Escalating Sino-US trade tensions and concerns over an emerging market currency contagion caused the Stock Exchange of Thailand (SET) index to tumble by almost 20 points on Tuesday.
Thailand's bourse closed on Tuesday at 1,672.42 points, down 19.09 points or -1.13%, in turnover worth 50 billion baht.
Foreign investors were net sellers of 3.4 billion baht. On the other hand, retail investors were net buyers of 2.5 billion baht, with brokerage firms and institutional investors purchasing 566 million and 378 million worth of shares, respectively.
Three large-cap stocks, namely AOT, PTT and CPALL, dominated Tuesday's market sell-off.
Each stock has its own negative sentiment pushing down prices, said Mongkol Puangpetra, head analyst at KTB Securities Thailand.
AOT's share price was pressured by possible delays of the second-phase construction for Suvarnabhumi airport and duty-free concession bidding, while accusations of unfair business practices in the PTT Plc acquisition of Glow Energy Plc muted investment appetite for PTT shares, said Mr Mongkol.
Poranee Thongyen, senior executive vice-president at Asia Plus Securities, said pressure from the global trade war will continue to suppress the SET index below 1,700 points.
Developing countries' currencies are also weakening in tandem with continuous fund outflows following prolonged trade and current account deficits, along with massive external debt shouldered by Venezuela, Argentina and Turkey, said Mrs Poranee.
The US is likely to announce a final list for additional tariffs on another US$200 billion (6.57 trillion baht) of Chinese exports to the US, which could be imposed by October and provoke retaliation from China, said Deutsche Bank research.
"Moreover, we cannot rule out the US administration proceeding with tariffs on the remaining $240 billion of imports from China next year, although economic consequences for the US would be greater than the first two round of tariffs," said the research.
"For emerging Asian markets, this could subtract another 0.3 percentage points off headline growth, without countervailing policies."
The most affected economies would be Singapore, Hong Kong, South Korea and Taiwan, given their dependence on exports and production networks in China, according to the research.
"The possibility of a pernicious trade war has become a factor for monetary policymakers -- mitigating against rate hikes, for example, in South Korea and Taiwan, and allowing their currencies to weaken further," said the research.
"In contrast, external deficit economies like India, Indonesia and the Philippines are likely to continue with relatively aggressive rate hikes, given the sharper depreciation of their currencies and -- in the Philippines -- much higher inflation."
Asean currencies remain under pressure as concerns over global trade tensions continue to weigh on regional risk sentiment, said Stephen Innes, head of trading for Asia-Pacific at Oanda Corporation.
"With foreign equity inflows waning, [regional] currencies have a strong tendency to struggle," said Mr Innes.
With prospects of higher US interest rates and robust oil prices, countries running huge deficits should be cautious as they are favoured targets for currency speculators, he said.
Separately, chief executives of SET-listed companies expect Thailand's economy to expand between a range of 3-4% in the second half, propelled by public expenditure, robust tourism, private consumption recovery and domestic political stability, according to a survey conducted by the SET. Headwinds to growth prospects include ebbing private consumption, instability in domestic politics and a slow global economic recovery.