The Stock Exchange of Thailand (SET) index saw the biggest drop among Asian bourses Wednesday, tumbling by over 2%, with energy stocks sliding off the rail following a recent decline in oil prices.
Thailand's benchmark stumbled by 35.19 points to close at 1,623.37 points in heavy turnover, worth 65.32 billion baht.
Investors unloaded large-cap stocks, led by PTTEP (-7.6%), IVL (-5.9%), PTTGC (-3.6%), PTT (-3.5%) and CPALL (-3.1%). Foreign investors led the retreat, with net sales worth 4 billion baht.
Nuttachart Mekmasin, executive director at Trinity Securities' research department, said a stumble in Thailand's bourse was attributed mainly to a dip in global oil prices and foreign capital outflows.
"More than half of SET index shares were pressured by the energy and petrochemical sectors," Mr Nuttachart said.
The foreign sell-off in Thai shares accumulated from Tuesday's regional sell-off, for which Thai bourse was closed for holiday, he said, adding that on Wednesday the baht depreciated the most among regional currencies.
Huge inflows of foreign funds are not expected as the US bond yield remains attractive, said Mr Nuttachart.
Foreign investors registered net sales of US$1.2 billion (39.5 billion baht) on the first two trading days of this week, said Finansia Syrus Securities in a note.
South Korea recorded the largest net outflows of $724 million, while Thailand booked net outflows of $2 million on Monday.
On Tuesday, the MSCI Asia ex Japan index slumped by 1.3% on average, pressured by external factors such as geopolitical disputes between the US and other countries, namely China, Iran and Saudi Arabia, Italy's fiscal problems and uncertainty over Brexit negotiations adding to heightening bearish sentiment.
A number of large Asian companies signalled weak third-quarter earnings performance due to negative impacts from the trade war.
"Looking ahead, funds look set to stream out of the region after concerns over China's economic growth outlook increase. Moreover, crude oil prices have tumbled after Saudi Arabia signalled an increase in output," said Finansia Syrus Securities.
Amid risky market conditions, gold and bonds are more attractive than equities, said Finansia Syrus Securities.
Global stock markets are in a risk-off mode, with the US dollar and spot gold price rising as investors pull money out of risky assets and pour it into the safe haven counterparts, said Kasikorn Securities vice-president Prakit Siriwattanaket.
But the widespread equity sell-off is expected to ease next month, supported by expectations of slower US inflation on the back of a decline in global crude prices, said Mr Prakit.
The US Federal Reserve is also expected to tone down its hawkish interest rate stance following complaints by US President Donald Trump over rising interest rate, he said.
"We expect the SET Index to recover in the final two months as foreign investors normally stay on the sidelines ahead of the end-of-year festive season," said Mr Prakit.
"Inflows into the long-term equity funds for tax purposes ahead of the year-end are expected to be approximately 30 billion baht and the government is expected to roll out stimulus measures to boost domestic spending," he said. "The last positive factor is expectations for [His Majesty King Vajiralongkorn's] coronation ceremony ahead of the general election in late February."
- Earlier report: SET leads regional stock slide
