The Thai stock market yesterday plunged 2.44%, bucking most regional trends, as investors worried about heightening political tensions after a House committee scrutinising the amnesty bill has voted the controversial draft legislation with blanket proposals.
The SET index, the worst performer among regional peers, yesterday fell from the opening bell and headed south to the day's trough of 1,446.40 before bouncing back marginally to close at 1,448.54 points or a 36.18-point drop in a single day in brisk trade of 45.46 billion baht.
Big-market cap stocks were at the centre of the selling spree. True Corporation (TRUE) dropped 6.6% to 9.20 baht, Advanced Info Service (ADVANC) went down 2.2% to 260 baht, and Kasikornbank (Kbank) shed 3.64% to 185.50 baht.
Institutional investors and brokers pulled 4.03 billion baht and 690.37 million baht, respectively, out of the market, while retail and foreign investors bought 1.06 billion baht and 3.66 billion baht, respectively, more than they sold.
Local political concerns overshadowed the rising optimism that the US Federal Reserve will delay its stimulus cuts to next year which bolstered other stock markets in Asia.
The Jakarta Stock Exchange Composite yesterday rose 0.70%, the Nikkei 225 gained 0.91%, and Hong Kong's Hang Send Index edged up 0.42%.
Pattera Dilokkrungthirapop, chairperson of the Association of Securities Companies (Asco), said local political risks are escalating as the controversial amnesty bill will be on the table for the House's second reading and this could intensify anti-government street protests.
She said the US public debt ceiling issue remains a pressure on the market as it has not been completely solved.
Congress recently reached an agreement to temporarily extend the debt ceiling negotiations to next February.
However, the market has largely discounted the issue.
"Local politics from now on is in the spotlight and is becoming a risk factor, while the US debt ceiling movement is another factor of which investors should be aware," said Mrs Pattera.
"There is no positive news in sight. Our economic condition remains uncertain due to the fragile state of the global economic recovery. Local political risk is increasing. The market is unpredictable as a slew of uncertainties surrounds the market," she said.
Prakit Siriwattanagase, an investment strategist at Asia Plus Securities, attributed the drop in the SET index yesterday to the retreat of investors as during the past few weeks, the investors bought as high as 12 billion baht while brushing aside the political effect, saying it was slightly affected as it was only speculation.
"People are quite concerned about the possibility of political unrest after the opposition party declared that they will join the rally by anti-government groups if the amnesty bill gets the nod for the third reading. Even though the bill has not yet gone through that stage, unsurprisingly investors were taking profit in the wake of uncertainty," he said.
However, he recommended buying for some sectors such as tourism, transportation and construction that would benefit from government policies.