SET nosedives 3.30% on Cyprus, domestic concerns

Thai shares nosedived by as much as 60.58 points or 3.96 per cent in the morning session to 1,468.94 points on the escalating chaos in Cyprus and concerns at home.

At the end of the day, the loss was narrowed to 50.55 points or 3.3 per cent to close at 1,478.97 points.

Stock Exchange of Thailand President Charamporn Jotikasthira viewed the slump part of normal correction and profit taking, after the rapid rise in the SET index. The index has jumped by 50 per cent in the past 14 months (January 2012-February 2013).

He said that from another angle, the correction offers a good opportunity for investors to accumulate promising stocks.

"After a sharp rise, it can head down," he said, noting that investors will then realise that investing in the stock market is like a two-sided coin.

Despite the fall today, the SET index has still advanced 6.25 per cent from the end of 2012, against the 2 per cent decline in the the MSCI AC Asia Pacific Index (ex-Japan).

The exchange held a press conference today at 4.30pm.



The morning slump followed a big loss in the five trading days. Aggregate loss in the past five days was 4.29 per cent, after the Stock Exchange of Thailand composite index hit the 19-year high at 1598.13 points on March 15.



Aside from the Cypriot crisis, brokers attributed the sharp fall to two political reasons: the Bt2 trillion borrowing bill may violate the Constitution and Prime Minister Yingluck Shinawatra may be indicted for conflicting asset declaration. There were also concerns that the central bank will announce capital control measures to slow down capital inflows.

Tisco Securities said in a research note that the Bank of Thailand is not expected to resorto to severe measures. "We’re more concerned about the differing views of the government and the central bank on baht stabilisation. This affects foreign investor confidence and this could draw political interference."

In Cyprus, protesters gathered outside Parliament as President Nicos Anastasiades maneuvered stave off financial collapse. Seeking to unlock an international bailout to avoid defaults, the Cypriot central bank proposed a bill to overhaul the banking system that would allow Cyprus Popular Bank, the country s second-largest lender, to avoid a catastrophic bankruptcy and protect insured deposits to an amount of 100,000 euros ($129,000).

Earlier, there were expectation that the SET index, buoyed by the strong economic fundamentals, would rise to 1,850 points this year.