The Stock Exchange of Thailand Index tumbled to 677.55 at the opening bell on the first day of trade after the long holiday weekend, and headed further south to the day's trough at 653.14 before recovering to finish at 659.25 - a 3.03-per-cent slump. Turnover was moderate at Bt15.46 billion.

Big market caps, industrial estates, department stores, theatres and tourism stocks were at the centre of the selling spree.

Bangkok Bank was off 3.64 per cent at Bt106, Major Cineplex Group was almost 8 per cent lower at Bt15.10, Erawan Group fell 11.06 per cent to Bt3.70, Airports of Thailand lost 5.13 per cent at Bt55.50 and Thai Airways International slipped 7.91 per cent to Bt40.75.

Central Pattana was off 7.96 per cent at Bt20.80, Central Plaza Hotel dived 5.26 per cent to Bt6.30 and Amata Corp sank 7.32 per cent to Bt11.40.

In contrast, Singapore's Straits Times Index set a record high above the 3,000-point mark, the Kuala Lumpur Composite Index was up 1.9 per cent and Philippine shares ended 1.5 per cent higher.

The bombings also sent shivers through the foreign-exchange market. Onshore baht yesterday overshot to its weakest point at Bt36.40 per US dollar in the morning session, compared with Bt35.42 at the close on December 29, before strengthening to end at Bt35.95.

Vichate Tantiwanich, SET executive vice president, was quoted by the Thai-language newswire Reuters as saying the stock market had declined at a higher rate than expected, down 10 points.

"I checked in the morning. Some fund managers, particularly foreigners, wanted to exit the Thai stock market," he said. The selling pressure was far less than it was on Black Tuesday, December 19 - the day of the biggest loss ever seen on the Thai bourse, he said.

The stock market that day gave up 14.84 per cent - almost 20 per cent at one point - after the Bank of Thailand imposed a 30-per-cent withholding requirement on capital inflows in a bid to counter baht speculation.

Finance Minister Pridiyathorn Devakula said the loss on the SET following the terrorist attack on the capital was less than anticipated.

"Panic selling has pulled the stock market down. However, the market has recovered from the day's low, which is better than expected," he said.

The Council for National Security and the government are working on the issue. If the situation is restored shortly, the shock to the equity market will likely be short-lived, he said.

The SET plans to conduct a road show for foreign investors towards the end of this quarter.

Maris Tarab, managing director of ING Funds (Thailand), sees the stock market in the doldrums for at least three months.

Foreign investors will dump shares here because the bombs will hurt the tourism industry and push the country's current account back into the red.

"The current account will run a deficit, and the baht will weaken [in the future]. So, it makes sense to sell Thai shares now because they still gain from the foreign exchange [rate]," he said.

Waroot Siwasariyanon, research director at Globlex Securities, said the fallout from the bombings would cast a dark cloud over the stock market for the entire week.

Foreign brokers have reduce their investment weighting for the Thai stock market from underweight after the central bank introduced the 30-per cent reserve withholding requirement late last year, he said.

Tisco Securities has downgraded the tourism sector to underweight.

Although it is too early to assess the extent of the impact, under such circumstances both foreign tourist arrivals and domestic tourism are likely to be particularly vulnerable, the securities house said.

The tourism industry will suffer for the first three months of this year and will likely recover in the second half, barring further bombings, the broker said.

It has lowered its forecast for foreign tourist arrivals this year from 15 million to 14.9 million, while that of domestic tourists will be 89.7 million.

Tourist cancellations this quarter could drag on the profits of Minor International and Central Plaza Hotel, which had been targeted to grow 5-15 per cent this year.

The steep decline in share prices of the two major hotel operators, however, will present a good opportunity to accumulate both stocks, the broker said.

DBS Vickers Securities (Thailand) said the industrial estate sector would be hard hit.

Political risk here has risen, and foreign investor confidence has been shaken. This will lead to a no-show of foreign direct investment, the broker said.

However, if the situation is brought under control, the concerns would ease and it would be a good time to scoop up shares of Rojana Industrial Estate, Amata Corp, and Hemaraj Land and Development, the broker added.

Oranan Paweewun,

Somruedi Banchongduang

The Nation