Asian stocks plunge

The composite SET index started the day with a sharp slump and further headed south to close 3.01 per cent lower at 426.26, off the day's lowest level of 424.16. Turnover was moderate at Bt10.30 billion. Foreign investors sold Thai shares with a net value of Bt354.46 million.

Korea's KOSPI index took the hardest blow, slumping 6 per cent to 1,111.34. Japan's Nikkei stock index slumped 4.92 per cent. Taiwan's weighted index was off 4.44 per cent at 4,320.77. Australia's S&P/ASX200 dropped 4.3 per cent to 3,529.5. Indonesian shares ended 3.1 per cent lower. The benchmark Hang Seng Index slumped 3.4 per cent, And the main Straits Times Index fell 3.44 per cent to 1,704.06.

Other markets lost less than 2 per cent.

The Dow Jones Industrial Average slid 248.42 points or 2.94 per cent to end at 8,200.14. The Nasdaq composite tumbled 56.82 points or 3.67 per cent to 1,489.64.

Citigroup was expected to post a loss when it reports its quarterly results today amid indications it will downsize, while analysts said HSBC may halve its dividend and raise up to US$30 billion (Bt 1.05 trillion) in a rights issue.

Thai bluechip stocks, particularly in the energy and banking sectors, were at the centre of the selling spree in Bangkok. PTT (PTT) lost 2.53 per cent to Bt154, PTT Chemical (PTTCH) dropped 5.65 per cent to Bt29.25, PTT Aromatics and Refining (PTTAR) declined 4 per cent to Bt9.60, PTT Exploration and Production (PTTEP) tumbled 4.81 per cent to Bt99, Bangkok Bank sank 4.29 per cent to Bt67, Kasikornbank fell 3.30 per cent to Bt44 and Krung Thai Bank was off 5.94 per cent at Bt3.80.

CIMBGK Securities (Thailand) head of research Kasem Prunratanamala said the sharp decline in stock market could be ascribed to investors' mounting concerns that the US economic recovery would be delayed from the end of 2009 as expected to 2010 following the market's pessimism over disappointing US bank earnings.

Citibank's decision to sell off Smith Barney has raised an anxiety that European banks might need fresh capital or divest some of their businesses. This was proven by foreign fund managers' selling spree, Kasem said.

"Holding cash is the best option now as the overseas situation is harder to predict. If the banks' problems are not settled, the economic recovery will take a longer time while any stock market rebound will be difficult. We might see the SET index plunge below 380 points," he said.

An analyst at Siam City Securities said the SET index tracked the loss in Asian stock markets triggered by heightened concerns over weak fourthquarter earnings globally as the world economy seems to be heading for recession.

Investors shrugged off a series of Thai government economic stimulus measure, he said.

The Bank of Thailand's prediction that the economy in 2009 would grow below the predicted 0.52.5 per cent and the oilprice slump, which hit the heavily weighted energy sector, would exacerbate the situation, the same analyst said.

He recommended that investors digest the situation before making any investment decisions.  

Stock Exchange of Thailand president Patareeya Benjapolchai suggested investors closely watch both the domestic and international economic situations and stockmarket moves in line with them.

They should use savings for investment and allocate assets well, she said.

She said it was the right time for depositors to seek other investment options offering higher returns than deposits after the monetary policy committee slashed the policy interest rate by 75 basis points to 2 per cent. 

Patareeya estimated that the banking sector's fourthquarter earnings would grow at the same pace as the third quarter due to their strong financial position and high provision.

If the energy sector announced grim fourth quarter's earnings, it would not send an adverse impact to overall investment sentiment as the news was already priced in, she said.

Early this week, PTT and its group were reeling under selling pressure after brokers estimated that PTT would record a net loss of over Bt10 billion for the fourth quarter due to the poor earnings of its refining and petrochemical units.