The Thai stock market's slide could be extended and the benchmark index could fall below the psychological 1,300-point level, given that there is no end in sight for foreign investors' exodus, say analysts.
"Foreign investors' selling spree won't dwindle any time soon. Their sell-off has been seen in all asset classes. They don't care about fundamentals now," said Pichai Lertsupongkit, a senior vice-president of Thanachart Securities.
Offshore investors have sold a net 44.9 billion baht worth of Thai shares this month through Friday and 66 billion year-to-date.
They were net sellers of 3.84 billion baht on Friday.
The Thai stock market, like others across the world, has been under selling pressure from foreign investors.
They are concerned the US Federal Reserve's potential exit strategy could end the cheap funding era and dampen demand for emerging markets' assets.
The Fed has recently been optimistic about the US economic outlook and signalled tapering its US$85-billion-a-month asset purchases later this year before terminating it in mid-2014.
The Stock Exchange of Thailand (SET) index has dived nearly 15% from the year's intraday peak of 1,643.43 points on May 21.
It has gained 2.45% year-to-date.
Apart from equities, foreign investors are unloading bonds, gold and other commodities.
Mr Pichai said the SET index could fall to 1,250 points should it fail to stay firmly above 1,350.
Investors can start snapping up stocks when three signs emerge: bond markets stabilise, Asian stocks begin to pick up and the baht strengthens.
The SET's intraday low this year was 1,351.95 points on June 13, but the market successfully clawed back above 1,400 points after falling below that level several times in recent days.
It closed last week at 1,400.50 points on Friday after diving to the day's low of 1,354.62.
Paiboon Nalinthrangkurn, chairman of the Federation of Thai capital Market Organizations and chief executive of Tisco Securities, earlier said foreign investors still hold Thai shares worth 35% of the market capitalisation after selling a net amount of 66 billion baht year-to-date.
But uncertainty remains, as no one knows whether long-term global funds will follow suit by adjusting their portfolios.
Noppadol Piriyawut, an assistant vice-president of Thanachart Securities, said the market could stage a technical rebound this week after the recent sharp fall.
A lull could follow before another wave of foreign investors' liquidation continues.
New trigger funds and window-dressing by funds could also lend some support to the market this week, Mr Noppadol said.
"It's possible we'll see a new low for this year, and 1,300 is a good entry point for investors," he said, adding that the SET will likely fall below 1,300 points if the major support level of 1,350 cannot absorb foreigners' selling pressure.
"There is no end in sight to their selling," he said.
Usara Wilaipitch, a senior economist at Standard Chartered Bank (Thai), estimates the baht could depreciate to 31.50 or even 32 to the US dollar in the third quarter.
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Writer: Oranan Paweewun