Thai shares plunged 1.47% Monday, following the global stock market sell-off, on concerns over the escalating trade spat between the US and China, the persistent capital outflows triggered by the Federal Reserve's hawkish stance and the European Central Bank's (ECB) plan to shut down asset purchases.
The looming trade war between the US and China is investors' biggest concern, as the confrontation could stall global economic growth, said Prakit Siriwattanaket, vice-president at Kasikorn Securities (KS).
Renewed fears of a trade war between the world's top two economies emerged after US President Donald Trump's decision last week to hit China with a 25% levy on its goods, while China swiftly responded by slapping an additional 25% levy on US agricultural and auto exports starting July 6.
The SET index started the day on a sour note, falling below the 1,700-point barrier, and headed south further to the day's low of 1,679.48 points before marginally recovering to close at 1,679.68, with moderate trade value of 51.9 billion baht.
Foreign investors continued their selling spree in Thai shares, with a net 2.81 billion baht Monday. They also yanked 9.1 billion baht out of the Thai bond market on Monday.
The falling oil price on anticipation that Opec and Russia will raise their production capacity soon weighed on Thai stock market sentiment, he said.
Heavy-weighted energy and petrochemical stocks were unloaded and were the most active stocks Monday. PTT Plc (PTT) fell one baht to 49 baht, Indorama Ventures Plc (IVL) tumbled 3.25 baht to 55.25 baht, Siam Cement Plc (SCC) dipped 12 baht to 422 baht, and PTT Exploration and Production Plc (PTTEP) plunged four baht to 130 baht.
"We expect the SET to continue to move below 1,700 points and trade in a range of 1,670-1,685," said Mr Prakit.
He said the Thai equity market's downside, however, is limited after sliding considerably.
KS recommends investors accumulate on weakness, he said.
Nuttachart Mekmasin, executive director at Trinity Securities, said capital repatriation to the US has emerged after the US central bank signalled a more hawkish monetary policy view.
The Fed, after raising its benchmark rate for the second time this year to 1.75-2% last week, implied that there will be four hikes in 2018, up from three estimated previously.
"Large market cap energy stocks are also pressured by the expectation that Opec will terminate the agreement to cut production capacity earlier," he said.
In the meantime, Ariya Tiranaprakit, senior executive vice-president of the Thai Bond Market Association, said foreigners' selling spree in Thai bonds accelerated to 9.1 billion baht Monday, up dramatically from the net of more than 4 billion on Thursday and Friday.
Of that sum, 8.9 billion was cashed out of short-term bonds and the remaining 200 million from long-dated notes.