Thai shares yesterday plummeted 2.26 per cent, taking them back to the level prior to the stock rally after the Constitution Tribunal ruled to disband the Thai Rak Thai Party late last month.

The fall was triggered by rumours spread widely among trading rooms about pro-Thaksin protests and the declaration of a curfew.

Sluggish regional markets, which followed a slump on Wall Street as traders remained jittery over the prospect of higher US interest rates, also dampened the local market.

The SET Index started with a tumble, before falling sharply late in the afternoon on rumours that the Democratic Alliance Against Dictatorship will move protesters to the home of Privy Council chairman General Prem Tinsulanonda, and that the government may declare a curfew to limit the movement of pro-Thaksin Shinawatra protesters.

The stock market closed at the day's trough of 726.60. Turnover was moderate at Bt16.21 billion. Foreign investors were net sellers to the tune of Bt343.47 million. The SET has slumped 5.7 per cent since the peak on June 4.

Large-cap stocks were at the centre of the steep loss. PTT plunged 3.88 per cent, PTT Exploration and Production was off 2.86 per cent, Thai Oil fell 2.92 per cent, Siam Commercial Bank lost 2.9 per cent and Advanced Info Service fell 4.65 per cent.

"The stock market in the afternoon was badly hit by nervousness over the political situation, coupled with rumours that pro-Thaksin protesters will move from Sanam Luang and the government would declare a curfew," Far East Securities strategist Veerachai Krongsamsi said.

He said the market would head further south today. 

Ayudhya Securities senior vice president Kitti Hamnilrat said the SET's sharp slump was in line with his expectations.

The steep fall could mainly be ascribed to the mounting political tension after the lawyer for Thaksin said the ousted prime minister might return to Thailand to fight allegations of corruption. A freeze has been placed on the bank accounts of Thaksin and his wife over the charges.

"The stock market could have some mild rebounds. Political issues are casting a dark cloud over the market and investor confidence is subsiding," Kitti said.

He added that it was possible to see the SET Index back down at the psychological 700-point level, depending on the degree of political tension in the country.

Oranan Paweewun

The Nation