12:53 PM
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The Stock Exchange of Thailand index dropped 39 points to close at 990.59 in trade worth 32.5 billion baht. Large-cap stocks were subject to heavy sales.
Kasikornbank (KBANK) shares fell 4.45 per cent to close at 118 baht in heavy trade worth 1.7 billion baht, followed by PTT shares falling 3.21 per cent to 302 baht in trade worth 1.88 billion.
Advanced Info Service (ADVANC) closed at 123.50 baht, down 2.37 per cent, in heavy trade worth 1.69 billion baht.
Other markets around the region also dropped sharply on Thursday. The Hang Seng Index fell 912.22 points or 4.85 per cent to close at 17,911.95 points, the Nikkei 225 dropped 180.9 points or 2.07 per cent to close at 8,560.26, and the Straits Times Index closed down 71.26 points or 2.55 per cent at 2,720.53 points.
(In the opening minutes of Wall Street trading Thursday evening Thailand time, the Dow Jones industrial average was down 301.06, or 2.7 per cent, at 10.823.78. The Standard & Poor’s 500-stock index lost 2.6 per cent, and the Nasdaq composite was down 2.7 per cent.
(In afternoon trading Thursday in Europe, the benchmark Euro Stoxx 50 index, the FTSE 100 in London and the CAC-40 in Paris were all down between 4 and 5 per cent.)
Asia Plus Securities said global stock markets remained sombre after the Fed failed to come up with any fresh drivers to stimulate the economy or the markets in the short term.
Global crude oil prices would continue its decline, it added.
After meeting for two days, the Fed decided that it would keep its near-zero benchmark interest rate for two more years.
It also announced a plan, dubbed Operation Twist, to issue long-term instead of short-term government bonds, which will help increase the maturity period of the country's average debt from six years to eight, while hoping that a decrease in long-term interest rates will benefit investors, particularly homebuyers and businesses.
At the same time, liquidity problems in the euro zone are significantly worsening. Commercial banks in Europe have become more cautious about interbank lending, leading to greater dependence on European Central Bank loans.
Analysts believe the EU situation is close to the magnitude of the 2008 US sub-prime crisis, which if it occurs would disrupt businesses' financial transactions, especially trade financing.
Consequently, the EU crisis has pushed down the euro against other major world currencies and made the US dollar index strengthen cautiously.
Parin Kitjathornpitak, the research manager at Far East Securities, said Thursday's SET close was the lowest since the March 11 tsunami in Japan, when the index closed at 984.55 points.
The Fed's failure to announce a third round of quantitative easing or QE3 also disappointed investors, leading Thai shares to fall accordingly.
However, Mr Parin insisted Thailand's economy remains strong and said the sell-off occurred because the investment climate depends more on investor sentiment than economic fundamentals.
Stock markets in Thailand and elsewhere fell more than expected, especially Indonesia, which plunged 8.88 per cent on disappointment over the absence of QE3, he said.
"Today, the focus remains on the EU and US markets, and it will be difficult to predict if and when the negative factors will cease," he said. "The SET index for Friday is expected to see a support level of 980 points and a resistance level of 1,000 due to investors' loss of confidence."
However, Mr Parin said next week could bring a rebound on end-of-quarter window dressing by big investors. If so, it would be a good time to take short-term gains.
In the gold market, YLG Bullion International said the Fed's Operation Twist was aimed only at keeping long-term interest rates down, and this appears to have disappointed gold investors.
Gold will range between US$1,700 and $1,790 an ounce in the short term, say YLG analysts, though it should continue to rise if the world economy remains weak
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