Both the stock market and the baht yesterday rose to their highest levels since mid-2008 on foreign investors' confidence the red-shirt protests would not escalate into violence.
The Stock Exchange of Thailand (SET) Index yesterday increased for a fifth day, climbing 17.37 points, or 2.4 per cent, to close at 752.2, its highest level since July 2, 2008. The volume of trading was high at Bt27.39 billion.
Foreign investors were net buyers of Bt21.23 billion worth of Thai shares between March 2 and this past Monday.
FOREIGN INVESTORS 'CONFIDENT'
"Foreign investors remain confident in Thailand, because they believe the protests will not turn violent," said Bank of Thailand Governor Tarisa Watanagase.
SET president Patareeya Benjapholchai said foreign investors were buying Thai equities because of the strength of the nation's economic recovery and corporate-earnings growth.
"Concerns about the present street protests have eased, because they've been peaceful these past few days," she said. "Thai stocks are attractive, because the country's economy and company earnings were stronger than expected in the fourth quarter."
US brokerage Morgan Stanley has increased its weightings for emerging markets, including Thailand, Turkey and the Czech Republic.
The baht also strengthened to a 21-month high after foreign investors added their holdings to baht assets, particularly |Thai stocks, as clear evidence of an economic recovery.
The baht rose 0.3 per cent to 32.45 against the US dollar late yesterday afternoon in Bangkok after reaching 32.41 during the day, its strongest since June 2008.
Some 100,000 red-shirt demonstrators began entering Bangkok last Friday to pressure Prime Minister Abhisit Vejjajiva into dissolving Parliament and calling a fresh general election. They are supporters of ousted premier Thaksin Shinawatra.
However, the red shirts yesterday appeared to have lost their momentum after five days of political rallies out in the scorching heat, and many have decided to return home.
The protesters yesterday donated blood to pour at Government House as a curse.
"Investors are confident the government can keep the situation under control, because the demonstration will not likely bring about any political change," said one local broker.
TOURISM MAY BE AFFECTED
Tarisa said the anti-government protests might affect tourism and consumption.
"Still, the severity of the impact will depend on the length of the protest and level of any violence," she said. "If the situation ends soon without any violence, we expect the effects to be limited and recovery quick."
Thailand Trade Representative Office president Kiat Sittheeamorn yesterday estimated the tourism industry had lost Bt1 billion a day from the rallies.
Finance Minister Korn Chatikavanij reiterated |economic growth in the first quarter would be "more than 5 per cent", against 5.8 |per cent in last year's |fourth quarter.
