The Stock Exchange of Thailand was hammered in June, falling from 1,663.41 points at the end of May to close the month at 1,568.33, a drop of 5.7%. The decline follows those of other markets around the globe, especially the Dow Jones which plunged by almost 10%.
We believe the main factor behind the fall in the SET was inflation which came in at 7.1% in May. Fear of recession in the US added to the concern after the Federal Reserve increased its policy rate by 0.75 percentage points, as the market expected. Messages from the US central bank have been fairly negative, cautioning that it may need to increase the rate by even more than expected later in the year to keep inflation in check.
In the second half of June, the SET dropped below the 1,600 level and hasn't managed to break back above that level since. In the last two days of June, the index plunged almost 2%, or more than 26 points, on recession fears. This trend has continued into this month, and on July 5, the SET reached its bottom for the year at 1,541.30, down another 2% over three trading days.
