Bloomberg reports:

The benchmark index may decline to as low as 617, Kim Eng Securities (Thailand) Pcl wrote in a report today, without specifying the time period. The forecast is based on technical analysis, the brokerage said in a separate note. The measure fell 1.1 percent to close at 708.76, a third day of decline.

“We maintained our call for 100 percent cash,” the brokerage said. “There have been emerging signs that the SET will decline further. Investors are concerned about the government’s stability.”
…
Overseas investors sold a net 1.1 billion baht of Thai stocks yesterday, the second-highest in two months, according to the Stock Exchange of Thailand’s data.

NOTE: This is significantly a large drop as just a few weeks ago some were predicting that the SET would reach 800 by year’s end.

Reuters:

“The SET has fallen amid improving exports and better-than-expected third-quarter bank results, suggesting that all the good news may be priced in,” he said.

BP: Is the government less stable than a week ago? Is this really code for other concerns? Last week, the SET fall on rumours of HM the King’s health. On this, we also have VOA on why:

David Cohen is the director of Asian economic forecasting at Action Economics in Singapore.

“I think he’s [HM the King] been viewed as a source of political stability, given the considerable political turmoil that Thailand has experienced over the past few years,” Cohen said. “So, I think that was a source of concern, maybe just a reflex sale.

AP:

“The market’s skittishness is traceable to the possibility of a destabilizing power vacuum if the monarchy’s power diminishes” after Bhumibol dies, the political risk consultancy Eurasia Group said in an analysis of last week’s stock slide.

“A mishandled succession and the rise of a less-respected monarch could lead to an intense round of political jostling as key players try to increase their power relative to the monarchy,” it warned, suggesting that a worst-case scenario could split the ruling class and trigger popular unrest.

More importantly, this from FT:

The stock market has become a barometer of the fear that many Thais have for the future. “Whatever is happening with his health, there is the perception of a storm brewing and that at some point it is going to burst,” said one analyst who declined to be named because of the sensitivity surrounding the royal family in Thailand.

“There are a lot of people who are trigger-happy about this event: they are afraid that when it happens the market is going to fall 10 or 20 per cent,” he said.

BP: Don’t really see what the recent fall has to do with government stability – the government’s financial accounts are not looking the best, but this is separate from government stability. Yes, the Thaksin crew are going on the offensive, but there is no signs of cracks in the coalition yet. This is concerns about what may happen. As VOA, AP, and FT show above, there is concern about what next. The main reason is that with a Puea Thai-led government or a Democrat-led government, foreign investors will largely be happy. Neither of them are going to pass some legalisation altering the status quo regarding foreign investment or foreign businesses, but the question is what happens if a certain event transpires, will there be a civilian government? Would the military stage a coup? Foreign investors just need to look at the capital controls and the Foreign Business Act changes during the “technocratic” military-installed government at the end of 2006 and 2007. Both were done suddenly and neither of which BP views would have happened if there was an elected government in place. It is the question of, what if that worries people.

h/t Absolutely Bangkok for one of the links.

btw, Andrew Walker of New Mandala was on ABC Radio (Australia) two days ago and was talking about the stock market fall.