Global bourses and bond markets fell yesterday after new Federal Reserve chairwoman Jenet Yellen suggested interest rates in her country might increase sooner that financial markets were anticipating.
Yesterday, major stock markets fell across the board.
The London’s FTSE Index shed 1.2% to 6,494.26 points at mid-day, while the Hong Kong stock exchange shed 1.79% to close the day at 21,182.16, Tokyo’s Nikkei 1.65% to 14,224.23 and Jakata down 2.54% to 4,698.97.
Thailand’s stock market dropped slightly by 2.8 points or 0.21% from Wednesday.
It fell to the day’s low of 1,351.36 points before rebounding to close at the day’s high of 1,361.47.
Somchai Anektaweepon, the research manager at Finansia Syrus Securities, said the declines were a surprise reaction to Ms Yellen’s suggestion that the Fed could raise its policy interest rate next year.
The move would come after a possible end to its monetary stimulus package this fall.
The rate could rise to 1% in 2015 from previous expectations of 0.75%.
The Fed recently approved a US$10-billion-a-month reduction in its massive asset purchase programme to $55 billion a month.
The planned reduction has triggered investors’ concerns over fund flows.
Noppadol Piriyawut, the senior executive research director at Thanachart Securities, said the slight drop in Thailand was only a temporary correction after a rise during the previous few days.
He called it an opportunity for investors to buy strong fundamental shares selectively at discount prices.
The Fed’s signal on interest rates also affected the Thai bond market.
Ariya Tiranaprakij, executive vice-president of the Thai Bond Market Association, said the 10-year benchmark bond yield increased to 3.75% yesterday from 3.68% on Wednesday.
Yesterday, foreign investors were net sellers of 7.2 billion baht.