The stock market is once again likely to fall below the psychological 700-point level due to the widespread anxiety over the current political uncertainty.

Questions over whether the October 15 election will take place as scheduled and whether caretaker Prime Minister Thaksin Shinawatra will once again return to the premiership are key causes of concern.

Sombat Narawuthichai, secretary-general of the Securities Analysts Association, said the market could fall to about the 690 level in response to the current strife.

In particular, the uncertainty surrounding Thaksin's fate keeps investors at bay, he said.

The recent clashes between the pro- and anti-Thaksin camps have stoked fears that the situation could collapse into chaos, delaying the upcoming vote.

Trade on the Stock Exchange of Thailand moved in a roller-coaster throughout the

day yesterday before closing up 0.05 per

cent at 706.30. Turnover was thin at Bt7.58

billion.

Sombat said the buying spree by foreign investors was slowing because it was unlike-

ly that the baht would make further gains against other major currencies. The baht

has emerged this year as the strongest Asian currency against the greenback, gaining 10

per cent.

"However, if the stock market dips below the 700-point barrier, investors will snap up stocks," he said. Prachaya Kulvanichpisit, executive director and deputy managing director of Phillip Security (Thailand), echoed Sombat's view, saying the market would probably slump below the 700-point level because of political uncertainty.

"The Thai bourse has risen ever since His Majesty the King endorsed a Royal Decree to set the next general election. However, investors are concerned whether the next general election will be held on October 15."

Kitti Hamnilrat, senior vice president of Ayudhya Securities' Research Depart-

ment, meanwhile, said the fights that have broken out between the pro- and anti-Thaksin camps had barely affected trade by retail investors.

However, he said the possibility that the election could be pushed back was having a psychological effect.

"If the election is postponed, and there's no other good news, the doldrums sentiment is likely to continue. Most listed companies are expected to show sluggish performance in the second half of the year," said Kitti.

A source at another brokerage firm agreed that the clashes had had only a minor effect on retail trade.

"The two sides have been squaring off for some time. We have seen people support and oppose the prime minister for quite a while. This should not be a factor," the source said.

"Everybody is focusing on the election in October. Everybody knows that the selection of the Election Commission may not be completed on time, so it would be okay if it were delayed," the source added.

Viwat Techapoonpol, Tisco Securities' head technical analyst, said the fights were part of the political risk that investors had already taken into consideration.

"The most important thing is whether or not the October election takes place. Postponement would mean delays in forming the new government as well as a delay in investment," said Viwat.

Meanwhile, SET executive vice president Vichate Tantivanich said the clashes between two groups had increased concern over political uncertainty among retail investors.

"The thin trading volume could be ascribed to retail investors' anxiety about the political situation. If the uncertainty remains, investors will avoid investing because investors don't like uncertainty," he said.

Piyarat Setthasiripaiboon,

Oranan Paweewun

The Nation