Bangkok: Thailand's stocks fell yesterday, driving the benchmark index to a one-month low, after the government said the nation's deadliest political clash in two decades is expected to undermine growth.
The benchmark SET Index declined 3.3 per cent to close at 736.16, the lowest since March 15, ending the worst week since November 2008. Kasikornbank Pcl, the third-biggest lender by assets, fell the most in 11 months, while Siam Cement Pcl had its steepest drop in half a year.
"The instability is creating a massive risk premium," said Nader Naeimi, an investment strategist in Sydney at AMP Capital Investors, which oversees about $90 billion (Dh331 billion) globally. "We don't think valuation is compelling to have that kind of risk. The Thai share market will continue to struggle."
Finance Minister Korn Chatikavanij said yesterday that economic growth may be shaved by one or two percentage points, even without taking into account the impact on consumer confidence. At least 23 people died after anti-government protesters clashed with soldiers last weekend.
Thai equities are trading at 11 times estimated earnings, the lowest in Asia after Pakistan and South Korea, data compiled by Bloomberg show.
Selloff
Overseas investors sold a net 2.1 billion baht (Dh239.12 million, $65 million) of Thai shares on April 12, the most since November 23, according to the Stock Exchange of Thailand's data. They withdrew a net 5.2 billion baht over the last three trading sessions, halting 31 straight days of net purchases, the longest stretch since February 2005.
"The political situation is hurting consumer and investor sentiment," said Sukkawat Prasurtying, who oversees about $150 million as chief investment officer in Bangkok at Manulife Asset Management (Thailand) Co. "Things will go back to normal as soon as we get through politics."
The SET's decline today is the most among Asian benchmark indexes. Kasikornbank dropped 7.9 per cent to 84.75 baht, the lowest since February 24, and Krung Thai Bank Pcl, the nation's second-largest lender, retreated 6.9 per cent to 12.2 baht, the sharpest drop since May 14.
A good entry point for Thai stocks is when the SET falls below 650, which may happen around June, Naeimi said.
Thailand's tourism industry may be "decimated" by political unrest that spilled over into violence, Korn said in a phone interview. Airports of Thailand Pcl, Thailand's biggest airfield operator, slid 4.9 per cent to 33.75 baht, its lowest close since August 5.
