SET follows the herd, slide 2.86%

Japan's Nikkei225 index tumbled 2.86 per cent, the Jakarta Composite Index lost 1.91 per cent, the benchmark Hang Seng Index closed down 1.80 per cent, and Kuala Lumpur Composite Index fell 1.59 per cent.

The composite SET index yesterday dropped since the opening bell and headed south further to end the day at 596.54 points, off the day's trough at 593.39. Turnover was moderate at Bt25.44 billion.

Foreign investors turned to be net sellers with a net worth of Bt2.16 billion.

Bluechip stocks were at the centre of the sharp fall. PTT dived 3.24 per cent to Bt239, PTT Exploration and Production was off 3.20 per cent to Bt136, Banpu slumped 3.31 per cent at Bt351, Thai Oil fell 4.32 per cent at Bt38.75, PTT Aromatics and Refining was down 5.03 per cent at Bt18.90.

Meanwhile, ToyoThai Corp, the first newly listed stock on the SET this year, ended its first day of trading yesterday at Bt4.54, above the initial public offering (IPO) price of Bt4.25 apiece.

Thai shares dipped 5.5 per cent for two straight days after it shot up nearly 40 per cent this year.

Tisco Securities managing director Paiboon Nalinthrangkurn forecast that the SET index would dive to 500 points in the third quarter this year as investment sentiment will be depressed by the US Fed's hike in the key interest rate.

The current correction in the Thai stock market is in line with expectations as the US economy has not fully recovered yet and financial institutions in the US and Europe remain weak, he said.

An analyst at Asia Plus Securities said the SET's slump yesterday could be attributable to switching of money from the stock market to buy initial public offering (IPO) of Chinese companies worth about US$50 billion (Bt1.7 trillion) in the second half of this year.

The US government's plan to announce a stringent regulation to govern hedge funds also dampened the stock market, the analyst said.

Another analyst at a local broker said the Thai stock market's decline was in line with Wall Street and other regional stock markets.

A drop in oil price is also taken into account, the analyst said.

Investors should be prudent in profittaking as those who bought cheap stocks in the past couple of months might lock in profit, the analyst said.

They should hold cash to assess how the situation develops, the analyst said.

The next support and resistance levels are at 590 and 600 points, respectively.

Sombat Narawutthichai, secretary-general at the Securities Analysts Association (SAA), said the association is to revise upward the SET index target as several economic signs show improvement and capital is flowing into the stock markets.

The sharp increase in commodity prices, including freight rates, oil price and petrochemical products, would also be a blessing to companies' earnings, he said.

The next round of analyst survey will be conducted in early July.

According to the SAA's current consensus, the minimum and the maximum SET Index targets for this year are 535 and 582 points, respectively.