The stock exchange looks set to be the first victim of the political crisis, which has intensified with the opposition parties' call for a boycott of the April 2 election.

The SET index could drop by 5 to 10 percentage points as soon as the market bell rings today, one broker warned.

Business leaders believe investor confidence could also be dented if the conflict is prolonged and that could lead to a decrease in new investments.

"This directly affects investor confidence and could discourage private investors from putting money into new projects," said Federation of Thai Industries (FTI) vice chairman Plengsakdi Prokaspasat.

He said the political turmoil had come at a bad time, given that instability was the only flaw that could hurt the Thai economy as economic fundamentals are in a healthy condition. He noted that, despite the conflict, export-oriented companies in all sectors had incoming orders.

"Before, we believed that [Prime Minister] Thaksin would agree to constitutional reform. But under the new situation, new private investment could be stalled because businessmen [now] have to wait and see how this conflict evolves," Srithai Superware chairman and managing director Sanan Angubolkul said.

He said that while some government projects could be delayed, Suvarnabhumi Airport should open this year as planned and this would help Thailand achieve regional aviation hub status, as well as helping local manufacturers by lowering transportation costs.

Kim Eng Securities (Thailand) believes the Thai stock market will plunge at least 5 points to 10 points today following the opposition parties' call for a boycott of the election.

A source at the securities company said that while foreign investors were buying yesterday, with net investments of Bt4.7 billion showing continued confidence in the Thai market, local investors could sell off stocks today because of fears about the political uncertainty.

"If Thaksin won't resign, there could be mobs colliding with mobs and the market will plunge even further," he said. "I think this would finally lead to Thaksin's resignation."

Advertising Association of Thailand president Chaipranin Visudhipol said the economy was "heading into limbo", as businessmen are unable predict the future.

"The election will tell who the winners are and where the economy is heading. But now, they have no idea if they should turn left or right," he said.

"The economic fundamentals rely on political stability. If politics gets messy, the economy will also be in a turmoil."

Chairman of the FTI's Auto Parts Club, Chavalit Jariyawatkul, said a boycott of an election had never occurred before. He believed political parties should discuss the situation over coming days or reschedule the election day.

"I think the Opposition has called the boycott are because they have been given so little time," he told Krungthep Turakij.

"A compromise would be a good way out and would reduce economic impacts, as all businessmen prefer political stability."

One businessman, who asked not to be named, said that if the situation continued without any compromise, Thaksin would have only one option left to defuse public pressure: Resign.

Business Desk

The Nation