Court's decision may cause foreign investors to shun Shin group stocks
Foreign stock investors are expected to avoid investing in Shin Corp Plc following the decision of the Supreme Administrative Court to hear a case against the telecom giant for alleged violations of foreign-ownership rules.
Foreign brokerage houses said the upper court's decision yesterday to reopen the case would prompt foreign stock investors to avoid Shin.They added that it was a natural reaction for foreign stock investors to avoid companies that had legal charges pending. "The major foreign funds will not invest in the stocks of such companies, because it may affect their unit-trust holders. Even though the share prices of such companies drop dramatically after facing legal suits, the funds have no reason to invest in them," said one foreign brokerage house. Rangsit University law lecturer Sastra To-on filed a lawsuit against Shin with the Central Administrative Court in March, claiming the group was not eligible to hold the state-granted mobile-phone and satellite concessions after it was sold to Singapore's state investment arm Temasek Holdings in January. The lower court declined to accept the case on the grounds that Sastra was not personally affected by the deal. But the upper court yesterday overruled the lower court's decision, claiming Sastra was affected by the sale, because the transfer of concessions to an "alien" firm could lead to damages for local customers. In the next step, the lower court will hear the case. Shin businesses include Advanced Info Service Plc, Thailand's largest cellular operator with more than 17.5 million subscribers, satellite operator Shin Satellite Plc (ShinSat), and free-television operator iTV Plc. Brokerage house Siam City Securities pointed out that the decision of the upper court to ask the lower court to take up the case would affect Shin shares if Shin were ruled to be in violation of foreign-ownership laws. In the case of ShinSat, its concession is unlikely to be revoked, as the Information and Communications Technology Ministry, which owns the concession, recently affirmed that ShinSat was a Thai company. A TSEC Securities Co Ltd analyst thought Shin's business concessions were unlikely to be revoked, because the case was not "incurable". "One solution is that Shin must adjust its shareholding structure to be in line with foreign-ownership laws," said the analyst. The analyst added that the target price of Shin should be about Bt35, while that of ShinSat was Bt15, iTV Bt1 and AIS is Bt100. Stock Exchange of Thailand president Patareeya Benjapholchai said she hoped the court would hear the case carefully and take into consideration any possible impact on the stock market. Siriporn Chanjindamanee The Nation
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