Index falls 1.63% as bad news abounds

STOCKS BEAR RUN

Index falls 1.63% as bad news abounds

NUNTAWUN POLKUAMDEE

Thai stocks fell 1.63% yesterday on investor concerns about domestic politics as well as global worries about the health of the US economy.

The Stock Exchange of Thailand index closed at 808.31, down 13.4 points, in trade worth 15.47 billion baht.

Energy stocks dropped 2.76%, banks fell 1.23% and technology stocks dipped 0.96%.

Foreign investors continued to dump Thai shares with a net selling position of 4.53 billion baht. Retail investors were net buyers of 4.33 billion baht worth of stock, with local institutions net buyers of 194 million.

Wisit Ongpipatkul, a deputy managing director at Trinity Securities, said sentiment was poor due to both global and local negative factors.

Speculation about the direction of US interest rates ahead of a US Federal Reserve meeting later this month has prompted a shift in asset flows from the US and Europe to Asia.

Mr Wisit said investors expected a quarter-point rate cut if US economic indicators remained stable.

But the Fed could freeze rates if inflation shows signs of increasing, or alternatively cut rates by an aggressive half-point if property sales and new bank lending continue to slow.

Local politics continue to be another concern for investors due to the possibility that the People Power Party, which led all parties in the preliminary results for the Dec 23 election, could be dissolved following a court challenge filed by a member of the Democrat Party.

''Investors continue to have little confidence in the political situation even after the December election. We still don't know which party can form the government or predict the outcome of the Supreme Court case over PPP,'' Mr Wisit said.

The dissolution of PPP on the grounds that the party was a nominee for the disbanded Thai Rak Thai party would lead to chaos, he said, as the Parliament would lack a quorum to open. The court is set to hear the case on Jan 15.

Mr Wisit recommended that investors focus on high-dividend stocks, adding that the main SET index was projected to move between 790 and 860 points during the first quarter of this year.