The benchmark SET Index lost 2.65% to close at 1,293.97 points, its longest losing streak since 1998. Siam Cement Pcl (SCC) and Total Access Communication Pcl (DTAC) dropped more than 3.6% and were among the biggest drags on the index. The telecom sector lost 3.94%.
The baht weakened 0.8% to 32.18 per US dollar, while the yield on 10-year government debt rose 14 basis points to 4.29%, the highest level since December 2009.
Thailand entered a technical recession in the second quarter of this year, according to figures released this month, while data yesterday showed exports unexpectedly fell last month. The country will probably post a current-account deficit of $550 million in July, according to a Bloomberg survey of economists.
"Companies with revenue from domestic markets should be affected by weak economic growth," Jintana Mekintharanggur, director of equity investment at Manulife Asset Management Co in Bangkok, which has about $200 million of assets, said. "Overseas investors are unlikely to bring money back into equity markets in Thailand and the region until there are signs of strong economic growth."
Overseas investors sold about $1.1 billion of Thai stocks and $1.2 billion of local bonds this month amid speculation that the United States Federal Reserve will reduce monetary stimulus this year. Outflows from Indonesian shares totalled $442 million, while investors withdrew $163 million from Philippine equities.
The three Southeast Asian markets led a four-year rally in global shares through May as growing local economies sent corporate profits to record highs and Fed stimulus spurred international investors to seek riskier assets. The SET index has dropped 21% from its May 21 closing high.
Thailand's gross domestic product unexpectedly shrank 0.3% in the three months through June from the previous quarter, when it contracted a revised 1.7%, the National Economic and Social Development Board (NESDB) said on Aug 19. The state agency cut its full-year expansion forecast to as little as 3.8% from a previous estimate of 4.2%. It lowered its export growth target to 5% from 7.6%.
Overseas shipments in July dropped 1.5% from a year earlier to $19.06 billion, the commerce ministry reported on Monday. Economists had expected a 0.8% increase, according to a Bloomberg survey. The country posted a trade deficit of $2.28 billion last month, compared with an estimate of $2.03 billion.
"Global investors are worried about slowing growth in the region," Kasamapon Hamnilrat, head of research at Krungsri Securities Co, said. "Weak export data may prompt more downward revisions in Thai GDP growth."
Siam Cement, Thailand's biggest cement producer, dropped 3.7% to its lowest close since Nov 30. Total Access slid 6.4%, the lowest level since April 12. CP All Pcl (CPALL), the country's largest convenience store operator, lost 2.9%.
The SET Index is valued at 11.4 times estimated profit for the next 12 months, the lowest level since July 2012, according to data compiled by Bloomberg. That compares with a multiple of 9.8 for the MSCI Emerging Markets Index.
Meanwhile, the Asian Development Bank (ADB) is considering revising down Thailand's GDP growth rate for this year, due to the slowdown.
The international financial institution initially predicted an economic growth rate of 4.9% this year, on the basis that the country's exports growth would stand at 8%. The adjusted rate is expected to be in the range of 4% to 4.3%, but has not been finalised yet and will be announced in October.
The ADB's planned revision of predicted GDP growth is in line with a recent readjustment from the NESDB. The government think-tank revised its 2013 GDP growth forecast down to 3.8%-4.3% from 4.2%-5.2%, due to sluggish exports and decreasing household spending.
The ADB expects Thai export growth to be lower than its earlier projection of 8% for the year, said the organisation's senior economist Luxmon Attapich.
However, economic sentiment would improve in the second half of the year supported by amendments to the government’s 2.2 trillion baht infrastructure investment bill . The project is expected to start from next year and will stimulate private investment and consumption, she added.
Ms Luxmon said the impact of current foreign capital outflows on the Thai financial markets and local currency is insignificant in comparison to other regional economies, particularly, Indonesia and India.
"With the central bank's solid international reserve and foreign exchange management, and the strong fundamental base of the country's banking system, Thailand has not been significantly affected by foreign capital outflow," she said.