The Stock Exchange of Thailand index yesterday saw a steep correction as brewing Sino-US trade tensions and several explosions in Bangkok soured investment appetite.
The SET index closed at 1,684.71, down 15.04 points or 0.9%, in turnover worth 82 billion baht. The benchmark gauge was down nearly 28 points at one point during the day.
Tensions over the US-China trade spat sent global stock markets into the red, said SET president Pakorn Peetathawatchai.
US President Donald Trump announced that he would hit China with punitive tariffs on a further US$300 billion in goods, escalating his trade war after accusing Beijing of reneging on more promises.
The 10% duties will take effect Sept 1 and come on top of the 25% tariffs on $250 billion (7.7 trillion baht) in imports already in place.
"Trade tensions are the core negative factor pressuring market sentiment," Mr Pakorn said. "The interest rate cut [by the US Federal Reserve] and the trade war are affecting the real sector."
"This latest trade stance of the US president has put more pressure on the Fed, as this was not factored in to the US central bank's previous assumption," said Trinity Securities executive director Nuttachart Mekmasin. "The probability of an additional rate cut by the Fed could be higher."
SHAKY CONFIDENCE
A series of explosions rocking Bangkok early yesterday also took a toll on short-term investment sentiment, Mr Pakorn said.
Foreign investors were net sellers of 3.6 billion baht, while institutional investors and brokerage firms offloaded shares worth a net 1.6 billion baht and 550.7 million baht, respectively.
Six bombs detonated at three locations and one explosive device was recovered before it blew up yesterday morning in Bangkok.
The bombings took place just before a keynote speech by US Secretary of State Mike Pompeo, who is attending the meeting of Southeast Asian foreign ministers.
Investors should take this opportunity to accumulate stocks with good fundamentals and invest in long-term mutual funds, Mr Pakorn said.
The SET index's plunge paled next to the 2.1% decline of Japan's Nikkei 225 and the Hang Seng index's 2.4% drop. The benchmark Thai gauge was up 9.5% from year-end 2018 to July 31 but fell by 1.1% on a month-to-date basis from June 30 to July 31.
Mr Nuttachart said the correction was mainly driven by external factors, rather than the Bangkok explosions, which are considered "noise" affecting only a handful of business segments, such as tourism and hospitality.
"We expect the global stock markets to price in the bad news of the Sino-US trade war for 1-2 weeks," he said, "then sentiment will turn positive as expectations will be high for a Fed rate cut in September."