Stock markets across Asia took body blows yesterday on panic selling driven by plunging US shares and fear of higher interest rates, with Thailand's benchmark index tumbling below 1,700 for the second time in a week.
The sell-off was triggered by anxiety over a series of global headwinds, including rising US rates, escalating tensions over the China-US trade row and Italy's increasingly unsustainable government debt.
Melancholy sentiment across regional bourses followed Wednesday's sell-off in the US stock market as tit-for-tat trade disputes stoked concerns among US corporations, with President Donald Trump's negative comments on the US central bank also dampening the mood.
The worst of the stock declines were in Asia, with no single bourse spared from substantial fund outflows, according to Bloomberg. China's Shanghai Composite gauge closed down more than 5%, while Taiwan's tech-heavy TWSE index plummeted more than 6%.
The Stock Exchange of Thailand (SET) index fell to 1,682.89, down 38.93 points or 2.3%, in heavy trade worth 82.9 billion baht.
Foreign investors were net sellers of 10.6 billion baht, with brokerage firms offloading Thai equities worth 1 billion.
Chaiyaporn Nompitakcharoen, deputy managing director of Bualuang Securities, said the SET followed other dismal sentiment seen across Asia in the wake of the US stock market plunge.
With US technology share prices dropping because of high valuation and rising US bond yields, the situation reflects a higher inflationary outlook and the growing probability of higher interest rates, Mr Chaiyaporn said.
"We have experienced several rounds of a stock market sell-off, but we should not be panicked because fund flows are similar to the flow of water, which moves to seek the point of equilibrium," said Deputy Prime Minister Somkid Jatusripitak.
Lesser impact
Thursday's stock market jitters dealt a further blow to regional bourses after Monday's poor showing.
The equity sell-off in emerging markets resurfaced on Monday as most Southeast Asian bourses declined in line with China's stock markets over trade disputes between Beijing and Washington, coupled with how US Vice-President Mike Pence accused China of meddling in next month's congressional elections.
The SET index reeled from the impact of a sell-off in Chinese equities, falling by 1.4% to close at 1,696.22 points.
Nuttachart Mekmasin, executive director at Trinity Securities' research department, said the Thai capital market has seen lesser impact from external factors compared with regional peers.
"Thailand's bourse declined less than other emerging countries, and the baht is still one of the top emerging currencies over the past two months," Mr Nuttachart said. "Hence, foreign investors perceive Thailand as a significant safe haven."
Thailand is one of the top three emerging economies attracting foreign fund inflows and investment asset allocation from countries such as China and Indonesia, he said.
Thailand's current account surplus at around 10% of GDP and a huge trove of foreign reserves per short-term external debt are factors boosting the country's status as a safe haven, Mr Nuttachart said.
"The only factor causing a tumble in the SET index Thursday was how investors were engaged in asset allocation by selling equities and buying bonds," he said.
The US bond yield rose to 3.25% on Wednesday, a significant rise from 2.9% seen in early September, prompting global investors to embark on an equity sell-off and invest in US treasury notes instead.
A US treasury yield of 3-3.1% should stabilise the sell-off in equities, likely by the end of this month, Mr Nuttachart said.