The Stock Exchange of Thailand (SET) started the day with a mild tumble and headed further south to hit the lowest level of the morning session at 629.64, a nearly 19-point drop, before rebounding slightly.  

The SET composite index tumbled again shortly after the Council for National Security (CNS) issued a warning that the Finance Ministry and the Stock Exchange of Thailand were major bombing targets, sliding to the day's trough at 626.85 or a loss of 3.29 per cent before recovering to finish at 628.19, a 3.09-per-cent fall for the day.

Market sentiment was also weighed by talk since Thursday of a "counter-coup" against the current military-appointed transitional government. Government and military officials have denied the rumors.

DBS Vickers Securities (Thailand) said that investors had unloaded shares yesterday to reduce risk over the weekend.

"The stock market feels the pinch of the unrest, and this undermines business, consumer and investor confidence. Economic growth tends to be slower than estimated," the broker said.

The CNS yesterday issued a warning to all government agencies, including the Finance Ministry, urging them to be alert in the current situation.

PrimaVest Asset Management president Phuemphol Prasertlum rushed to soothe market jitters by saying that foreign investors would return to the Thai stock market once the uncertainty ended.

The steep fall in the market can be ascribed to a decline in investor confidence prompted by the Bank of Thailand's measure to counter baht speculation, the New Year's Eve bombings in Bangkok and rumours of another coup, he said.

Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula yesterday tried to soothe market jitters by saying that the steep fall in stock prices should be short-term.

Pridiyathorn said the stock market should recover once worries over the blasts in Bangkok subside as the country's economic fundamentals remained solid, with foreign direct investment and exports continuing to grow.  

The SET index has so far shed 102.36 points, or 14 per cent, since the central bank introduced a 30-per-cent reserve-withholding requirement on foreign capital on December 19 to fight against baht speculation.

Stocks of movie theatres and retailers saw a drop as these businesses could be adversely affected by the bomb blasts. Major Cineplex Group Plc fell 9.59 per cent to a one-year low of Bt13.20, Erawan Group Plc lost almost 13 per cent at Bt3.10 and Central Pattana Plc (CPN) was down 5.58 per cent at Bt19.20.

Meanwhile, Thai Bankers' Association chairwoman Jada Wattanasiritham said yesterday that the association and foreign banks would set up a committee to coordinate security among banks. The committee will pay attention mainly to the safety of life and assets at members' branches across the nation, she said.

The association, which previously set up a committee to oversee security of banks in the South after 23 branches in the restive region were bombed last year, held a meeting with several foreign banks yesterday to discuss the recent bombings in Bangkok.

In the many bank branches nationwide, each employee will look out for any suspicious incident. Banks will also keep foreign customers and tourists making transactions at foreign-exchange booths informed about the country's situation.

Foreign banks at yesterday's meeting also shared their experience with security issues overseas, including measures that Thai banks could adopt. The meeting did not discuss the impact on business because it is too early to assess, and the association was mainly concerned about public confidence, Jada said.