Panic starts to grip investors

The Thai stock market tumbled 3.3 per cent yesterday to its lowest close since April last year on a world-wide sell-off over fears of financial sector stability following the rescue plan for mortgage giants Fannie Mae and Freddie Mac.

Even the government's Bt46-billion anti-poverty package announced in the afternoon failed to break the market's timid sentiment.

The SET Index started the day yesterday with a mild decline before falling to close at the day's trough of 693.41. Turnover was Bt13.7 billion.

Foreign investors have sold a record number of Thai shares with a net worth of more than Bt74 billion so far this year.

The sell pressure yesterday was seen in large-market cap stocks. PTT Plc (PTT) was off 5.59 per cent at Bt270, Siam Commercial Bank (SCB) fell 5.33 per cent at Bt71, and Kasikornbank (KBANK) lost 4.55 per cent at Bt63. Thai Airways International lost 11.76 per cent at Bt15, dropping to its lowest level in 16 years on fears the national carrier's earnings would be ravaged by high fuel costs.

In the year to date, the Thai stock market has been the 10th-worst performing in Asia with a 19.19 per cent slump. Ho Chi Minh Stock Exchange is the worst performer with a 48.24 per cent loss, followed by Shanghai Stock Exchange with a drop of 47.17 per cent.

The SET Index has plunged 24 per cent from its 52-week high close in October last year.

Globlex Securities vice president for research Warut Siwasariyanon said the steep decline in the SET Index was triggered by a foreign investor selling spree in stocks across Asian markets on fears for US financial institutions.

The Samak government's rescue plan failed to calm nerves as investors still fear many financial institutions might be on the verge of bankruptcy, he said.

For the Thai stock market, local political tension has aggravated the situation, he said.

The foreign investors' sell-off would continue as they have to sell to offset losses from investments in the US and prepare for unit trust holders' redemption. The next resistance level is at 680 points.

KGI Securities vice president Adisak Kammool said the Thai stock market's sharp decline could be attributable to investors' anxiety that the interest rate hike would hurt listed companies' profitability.

"The overall situation is worrying. We must keep an eye on the SET Index as it would slump without any resistance levels if it fails to stay above 700 points," he said.

Adisak said the government's latest package was introduced too late and did not have any substantial measures to restore confidence.