SET index plunges on profit-taking, taper concerns

Thai shares yesterday tumbled 3.37% as investors locked in profit after the recent rally and concerns over the US Federal Reserve’s stimulus stance return on comments by a Fed bank president that the the programme’s tapering could start next month.

The SET index, the worst performer among its regional peers yesterday, plunged at the opening bell and headed south further to close the market at 1,436.68 points in heavy trade worth of 50.63 billion baht. Local institutional investors were the largest sellers with a net amount of 2.48 billion baht, followed by brokers at 1.66 billion baht and foreign investors at 299.18 billion while retail investors bought 4.44 billion baht more than they sold.

The main gauge surged almost 230 points or 18.17% from the year’s closing low of 1,260.08 on Aug 28 to 1,489.06 at the close on Thursday.

‘‘The Thai stock market is now in a dearth of fresh positive news. However, the slump could be short-lived as we don’t expect the Fed will scale back its stimulus programme this year,’’ Maybank Kim Eng Securities vice-president Padon Vannarat said.

The Fed would not begin rolling back the monthly $85-billion asset purchases before Ben Bernanke’s tenure ends in January, he said.

St Louis Federal Reserve Bank president James Bullard’s comments that the programme could be wound down next month, depending on economic data, outweighed China’s upbeat preliminary HSBC Purchasing Managers’ Index for September and sent some markets into negative territory.

Last week, Fed chairman Bernanke surprised the market by putting on hold a plan to pare the stimulus. He did not say when the first step will take place.

Mr Padon said the SET could rise to at least 1,500 points this year.