The Stock Exchange of Thailand (SET) index suffered the biggest drop among Asian bourses on Monday as confidence was hampered by rising cases of the Covid-19 outbreak outside of China, with risk-averse sentiment sending gold prices to a seven-year high.
The SET index fell by 59.53 points or -4% to close at 1,435.56 points in turnover worth 76.4 billion baht.
Institutional investors were net sellers of 4.2 billion baht, while foreign investors sold 1.7 billion and brokerage firms offloaded 862 million worth of shares.
On a year-to-date basis, net foreign equity outflows totalled 34.4 billion baht, with 15.8 billion the net amount of local shares unloaded by institutional investors.
The sell-off was also seen among other Asian bourses across the board as fears of a Covid-19 pandemic were fuelled on the back of rising cases of infections, particularly in South Korea.
South Korea's Kospi index was among the most affected bourses in Asia-Pacific, falling by almost 4%, as seven people died and more than 700 have been infected with the novel coronavirus.
The intensifying viral outbreak and inadequate containment measures are the main reasons causing Asian bourses, including the SET index, to plunge sharply, said Pattera Dilokrungthirapop, chief executive at DBS Vickers Securities Thailand.
Thailand could possibly announce the third stage of the outbreak soon and this would cause economic activities to tumble further as people who return from overseas could be quarantined or monitored for at least two weeks to see if they are infected, said Mrs Pattera.
The Public Health Ministry has urged Thais to postpone any planned visits to Singapore and Japan because these two countries have reached the third stage, where locals with no record of meeting with people who visited China are found to be infected.
A tangible effect on SET-listed companies will appear in their first-quarter earnings, which will be announced around mid-April, she said.
Renewed fears the novel coronavirus will affect global growth continue to rock commodity markets, with oil and metals prices tumbling while gold soared toward US$1,700 an ounce amid higher risk-hedging appetite for safe haven assets, Bloomberg reported.
Retail stocks, meanwhile, have begun to feel a greater pinch from dejected investment sentiment seen earlier in tourism and hospitality-related equities.
Newly SET-listed shares of Central Retail Corporation Plc (CRC), Thailand's largest retailer and the retail arm of Central Group, fell the most when the morning trading session ended. CRC shares declined by 11.5% or -4.75 baht to 36.50 baht, down from its IPO share price of 42 baht per share.
Retail stocks have experienced a spillover effect from battered tourism outlook as lower tourist arrivals are tantamount to lower revenue stream, which subsequently curbs consumers' purchasing power, said Somchai Amornthum, executive vice-president of strategic asset allocation at Krungthai Asset Management.
"If the situation worsens over the next two weeks, the equity sell-off momentum could amplify," said Mr Somchai.
Despite continuous equity sell-off by foreign investors, the SET does not plan to implement additional measures to ward off a steep correction, such as a circuit breaker, as the bourse's liquidity remains high and it has the ability to withstand many crises as shown in the past, said SET president Pakorn Peetathawatchai.
"Every crisis presents an opportunity [to invest in] high-dividend stocks, defensive stocks as well as stocks of listed companies enduring a lesser effect from the outbreak," he said.
