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SET down on possible extension in political conflicts

Stock investors are still worried about the opaque political outlook, leading the Stock Exchange of Thailand index to end lower in the morning session.



The index rose at the open, following Prime Minister Yingluck Shinawatra’s announcement of the House dissolution. It gained as much as 16.45 points. The session however ended 1.58 points or 0.12 per cent lower, to 1,359.99 points.

In a research note, Asia Plus Securities said that political wrangling tends to continue, with the possibility that a vacuum seen in 2006 would return.

"The decision to dissolve the House came too late," it said. "This followed the Democrat Party’s plan for mass resignation. It is highly possible that the party would not join the upcoming election and the situation would be like in 2006, when three political parties boycotted the election."

The 2006 vacuum eventually led to a coup later in the year.

Following the House dissolution, KT Zmico Securities foresaw a chance that the SET index could rebound by 8 per cent in a 1-month period. However, if the situation remains unresolved for some time or if there’s violence, it foresaw that the Thai economic growth in the fourt quarter would be less than 1 per cent, which would pull down the annualised growth rate to 3 per cent or lower.

Capital Nomura Securities viewed that the economic growth in the fourth quarter is expected to range between 1.4 per cent to minus 1.4 per cent, due to a slowdown in tourism, private investment and domestic consumption.

DBS Vickers Securities (Thailand) noted that following the dissolution, the political tension eases. Politically, there is a need to keep an eye on the Bt2 trillion loan bill that might be nullified at the beginning of next year if the Constitutional Court rules that it is unconstitutional.




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