The Stock Exchange of Thailand (SET) continued to tumble for a second day, due to persistent negative sentiments swirling around the US-China trade row and volatile oil prices.
The SET index closed at 1,639.54 points Tuesday, down 40.14 or 2.4%, in trade worth 84.6 billion baht.
The bourse slid to 1,633.72 at one point during the day's session.
Foreign investors continued to be net sellers at 2.64 billion baht, with brokerage firms and institutional investors selling 4.81 billion and 1.62 billion worth of shares, respectively. On the other hand, retail investors were net buyers of 9.1 billion baht.
Energy stocks experienced a heavy sell-off, with PTTEP declining by 3.5% and PTT and BANPU down 2.6% and 3.8%, respectively.
Losses were even heavier in China and Hong Kong, where the Shanghai Composite index fell by 3.8% and the Hang Seng index lost 2.8%.
MTS Gold president Kritcharat Hirunyasiri said the baht depreciated further Tuesday because of continuous fund outflows, but gold prices bucked the trend as they climbed by about 50 baht per baht-weight.
Factors influencing the gold trading outlook include the outcome of the ongoing trade war between the two largest economies, Mr Kritcharat said.
If the trade war drags on, the US dollar will experience a depreciation and investors will flock to invest in bullion, he said.
But if the US and China negotiate and halt their aggression, market sentiments could become more neutral, Mr Kritcharat said.
The US Federal Reserve's interest rate normalisation is negative for gold, he said, as funds will shift to money markets and the greenback.
"However, the [Fed's] interest rate hike is still a concern factor for gold investment, and the trade war policies can either be positive or negative, warranting close observation," Mr Kritcharat said.
Jitra Amornthum, head of research at Finansia Syrus Securities, said market sentiment will remain dented by trade war concerns and the impact of US President Donald Trump's remarks that Washington will impose a further 10% tariff on US$200 billion worth of Chinese goods after Beijing retaliated against earlier tariffs.
Crude oil prices, meanwhile, continue to be volatile in the run-up to Friday's Opec meeting, where it's anticipated that production output will be raised.
"Nonetheless, we maintain our bullish view towards Thailand's mid- to long-term economic growth outlook," Ms Jitra said. "We recommend that investors park cash in domestic and defensive plays that deal with domestic consumption and state investment."
Phillip Securities Thailand research has found that the baht's continued weakness against the dollar may also further add to bearish pressure on Thai stocks, as this could trigger more foreign fund outflows as 10-year Thai bond yields rise.
"Under these circumstances, our preferred strategy is to trim exposure on rallies in Thai stocks and then play wait and see," said Phillip Securities Thailand. "It is best to maintain equity holdings at no more than 40% of the short-term trading portfolio until the market shows signs of a base-building pattern."
AEC Securities' research department said the SET could possibly dip further to 1,600 points going forward because of negative global sentiments, particularly the US-China trade war.