PTT trading may be suspended

General news - Thursday December 13, 2007

PTT trading may be suspended

SET hopes for calm after Friday ruling

NUNTAWUN POLKUAMDEE and KRISSANA PARNSOONTHORN

Trading of PTT Plc shares on Friday could be suspended temporarily pending the announcement of the Supreme Administrative Court's verdict, according to Patareeya Benjapolchai, the president of the Stock Exchange of Thailand.

''We will consider halting trade in the morning session, or until the verdict is announced, to minimise share volatility and possible panic,'' she said.

The court will rule on a challenge filed by consumer activists against the energy giant's privatisation in 2001. Plaintiffs in the case argue that the Thaksin Shinawatra government violated the law during the process to transform what was then the Petroleum Authority of Thailand from a state enterprise into a public company.

Uncertainties about the court verdict and its impact on the SET's largest listed company helped push the broad market lower yesterday. A sell-off on Wall Street in reaction to the Federal Reserve's modest quarter-point rate cut also damped sentiment.

The SET index closed at 834.09 points, down 6.36, in trade worth 13.5 billion baht. PTT shares fell four baht to 360 baht. Over the past month, PTT shares have fallen 9%, worse than the 3.9% decline for the main index.

Adipong Patarawikrom, a market strategist at SCB Securities, said concerns over PTT and disappointment over the modest US rate cut were the main factors pushing down the market yesterday.

Four scenarios were possible with regard to PTT. They include a verdict upholding the company's listing status to a worst-case scenario involving re-nationalisation.

Another scenario would be that PTT would remain a listed firm, but would have to transfer its pipeline assets to a new company, incurring tax liabilities of about 10 billion baht and reducing PTT's share value by 3.50 to four baht per share.

A fourth option would be for PTT to remain a listed company, but it would have to return the gas pipeline assets to the government. Assuming the asset transfer was made without compensation, PTT's asset value could decline by as much as 100 billion baht, or 35 to 40 baht per share.

Analysts, meanwhile, said US interest rates remained on the downtrend.

Kobsak Phutrakul, head of the SET Research Institute, said the Fed Funds rate of 4.25% and the discount rate of 4.75% would likely see at least two or three new cuts in 2008 due to the ongoing sub-prime mortgage problem.

Thai interest rates are likely to rise in 2008, as the Bank of Thailand seems poised to act to stem growing inflationary pressure on higher oil prices.

Prasarn Trairatvorakul, the president of Kasikornbank, agreed that local interest rates would rise in 2008.

The central bank was likely to maintain its one-day repurchase rate at 3.25% through the first quarter of 2008, he added.

Wiwan Tharahirunchote, the executive vice-chairman of Kasikorn Asset Management, said the policy rate would likely rise in the fourth quarter of 2008.

Bangkok Post