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Published on October 23, 2007

Thai shares yesterday plummeted 1.8 per cent on Wall Street and regional stock sell-offs amid anxiety over the risk of a US recession.

On Wall Street, the Dow Jones index tumbled 2.64 per cent on Friday after several major companies, especially in the financial sector, reported soft earnings and showed caution about the profit outlook.

Indonesia's stock market took the hardest blow among its regional peers, down 4.31 per cent. The Philippines' stock market was the second worst, slumping 3.98 per cent, while Hong Kong's Hang Seng Index lost 3.7 per cent and South Korea's Kospi index

fell 3.36 per cent. Other markets dived in a range of 1-3 per cent.

The Indian stock market bucked the trend, gaining 0.30 per cent.

The composite SET Index started the day with a sharp drop and it headed south further to an intra-day trough at 857.66, before recovering slightly to close at 860.09. Turnover was thin at Bt13.66 billion. Foreign investors sold Thai shares with a net position of Bt488.68 million.

Blue-chip stocks were heavily sold yesterday. PTT fell 2.15 per cent to Bt364, PTT Exploration and Production slid 2.47 per cent to Bt158, Thai Oil slumped 2.81 per cent to Bt86.50, Kasikornbank lost 3.68 per cent to Bt78.50 and Banpu dipped 2.05 per cent to Bt382.

Nervousness over the deterioration of the US property market and the credit crunch triggered the selling spree, an analyst at Merchant Partners Securities said.

"Investors are concerned the slowing US economy will also cool down the global economy and that's why they dumped shares across the globe," the analyst said.

Investors sold heavyweight energy and bank stocks to lower the risk of a liquidity shortage after the G-7 meeting issued a stern warning that the sub-prime mortgage woe would impact the world economy next year.

An analyst at Siam City Securities said the Thai stock market's correction could

be ascribed to taking its cue from the sharp fall in Wall Street and the regional stock markets after Caterpillar warned that the US real-estate market was entering into recession and its effect would snowball.

An analyst at DBS Vickers Securities (Thailand) said the SET Index was likely to slump further in the short term, as the US economy might slow more than expected after figures showed a weak property market and a credit squeeze.

"We have to keep an eye on the US Federal Reserve meeting to see if it will maintain the overnight rate at 4.75 per cent," the analyst said.

 Siriporn Chanjindamanee

 The Nation