Thai shares yesterday tumbled 2.55% to just above the 1,400-point psychological level as foreign investors unloaded their shares on renewed worries that the US Federal Reserve will start paring its economic stimulus in the coming months following a better-than-forecast US jobs report.
The SET index ended at 1,404.64 points with moderate trade of 41.83 billion baht. Foreign investors were net sellers of 3.90 billion baht.
The benchmark index has plunged 14.53% from this year's closing peak at 1,643.43 points on May 21.
Most Asian stock markets were also reeling in negative territory yesterday. The Jakarta Stock Exchange Composite Index was the biggest loser among its peers, diving 3.68%, followed by the Shenzhen Stock Exchange Composite Index at 3.57%, Shanghai Shenzhen CSI 300 Index at 2.84% and the Philippines Stock Exchange PSEi Index at 2.79%.
The baht's sharp fall also indicated foreign investors' flight from the Thai capital market. The currency yesterday fell to a 10-month low at 31.42-31.46 to the US dollar, compared with 31.12-31.15 on Friday.
Thanachart Securities senior vice-president Pichai Lertsupongkit said the US jobs data had reinforced expectations that the Fed will soon begin winding down the stimulus and this could dampen demand in emerging markets.
"Signs in the Thai stock market are not quite so good after the SET index failed to stay above 1,420 points. However, 1,350 points could withstand the market's correction in this round as the market has mostly priced in the Fed's stimulus curb," he said.
Fed chairman Ben Bernanke recently outlined a time frame for the Fed's US$85-billion-a-month asset purchase reduction, saying the curb will start later this year and end around the middle of next year if the US economic recovery gains traction.
Mr Pichai recommended investors pile up defensive stocks including Advanced Info Services (ADVANC), Shin Corporation (INTUCH) and Total Access Communication (DTAC).
Despite the SET's correction, Phillip Asset Management (Asia) maintains a positive outlook for Asia and Thailand on expectations that markets will be steady after the end of capital outflows.