By Willa Plank and Kenan Machado
Lions Gate/Courtesy Everett Collection
The stock market plunged Wednesday in Thailand amid simmering concerns about the health of Thai King Bhumibol Adulyadej. The country’s SET Index /zigman2/quotes/210598047/delayed TH:SET +0.83% dropped as much as 6.9% at one point, before closing down 2.5% at 1,406.18 points.
Thailand’s currency and stock market dropped to multi-month lows Wednesday, after Thai royal authorities said on Sunday that the 88-year-old king’s health wasn’t stable.
The Thai baht /zigman2/quotes/210561849/realtime/sampled THBUSD +0.0644% was among the worst-hit Asian currencies on Wednesday. The dollar rose as much as 1.3% against the baht Wednesday at one point to hit 35.89, the highest level since Feb. 3, according to Thomson Reuters data.
The pair had been stable for much of the day, but moved sharply from 35.48 at around 3 a.m. Eastern Time to 35.89, Thomson Reuters data showed, before settling at its current level. The baht was last seen down 0.8% at 35.71 to the dollar.
The market was reacting to concerns about the king’s condition and succession plans, said Tareck Horchani, deputy head of Asian Pacific sales trading at Saxo Capital Markets.
Amonthep Chawla, head of research at CIMB Thai, said domestic issues in the country were also likely triggers for the sharp selloff in the baht. There were warnings issued by authorities of terrorist attacks that could have weighed on the currency and stocks, he said.
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Other Asian shares were also broadly lower Wednesday as the odds rose for a U.S. interest rate increase in December, leading to worries that foreign investors will pull money out of Asia.
“People are starting to wake up that the hike is coming,” said Hao Hong, head of research at Bocom International. “The Fed is running out of excuses not to hike.”
The CME Fed Fund futures showed the market’s expectations of a rate increase in December rose to 74.5% from 69.5% a day earlier.
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“This is the first time [in a while] the Fed Fund futures have traded above a 70% [probability] for hiking,” said Heng Koon How, a strategist at Credit Suisse. “The market is taking it for real now…the market is very concerned.”
The market will be scrutinizing the minutes from the Federal Open Market Committee meeting in September, to be released later Wednesday.
Financials fall in Japan
In Japan, stocks were weighed down by losses for steel and financial companies. Weak second-quarter results from global aluminum major Alcoa Inc. /zigman2/quotes/200686102/composite AA +3.28% led to declines in Japanese steelmakers. JFE Holdings Inc. /zigman2/quotes/204336633/delayed JP:5411 +3.61% fell 5.2% and Nippon Steel & Sumitomo Metal Corp. /zigman2/quotes/209782682/delayed JP:5401 +5.71% declined 3.5%.
Among financial stocks, Mitsubishi UFJ Financial Group Inc. /zigman2/quotes/207520099/delayed JP:8306 +0.18% lost 2.4%. Mizuho Financial Group /zigman2/quotes/204507985/delayed JP:8411 +1.29% lost 2.6%.
In other markets, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.27% pared its earlier losses and closed down about 0.1%. BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP +0.58% was down 1.5%, Oil Search Ltd. /zigman2/quotes/204702973/delayed AU:OSH +1.29% fell 2% and Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO +1.07% shed 0.4%.
Hong Kong’s Hang Seng /zigman2/quotes/210598030/delayed HK:HSI -0.09% was heavily weighed down by financials. Bank of Communications Co. /zigman2/quotes/203442771/delayed HK:3328 +1.58% led declines with a 2.9% tumble followed by a 2.8% fall in Bank of China Ltd. /zigman2/quotes/204682472/delayed HK:3988 +0.96% and a 1.8% drop for Industrial & Commercial Bank of China Ltd. /zigman2/quotes/201401473/delayed HK:1398 +1.00%
China’s plans to deleverage firms with high debt ratios by swapping loans for equity are expected to be a drag on Chinese banks, say analysts. The specific worry is that banks will be saddled with near worthless equity holdings after swapping for bad loans.
In currencies, China fixed the yuan 0.2% weaker against the U.S. dollar Wednesday, setting the currency at its weakest level since Sept. 15, 2010, according Thomson Reuters data.
This was the third consecutive day of a weaker yuan fixing after China’s weeklong holiday, and the move followed broad dollar strength in the New York session on the back of heightened expectations for a rate increase this year.
— Saumya Vaishampayan, Yifan Xie and Ese Erheriene contributed to this report.