Equity outflow will further dent economy

The sectors most affected from the halt in operations at Suvarnabhumi Airport are hotels, hospitals, transportation and property funds related to tourism.

A report from SCB Securities released yesterday said foreign outflows from the equity market would further contribute to the already stumbling economy and financial markets. Hospitals, especially those with exposure to international patients, will be directly hit.

SCBS expects the airport operations to resume in a few days.

"The primary objective of the PAD [People's Alliance for Democracy] in taking over the airport is to force Prime Minister Somchai [Wongsawat] to resign. We do not think the prime minister will quit, and anticipate some change in PAD tactics soon because shutting down the airport is extremely detrimental to the Thai economy and could upset the PAD's financial supporters," the report said.

It said there was a chance that the prime minister would declare a state of emergency and in this case the impact on the Thai stock market would be "harsh", leading to more foreign fund outflows from the Stock Exchange of Thailand.

The impact on tourism will last much longer than just the few days the airport is shut down, the report said. The intensifying protests have hurt the high season of the industry.

Although the PAD occupation of the airport is not expected to last long, it has already dealt a crippling blow to tourism as the story has been headlined in all the major international news agencies. Further, thousands of tourists will be posting about their inconvenience and fright on the Internet and warning their friends.

Hotel operators may suffer more than originally thought. Although SCBS expected occupancy to drop in 2009, its analysts were expecting the fourth quarter to be somewhat shielded from negativity with the help of postponed bookings now taken up and already-planned high season trips.

The report says Bumrungrad Hospital and Bangkok Dusit Medical Services will suffer from the closing of the airport. But the holidays in December mean it is low season for the hospitals, and this may moderate the negative effect of the turmoil.

Further, Airports of Thailand and Thai Airways will both suffer from the protest. Shares of AOT dropped 1.69 per cent to Bt17.50 and those of THAI fell 2.56 per cent to Bt7.6 on the Stock Exchange of Thailand yesterday.

Asia Plus Securities said the action at Suvarnabhumi would cause losses of Bt58 million per day.

Kim Eng Securities said that AOT, THAI and the Central Plaza Hotel had been especially hard hit.

Sukit Udomsirikul, assistant managing director of SCIB Securities, said the effect of the airport closure would be acute next month, which normally contributes 27 per cent of revenue from tourism.

Siam City Research Institute has revised down the figure of tourists this year to 13.9 million to 14 million from the expected 14.6 million.