Thai shares yesterday nosedived 4.73 per cent, tracking Wall Street's tumble overnight as weak US retail sales data dented optimism about an economic recovery.
The SET Index took the hardest blow in the region. Thai shares were in negative territory throughout the day and closed at the day's low of 526.55 points. Turnover was brisk at almost Bt30 billion.
PTT fell 6.31 per cent to Bt208, PTT Aromatics and Refining sank 7.22 per cent to Bt18, PTT Exploration and Production slumped 7.63 per cent to Bt115, Thai Oil fell 9.47 pert cent to Bt38.25, Airports of Thailand slumped 13.21 per cent to Bt23, and Kasikornbank lost 8.04 per cent at Bt51.50.
Foreign investors sold shares with a net position of Bt1.06 billion. Since March, they have bought Thai shares with a net value of Bt9 billion.
Other Asian stock markets also suffered sharp losses. The Jakarta Composite Index lost 3.85 per cent, the Hang Seng Index dropped 3.04 per cent, the Straits Times Index shed 2.89 per cent, the Nikkei225 fell 2.64 per cent and South Korean shares closed 2.37 per cent lower.
An analyst at Globlex Securities said the steep slump in Thai shares could be ascribed to renewed anxiety over the US economy, after retail sales in April were worse than expected and the realestate foreclosure rate in the same month surged 32 per cent from March.
Thai shares have been overvalued and the SET Index's decline was in line with expectations, the analyst said.
Paiboon Nalinthrangkurn, managing director of Tisco Securities and president of the Securities Analysts Association, said the recent SET rally was liquiditydriven rather than based on fundamentals.
The world economy in the fourth quarter will remain in contraction, he said.
"As long as there is no clear sign of economic recovery, the stock market will not turn into a bull run. The recent rally is not sustainable," he said.
Investors over the past two months have switched capital from moneymarket funds to the stock market, following foreign investors deciding at the beginning of the year to park more of their money than normal in such funds, Paiboon said.
The "stress test" on banks did not cover around 8,000 small and mediฌumsized banks around the United States, and the US$75 billion (Bt2.6 trillion) in fresh capital required by 10 of the 19 largest US banks is not enough for newloan extension, he said.
Meanwhile, Stock Exchange of Thailand president Patareeya Benjapholchai said yesterday that the bourse would review its marketcapฌitalisation target of Bt12 trillion by 2013, as the global economic turbulence had sent a ripple effect to stock markets around the world.
At present, the SET's market capitalisation amounts to around Bt4.33 trillion, compared with Bt6 trillion at the precrisis level.
"The SET wants to analyse the situation before setting a new target, as we need to forecast when we will ride out the crisis," she said.
Patareeya warned investors that they should carefully consider all available information before putting their money in the stock market.