SET selling spree prompts scarcity of funds

Meanwhile the US House of Representatives was due to have a second vote on the US$700-billion (Bt24 trillion) rescue package last night after it was rejected once earlier this week.

The controversial plan lets the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. If it works, advocates say, frozen credit will begin flowing and prevent a serious recession.

Due to the US financial crisis, Supavud said, foreign investors are also unloading their holdings in other Asian stock markets, as they prefer to hold cash.

On the real economy, he said it would be great if Thailand could achieve 10-per-cent growth in export shipments next year.

This year's growth rate is estimated to be around 20 per cent, but the US crisis will likely hit Thailand's export sector significantly. In addition, the Euro-pean Union's economy is expected to slow down next year.

Supavud said there were also doubts about whether the $700-billion rescue package would be sufficient to prevent a serious recession.

Speaking at a seminar held by TMB Bank yesterday, he also noted that the US dollar would likely remain weak for the medium term.

Montree Sornpaisal, CEO of Kim Eng (Thailand) Securities, said that if consumers panicked the economic conditions would worsen.

Narongchai Arkaseni, chairman of the Export-Import Bank of Thailand, urged companies to pay more attention to their cash flow at this juncture.

As the US and EU face economic downturns, Asia and the Middle East will emerge as more important players. More countries are also expected to use Asian currencies for international trade, he said.

As for Thailand, foreign reserves of about $100 billion are sufficient to cope with the crisis, as there has been no large investment over the past few years, he said.

"Ironically, the political mess has saved us from a serious impact from the US crisis due to our low investment

and exposure," he added.

Meanwhile Japan's Yomiuri daily said in an analysis that major Japanese financial groups and securities houses had emerged as saviours for troubled US financial firms through capital infusion or partial acquisition.

The financial crisis in the US is regarded as an opportunity for Japanese financial institutions to improve their standing in the international financial market place.

Last Monday an executive of Mitsubishi UFJ Financial Group was delighted that Morgan Stanley, the second-largest US securities firm, had approached the group to seek financial assistance.

"Morgan Stanley has been a financial company beyond our reach. Its request for help is like a dream come true," he said after his group decided to provide funds totalling about 900 billion yen (Bt293 billion) to Morgan Stanley.