Thai shares bucked the trend seen in most regional bourses on Wednesday, plunging 1.7% on mounting anxieties over local political tensions after anti-government groups called a mass rally to oppose the blanket amnesty bill.
The Stock Exchange of Thailand (SET) index, Asia's worst performer, plunged into negative territory when the opening bell rang and kept heading south to the day's low of 1,428.32 points before punters buying in late trade emerged and helped to pare some of the losses.
The main gauge finished the day at 1,431.12 points in moderate trade worth 40.9 billion baht.
Local institutional investors and brokers were net sellers of Thai shares worth 692 million and 457 million baht, respectively.
Conversely, most Asian stock markets rose on confidence that the US Federal Reserve will maintain its stimulus programme unchanged for another few months at least.
Hong Kong's Hang Seng Index was the biggest gainer among Asian bourses, surging 2%, while the Shanghai Stock Exchange Composite Index advanced 1.48% and the Nikkei 225 jumped 1.23%.
Therdsak Thaveeteeratham, a senior vice-president of Asia Plus Securities, said the selling spree was triggered by domestic political concerns and less-attractive valuations of Thai shares after the SET index's current price-to-earnings (P/E) ratio at the market's close on Tuesday reached 15.24 times.
''Political developments will become the main market-moving factor. If the protests bring chaos, the stock market will fall sharply,'' he said, adding that the situation remains unpredictable since it is still early days.
Mr Therdsak recommends a wait-and-see approach, saying long-term investors could enter the stock market when the P/E ratio is at 14 times or the SET index hovers around 1,380 points.
The Democrat Party called for nationwide rallies to protest the amnesty bill. Anti-government groups are concerned it could return ousted premier Thaksin Shinawatra home a free man.
Bank of Thailand governor Prasarn Trairatvorakul said the protests could affect the economy if they are prolonged or break down into chaos.
Thanachart Securities strategist Adisak Phupiphathirungul said the local stock market could decline slowly until the local political situation improves.
The SET index could fall by 50 points if it fails to stay firmly above the support level of 1,428 to 1,430 points, he said.
Mr Adisak recommends investors buy on weakness, saying the political effect could be temporary, with the stock market rebounding rapidly.
The stable baht also indicated foreign investors have not fled Thai assets. The baht was at 31.05/31.07 yesterday compared with 31.03/31.07 on Tuesday.