Thailand's stock market performed better than expected yesterday thanks to foreign investors who appeared to believe that Tuesday's coup would bring little change to the Kingdom's economic fundamentals.

The Stock Exchange of Thailand closed just 1.42 per cent lower, a mild decrease compared to the 7.25-per-cent drop that occurred when the National Peacekeeping Council (NPKC) took control of the country 15 years ago.

In six major incidents that have occurred between October 1987 and now - excluding the baht devaluation in 1997 - the SET has always plunged once the market resumed trading.

"During the pre-through period [before the market opens], I saw the selling spree that came from retail investors. When the market fell sharply, foreign investors bought Thai shares. They understand that the reform council will not change much, so they are at ease," said the secretary-general of the Securities and Exchange Commission, Thirachai Phuvanatnaranubala.

He added that securities watchdogs from other countries had been asking if the stock market would resume trading yesterday and if there would be any problems regarding settlements.

"The reaction of foreign players was much more positive than many expected, [some investors are of] the view that the coup may have quickened the path to political resolution," said an analyst at Prudent Siam Securities.

Bank of Thailand Governor MR Pridiyathorn Devakula said he was happy that the SET's fall had been limited.

"By noon, the stock market had slumped only 1 per cent while it normally falls 5-10 per cent after a coup. This reflects that foreign investors remain confident in our country and that they are satisfied with the bloodless change," he said.

The baht was also stable after a sharp depreciation on Tuesday night in New York. Once the onshore trading system was back to normal yesterday, the dollar ended at an intra-day low of Bt37.455, up from Tuesday's close of Bt37.27 but below a post-coup high of Bt37.95.

Pridiyathorn insisted that the central bank had not intervened with the exchange rate and reiterated that Thailand's economic fundamentals remained solid. He recommended that the government budget process for the 2007 fiscal year be speeded up in case the new government is formed more quickly than is planned.

SET president Patareeya Benchapolchai said the limited fall in the stock market could be ascribed to the suspension of trading on Wednesday. She said investors had used that time to digest and evaluate the situation.

"Although the SET plunged almost 30 points in the morning session, it has the ability to recover a lot. I believe that the circuit-breaker measure will not need to be adopted as it is only to be employed when the SET Index falls by 10 per cent," Patareeya said.

Prasert Bunsumpun, PTT Plc president and SET director, attributed the rebound to increasing confidence among local and foreign investors who have been informed of the plans of the coup's governing council, the Council for Democracy Reform under Constitutional Monarchy.

"The drop in the morning is not serious compared to the plunge after the NPKC took power in 1992. This shows investors' confidence in the situation," Prasert said yesterday.

Montree Sornpaisarn, CEO of Kim Eng Securities (Thailand), said yesterday's sell-off by retail investors had been anticipated. He expects investors will soon understand that the coup will clear the nation's political divisions and benefit the exchange in the long term.

While local institutional and retail investors yesterday sold shares worth a net Bt2.79 billion and Bt4.6 billion, respectively, foreign investors surprisingly bought shares with a net value of Bt7.39 billion.

The composite SET Index fell marginally to 702.05 at the opening bell and dived further to reach a daily low of 673, a 4.02-per-cent decline, before recovering to 692.37 at the end of the day. Turnover was brisk at Bt43.08 billion.

Big market-capitalisation energy stocks and stocks linked with ousted prime minister Thaksin Shinawatra were at the centre of yesterday's sell-off.

SC Asset Corp Plc dropped 21.36 per cent to Bt8.65, M-Link Asia Corp Plc fell 17.37 per cent to Bt1.95, Wyncoast Industrial Park Plc plunged 23.53 per cent to Bt1.43, Shin Corp Plc was down 5.65 per cent to Bt29.25, Advanced Info Service Plc fell 2.69 per cent to Bt90.50, and iTV Plc dropped 13.37 per cent to Bt2.98.

Banking sector and big-cap stocks bucked the market trend and limited the loss. Kasikornbank rose 2.22 per cent to Bt69, Siam Commercial Bank was up 0.39 per cent to Bt63.50, Bangkok Bank increased 0.88 per cent to Bt114, Bank of Ayudhya rose 1.61 per cent to Bt18.90, and Siam Cement Plc increased 0.83 per cent to Bt244.

Trading volume on the Thailand Futures Exchange hit a record high yesterday of 3,623 contracts, smashing the previous record of 2,200 contracts, as foreign investors hunted for bargains, said futures traders.

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