Stock exchange plunge as political heat rises

Wall Street woes resulting in a selloff in the Asian regional stock markets also exacerbated the situation.

The baht yesterday fell to 34.22 to the US dollar, its weakest level since last September, from 34.10 late on Monday.

The composite Stock Exchange of Thailand (SET) Index yesterday was the region's worst performer, followed by the Shanghai Stock Exchange, which sank 2.62 per cent, while other bourses in the region fell less than 1 per cent.

Thai shares started the day with a mild fall, then nosedived in the late morning session before retreating to close the market at 668.92 points - a 1.37percent drop.

Turnover was thin at Bt7.46 billion. Foreign investors yesterday sold Thai shares with a net position of Bt375.79 million.

PTT, Thailand's largest marketcap stock, lost 0.77 per cent to Bt258, PTT Exploration and Production was off 2.05 per cent at Bt143, Thai Oil fell 2.01 per cent to Bt48.75 and Bangkok Bank sank 1.72 per cent to Bt114.

The stressful political situation has put pressure on investment sentiment in the stock market, SET president Patareeya Benjapholchai said yesterday.

Prime Minister Samak Sundaravej late yesterday issued an ultimatum, saying this was the protesters' last chance, because the government had acted with the utmost restraint so far in dealing with the PAD protests, while Interior Minister Kowit Watana ordered those intruding into the Government House compound to disperse.

Investors kept themselves at bay, waiting to decide whether the situation would become more serious, she said.

Patareeya said she personally would to see this end, because a prolonged situation would hurt investors' confidence.

"Thailand is like being in a nightmare. How can the country exist when people don't obey the rules?" Asia Plus Securities CEO Kongkiat Opaswongkarn was quoted by Bloomberg as saying.

"The wounds of disagreement have worsened in the last two years."

A Kiatnakin Securities analyst remained optimistic the protest would be peaceful and that the SET Index would move within the range of 665681 points.

Should the situation turn violent, the SET Index would break through the important 660point barrier, the analyst said.

"It's difficult to find attractive stocks right now, due to several risks, including the PAD's mass rally, the upward interestrate trend and the direction of foreign stock markets," the analyst said.

The analyst recommended investors hold onto cash for the time being.

Mayuree Chowvikran, senior analyst at Kim Eng Securities (Thailand), said the political situation had moved into its highest risk level, and the SET Index would be able to weather the political strife at 660650 points.

Mediumterm investors wanting to invest for three to six months can accumulate good fundamental stocks, because foreign investors' selling spree will be alleviated following the sharp decline in Thai share prices so far this year, she said.

A Sicco Securities analyst said the political situation would likely be prolonged and that this would put pressure on the SET index. The US financialinstitution debacle will also aggravate conditions, the analyst said.

The analyst also suggested investors wait and monitor progress in the political situation.