Thai stocks dived 1.29% yesterday on panic selling after rumours swirled on social media that the EU had imposed sanctions on Thailand.
The Stock Exchange of Thailand (SET) index, Asia's worst-performing market for the day, took a nosedive just minutes after the afternoon session began, with the selling spree hitting big-cap stocks.
The main gauge, which saw a morning sell-off in aviation-related stocks following a US downgrade of Thailand's air safety status, closed the market at the day's trough of 1,339.3 points in moderate turnover worth 37.2 billion baht.
Kasikornbank (KBANK) fell two baht to 167 baht, PTT three baht to 250 baht, Airports of Thailand (AOT) two baht to 322 baht, and Advanced Info Service (ADVANC) three baht to 202 baht.
Brokers' proprietary portfolio was the biggest net seller at 1.76 billion baht, followed by institutional investors at 500 million.
Retail and foreign investors bought 2.24 billion and 18.8 million baht more than they sold, respectively.
Deputy Prime Minister Somkid Jatusripitak rushed to quell jitters, saying he was unaware of any EU sanctions.
Finance Minister Apisak Tantivorawong said investors were shifting money to the US as the world's biggest economy gathers steam.
Since money flows to where it can make a profit, Thailand must make itself an attractive destination, he said.
A local analyst said the rumour was the EU had decided to sanction Thailand until a general election took place.
Thai stocks are likely to rebound today after the rumours fade, the analyst said.
The Thai bourse remains an attractive investment destination in Southeast Asia, said Ornkanya Pibuldham, managing director of Bank of America Merrill Lynch.
"Thailand continues to offer a compelling story for international investors despite global headwinds," she said at Thailand Focus 2015, the annual stock market roadshow.
"Continued investment flows into the Kingdom underline its strong fundamentals. Its position at the centre of a rapidly growing Asean bloc provides additional impetus for growth. With reform and new stimulus measures in place, we believe Thailand will continue to see direct and portfolio investment."
Ms Ornkanya said Thailand's slightly improved economic growth would carry over into the new year.
The SET together with Phatra Securities and Bank of America Merrill Lynch hosted 400 investors at yesterday's Thailand Focus session. Among them were more than 80 foreign funds that directly met 100 Thai-listed firms.