Renewed anxiety over domestic factors sent Thai stocks into a tailspin, plunging 6.9% at one point Wednesday, as the baht headed for its steepest drop in four months.
The SET index extended its sharp decline since Monday after starting the day on a sour note. The selling spree intensified once the afternoon trading session began.
The main gauge sank by nearly 100 points before bargain hunting kicked in and helped the benchmark index claw back above the 1,400 mark.
When the dust settled, Thai shares were down 2.5% at 1,406.18 points, a four-month closing low, in record trade worth 130.15 billion baht.
Large-cap stocks were again at the centre of the storm. Airports of Thailand (AOT) dived 24 baht to 356 baht, CP All (CPALL) skidded 75 satang to 59 baht, Kasikornbank (KBANK) plunged three baht to 182 baht, Siam Commercial Bank (SCB) tumbled three baht to 140 baht, and Siam Cement (SCC) shed two baht to close at 498 baht.
Brokers were net sellers to the tune of 3.02 billion baht, followed by institutional and foreign investors who yanked 1.22 billion baht and 411.36 million baht out of the stock market. Retail investors bought 4.66 billion baht more than they sold.
Since Monday, Thai shares are down 6.5% and 955.29 billion baht in market capitalisation has been wiped out.
The baht retreated to 35.74 to the US dollar from Tuesday's 35.44.
Warut Siwasariyanon, managing director at Asia Wealth Securities, said domestic factors hit Thai shares, while a steep decline on Wall Street, and the resulting spillover into Asian markets, also dampened sentiment.
Buying on weakness of undervalued and fundamentally sound stocks emerged in late trade Wednesday and helped pare the huge early loss, Mr Warut said.
He predicted investors would turn back to the Thai bourse once murky factors become clearer, citing a lower price-to-earnings ratio of local shares relative to peers in the Asean region.
The Thai stock market is likely to rebound if there is no fresh negative news, Mr Warut said. Even so, he recommended that short-term investors to hold cash to guard against uncertainty in the near future.
Mayuree Chowvikran, an analyst at Maybank Kim Eng Securities Thailand, agreed that Thai shares remain in a fragile state.
Analyst Teerasak Tanavarakul of CIMB Securities Thailand noted that the Thai stock market was the worst performer in Asia.
It was all red again on Wednesday at the Stock Exchange of Thailand although bargain hunters interceded to cut the losses late in the trading session (Photo by Pattarapong Chatpattarasill)
The dollar's strength is stoking fears of capital outflows from emerging markets, and the baht's weakness versus the greenback is denting investor sentiment.
CIMB Securities deems it likely that the SET index will slip below 1,400 again, so investors should adopt a wait-and-see strategy.
The broker recommends buying stocks expected to deliver strong earnings in the third quarter. Those sectors include banks, exported food, retail and construction.