 5.3%, before paring losses and closing at 1,452.63 in brisk trade worth 64.9 billion baht.
The broad index has slid 11.6% since its closing peak this year on May 21.
Foreign investors were net sellers of 5.48 billion baht, raising their net sales to 45.8 billion since May 23, when Fed chairman Ben Bernanke said the US central bank will ease its asset purchases if the economic recovery is sustained.
Disappointment over the Bank of Japan leaving its stimulus unchanged also kept the market on edge and hobbled most Asian bourses.
The baht's pullback is a clear sign of capital outflow. The currency fell to an eight-month low of 30.95/97 to the US dollar. Thai bonds were under foreign selling pressure with net sales of 500 million baht.
Bank of Thailand governor Prasarn Trairatvorakul blamed the sharp decline in Thai stocks on fund repatriation after S&P raised its US credit outlook from negative to stable.
"Fund flows out of Thailand are not a concern now, as the amount is still minimal compared with recent capital inflows and the country's foreign reserves," he said.
"However, investors should be cautious, as foreign exchange rates could be more volatile."
SET president Charamporn Jotikasthira agreed with Mr Prasarn's remarks, saying Thai shares slipped in line with those of Indonesia and the Philippines.
He said the US is in clear recovery mode, and investors have sold equities and bonds to raise cash for US markets.
"Investors need to keep a close watch on liquidity," he said.
"The SET index could continue sinking, but Thai listed firms have hardly been affected, as their fundamentals remain unchanged, so investors should not panic."
China's disheartening economic data and fears of further currency weakness in Asia have compelled foreign players to unload emerging-market assets, said Mr Charamporn.
Therdsak Thaveeteeratham, a senior vice-president of Asia Plus Securities, said fund outflows could continue albeit at a slower pace after offshore investors yanked more than 40 billion baht out of the Thai stock market since May 21.
Thanachart Securities strategist Adisak Phupiphathirungul recommends a "wait and see" approach until the foreign sell-off subsides.
"Foreigners are redeeming their investment in the region and no longer care about sound economic fundamentals," he said. "They only want to sell Thai shares at any price."
Kamoltun Pornphaisarnvichit, analyst manager at GT Wealth Management, said a survey of gold traders revealed expectations that gold prices will move in a range of US$1,340 to $1,460 an ounce in the second half of this year, with domestic prices seen at 18,500 to 21,000 baht per baht-weight.
"Domestic gold prices increased last month with the weakening of the baht, but the global price remains depressed by negative factors," he said, adding that gold is expected to give lower returns than savings, bonds and equities.