SET slumps through 700-point barrier

The sell-off was due to investors' mounting anxiety over a spluttering economic rebound.

Concerns that the eight-month rally on the Stock Exchange of Thailand will fade after the government' stimulus policy is unwound also negatively affected the market.

The SET Index slumped from the opening bell before closing at 690.10 points, off the day's trough of 685.39. Turnover was moderate at Bt21.21 billion.

The main sell-off was seen in big market-cap stocks. PTT lost 3.19 per cent at Bt243, PTT Exploration and Production dropped 3.63 per cent to Bt146, Kasikornbank plunged 3.36 per cent to Bt79, Bank of Ayudhya was off 3.23 per cent at Bt18, Siam Commercial Bank dipped 2.8 per cent to Bt78.25 and Siam Cement fell 2.86 per cent to Bt204.

Taiwan's weighted index fell 2.37 per cent yesterday, while Japan's Nikkei-225 index lost 1.83 per cent, the Hong Kong Hang Seng Index dived 2.28 per cent and the Shanghai Composite Index was down 2.34 per cent.

The Dow Jones Industrial Average overnight lost 119.48 points (1.21 per cent) to close at 9,762.69.

CIMB Securities (Thailand) said in a note that the steep fall in Thai shares indicated the stock market was entering a downward trend.

Initially, the SET Index might test the key support level of 670 points, it said.

The broker said foreign investors' selling pressure was behind yesterday's steep decline, adding that the sell-off would continue as investors sense fourth-quarter earnings will not be as good as third-quarter profits.

CIMB recommended investors to hold cash to snap up stocks when the SET Index reaches 670 points. Banking and construction stocks are recommended buys.

Capital Nomura Securities said concerns that the South Korean and other central banks in Asia would be tightening their monetary policy to guard against bubbles also dampened the stock market.

The brokerage said investors who hold shares for one to three months should lower property, petrochemical and financial stocks in their portfolios and shift to stocks gaining benefits from the economic recovery, laggard stocks and dividend plays.

An analyst at Kiatnakin Securities recommended investors to downsize their portfolio and hold more cash if the SET Index fails to pull itself back above 700 points.

An Ayudhya Securities analyst, however, said the SET's bullish medium-term outlook remained despite yesterday's fall.

Investors should wait and see, the analyst said, as stock markets around the world are consolidating and there is a higher chance of making the wrong investment move.

An opportunity to buys stocks in companies expected to post stunning earnings in the third quarter will be seen when the SET Index is at 665-670 points, the analyst said, citing Preuksa Real Estate, Supalai and Thai Union Frozen Products.

Ruchir Sharma, 35, who overseas US$25 billion (Bt837 billion) in emerging-market stocks at Morgan Stanley, said in an interview in Mumbai that the global stock-market rally, which resembles the bull run between 2003 and 2007, would end as government spending slows after so-called easy money boosted asset prices.