Thailand's stock market extended its losses on Monday, plunging by 3% on concerns flaring over a second wave of outbreak in China and Japan along with higher infections in the US.
A surge in infections in China and Japan is also poised to disrupt the Thai government's plan to rev up the domestic hospitality industry for foreign arrivals through "travel bubbles".
The Stock Exchange of Thailand (SET) index plummeted the most in three days following declines of 1.6% and 1% last Thursday and Friday, respectively, shedding gains made earlier this month.
The bourse fell by 40.57 points to end at 1,341.99 in turnover worth 83.4 billion baht. Foreign investors topped net selling at 4 billion baht, followed by brokerage firms at 1.6 billion and institutional investors at 1.2 billion.
The sell-off was in line with a broader equity offload across Asia as sentiment was derailed by a spike in infections in Beijing and Tokyo, coupled with a renewed surge of infections in the US.
Banking shares saw a considerable sell-off on the SET, with KBANK shares tumbling the most by 8.8%. Tourism-related equities also dipped, with share prices of MINT and AOT dropping by 5.3% and 3.9%, respectively.
Foreign capital, however, still moved into Thai bonds, with long-term debt securities logging net non-resident inflows worth 2.16 billion baht on Monday. Month-to-date net inflows from foreign investors tallied 24.9 billion baht.
"Fears of a second wave outbreak in Beijing and the impact on the economy have aggravated the equity sell-off momentum," said Somchai Amornthum, executive vice-president of strategic asset allocation at Krungthai Asset Management.
"On a forward-looking basis, the Thai government's travel bubbles initiative is poised to experience a hiccup from new infections in China."
Some 1,000 foreign visitors are expected to be allowed entry to Thailand per day and the standard 14-day quarantine rule will be waived, according to an implementation plan for travel bubbles to be submitted for the Centre for Covid-19 Situation Administration's approval on Wednesday.
These visitors, who in the beginning will be mostly business people and patients seeking medical treatment in Thailand, must come as part of bilateral cooperation on tourism between Thailand and selected countries that have managed to contain the novel coronavirus.
The SET is likely to continue its freefall because the market's valuation is still expensive compared with global stock markets, said Therdsak Taveeteeratham, executive vice-president at Asia Plus Securities.
The SET index's price-to-earnings ratio is at 19 times, higher than the historical average of 16.3 times.
Investors have to keep watching major central bank meetings as they are projected to go all-out easing monetary policies, especially interest rate cuts and direct money injection into the economic system, said Mr Therdsak.
The US Federal Reserve's announcement it is prolonging its ultra-loose monetary policy through 2022, however, supports a rally in gold prices, said YLG Bullion chief executive Pawan Nawawattanasub. Demand for gold has been gathering momentum, with gold exchange-traded funds seeing a new historical record for gold holding, said Mrs Pawan.