Thai shares Thursday pared losses after the national anti-graft body cleared Prime Minister Yingluck Shinawatra of an asset concealment charge, but mounting tensions on the Korean peninsula and disappointing US economic data are expected to depress the market further.
The benchmark SET index rose by 0.52% to close at 1,528.46 points, rebounding from a slump of as much as 2.6% in early trade to 1,480.41, with brisk trading worth 60.9 billion baht.
The market plunged 1.9% on Wednesday on panic selling over concerns about Ms Yingluck's case and potential measures to curb mortgage lending.
Somchai Anektaweepol, the research manager at Finansia Syrus Securities, said the market rebounded yesterday afternoon on eased concerns after the National Anti-Corruption Commission dismissed a case in which Ms Yingluck was accused of concealing a loan of 30 million baht to a company in which her common-law husband Anusorn Amornchat was a shareholder.
The Bank of Japan's announcement of doubling its bond purchases to help the world's third-largest economy beat long-time deflation also gave a boost to the Thai stock market, he said.
But other concerns including tension between North and South Korea, Wednesday's weak US economic data and political uncertainty over constitutional amendment will continue to affect market sentiment and keep the broader index moving in range.
"North Korea announcing it is waging war with the US and South Korea could affect the world economy in the long term," said Mr Somchai.
"We expect the SET index will move within a range of 1,510 to 1,535 points."
The Bank of Thailand's refusal to introduce measures to control the property sector yesterday also lifted market sentiment.
Charamporn Jotikasthira, president of the Stock Exchange of Thailand, said several negative factors are dampening market sentiment, but investors should not panic as the market's fundamentals remain unchanged.
The Thai stock market's price-to-earnings ratio at 13 times, lower than the regional level of 14 times, is still attractive for investment, and investors are recommended to accumulate when the market is in correction.
Even through negative factors from both external and local political uncertainty are surrounding the local bourse, they will not hurt the potential earnings growth of listed companies, said Mr Charamporn.
Pichai Lertsupongkit, a senior vice-president of Thanachart Securities, recommends investors pile up domestic stocks including Advanced Info Service (ADVANC), InTouch (INTUCH) and those in the retail sector.