SET plunges for second day in a row

Stock Exchange of Thailand (SET) president Patareeya Benjapholchai said investors were worried about the health of His Majesty the King, who had spent several weeks in Siriraj Hospital recovering from a lung infection.

She urged investors to monitor official announcements rather than hearsay.

In its latest statement yesterday evening, the Royal Household Bureau said His Majesty could take more food and was receiving medication and physical therapy.

Patareeya insisted the Thai stock market's fundamentals remained unchanged, with an attractive price-to-earnings ratio, dividend yield and return on investment.

"There was heavy selling in the morning session. Following the mid-day break, investors appeared to be more prudent. The past one to two days are quite abnormal, and the short-term hiccup should not affect new initial public offerings," she said.

Globally, stock markets rallied yesterday after Wall Street hit its highest level in a year on a wave of positive company earnings news.

The Dow Jones Industrial Average exceeded the 10,000-points level for the first time since October 7, 2008.

Bangkok bucked the trend, ending 5.3-per-cent down on concerns over the condition of the 81-year-old monarch.

On Wednesday, the SET Index plunged 2.04 per cent. At yesterday's closing of 692,72 points, the market had surrendered 54.95 points, or 7.3 per cent, in two days.

Finance Minister Korn Chatikavanij said the sell-off since Tuesday was only normal, because the SET had gained more than 65 per cent this year. He also attributed the decline to market sensitivity to negative rumours.

While Korn suggested there was no need to clamp down on the unconfirmed reports, he was said to be planning to give a press conference at Siriraj this morning after signing the well-wishers' album for His Majesty.

Foreign brokerages also blamed profit-taking for the SET's free-fall. Sources from foreign securities houses said the lack of clarity on the political situation could lead to further drops in the SET, to as low as 650 next week, because foreign investors were extraordinarily alarmed about the issue.

One source said the rumours coincidentally started after a correction in regional markets, which sparked foreign retreats. He implied that without the rumours, the market should not slide further, because it had given up nearly 10 per cent in the past two days.

UOB Asset Management chief executive Vana Bulbon admitted it was difficult to say whether foreigners would continue unloading shares amid the uncertainty. While the correction was a positive for market stability, some brokerages might be selling shares short to buy them back at lower prices, he said.