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03 Jan 2007 10:35
Thai shares sank on the first morning of trade after the deadly New Year’s Eve bombings in Bangkok, raising fears that the attacks could drag down the faltering economy.
The blasts that killed three and wounded 38 raised new fears about Thailand’s security and added to doubts about the post-coup government, which had already spooked markets last month with stringent new currency controls.
The Stock Exchange of Thailand composite index fell 22,12 points, or 3,25%, in the morning trade to 657,72 on the first day of business after the New Year holiday.
The latest fall followed massive losses in mid-December after the authorities introduced and then quickly reversed measures aimed at halting the baht’s sharp gains.
The market lost nearly 15% on December 19 after foreign investors were scared off by steps to effectively lock up for a year 30% of any fund inflows coming into Thailand for financial investment.
As a result, the government backtracked and the market recovered much of the lost ground in the following days but the policy flip-flop left investors nervous about the outlook for Thailand and trading has remained volatile.
Finance Minister Pridiyathorn Devakula told reporters after a Cabinet meeting that the fact that the drop wasn’t steeper showed that “investors still have a certain level of confidence in Thailand’s economic fundamentals”.
But he urged the junta to restore confidence by finding those responsible for the coordinated explosions that hit a range of targets, including Bangkok’s central business district.
Santi Vilassaksanont, chairperson of the Federation of Thai Industries, said the attacks added to doubts among foreigners and investors about the government and junta’s capacity to keep control both security and the economy.
“Investors are still worried, after the reserve requirement rules caused them to doubt government policies and its capacity to manage the economy,” Santi told AFP.
Adisak Kammnool, senior stock analyst at KGI Securities, said foreign investors were more worried about the impact of the bombings on the economy, rather than the political uncertainties they raise.—AFP
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