The Thai stock market plunged 1.32% yesterday, extending a rout that wiped out about 1.75 trillion baht in market capitalisation from the year's peak on May 21 to June 12, amid a mass sell-off by offshore investors.
The Stock Exchange of Thailand (SET) index fell to 1,433.47 points after rollercoaster trading of 66.5 billion baht. The benchmark index has sank 12.8% since May 21 but gained 4.86% year-to-date.
Pakorn Peetawatchai, the SET's chief strategic officer, said the market has been volatile, with profit-taking by both speculators and mid-term investors after the market doubled the past three years.
Foreign investors are selling on most Asian bourses, he said. The SET fell by 7.01% from June 3-11, the Philippines' by 6.63% and Indonesia by 9.05%.
Large-cap stocks in the SET50 index have become more active than the small-cap variety, which were the most popular in the first four months of this year.
In May, shares in the SET50 contributed 58% to total trading volume, up from 41% in March.
"The steep fall of large-cap stocks makes them more attractive as their fundamentals remains sound," said Mr Pakorn.
The SET has tried to reduce the effects of market volatility and foreign capital flows by diversifying to new institutional investors from the Middle East and Scandinavia, he said.
Banyong Pongpanich, the chief executive of the Kiatnakin-Phatra Financial Group, said foreign investors have divested US$2 billion, only about 2% of the total accumulation of $1-1.1 trillion since 1986. The figures excluded foreigners' investments through strategic investors.
Win Udomrachtavanich, the chief executive of One Asset Management (ONEAM), said there is more than 20 billion baht worth of foreign investors' holdings in Thai shares and the SET could hit 1,380 points if their sell-off continues.
Mr Win said ONEAM is maintaining its SET target of 1,640 points this year on expectations the 2-trillion-baht infrastructure development scheme and the 350-billion-baht water management project will start, bolstering economic growth in the latter half.
He said the central bank's rate-setting committee will likely cut the policy rate further at its next meeting on July 10 amid weaker-than-expected growth.
Local fund managers are snapping up stocks after the SET fell below 1,500 points, as share prices are under fair value. Auto, property, and telecommunication sectors look promising for the second half, said Mr Win.