Thai shares hit a two-year low and the baht fell as China's move to weaken the yuan heightened concerns about a slowdown in the world's second-largest economy.
In addition, the oil price plunged to an 11-year low, sending energy blue chips into a tailspin.
Gold benefited from the turmoil, however, as investors shunned risky assets and sought safe havens. Local bullion with 96.5% purity surged 250 baht per baht-weight yesterday to 18,850 baht for goldsmiths' selling price and 18,750 baht for the buying price.
The Stock Exchange of Thailand (SET) index started the day on a major sour note after China's bourses halted trading after the market sliding 7% in half an hour triggered a "circuit breaker". It was the second day-long freeze for China this week.
The magnitude of the sell-off in Thai shares intensified in the final half-hour of trading yesterday, causing the main gauge to plunge 35.21 points or 2.79% to close at the day's trough of 1,224.83 in brisk trade worth 46 billion baht. National oil and gas conglomerate PTT Plc slid 19 baht or 8.33% to 209 baht, while its petroleum arm PTT Exploration and Production (PTTEP) dived 5.25 baht or 9.72% to 48.75 baht and subsidiary IRPC 2.26% to 4.32 baht.
The sell-off was also seen in telecom, petrochemical and banking stocks. Advanced Info Service (ADVANC) dropped three baht or 2.18% to 134.50 baht, Siam Cement (SCC) 20 baht or 4.63% to 412 baht and Kasikornbank (KBANK) four baht or 2.7% to 144 baht. Since the year's first trading day of trading on Monday, the SET index has lost 63.19 points or almost 5%, with 600 billion baht in market value wiped out.
The shock wave in China sparked across-the-board sell-offs in other Asian markets. The Hang Seng sank 3.09%, the Nikkei 2.33% and the Kospi 1.1%, the benchmark Shanghai Composite 7.3% before the day-long suspension and the smaller Shenzhen Composite 8.3%.
China's central bank set its daily yuan guidance rate 0.5% below the previous fix, the biggest drop since a nearly 2% devaluation last August. The offshore yuan also fell to its weakest level since trading started in 2010. Meanwhile, the baht declined to 36.28/36.30 to the US dollar yesterday from 36.20/36.22 on Wednesday.
Chantavarn Sucharitakul, the Bank of Thailand's assistant governor for financial market operations, said volatility incurred in Thailand's financial market after the New Year period derived mainly from external factors. Geopolitical conflicts between Iran and Saudi Arabia as well as North Korea's recent nuclear test have also added to growing uncertainty in global financial markets.
"These factors have caused confidence in the global financial markets to weaken, putting pressure on regional stock markets and [triggering regional] currencies to depreciate," she said.
The baht had moved within a range of 36.08 to 36.35 to the dollar in the new year, weakening by 0.7%, Mrs Chantavarn added.
Somchai Anaktaweepon, head of research at Finansia Syrus Securities, said the Thai bourse remained at risk of a retreat, as the oil price was likely to tumble further.
Boonlert Siripanich, president and chief executive of gold and silver broker Ausiris, said gold trading was active yesterday as investors sought safe havens following political tensions in the Middle East and the rout in equities markets. If geopolitical tensions remain, gold is likely to climb above its strong resistance level of US$1,100 an ounce.
