Saturday, January 05, 2008

Political and inflation worries contribute to SET decline

Political and inflation worries contribute to SET decline


Thai stocks dropped 1.31% yesterday as political uncertainties and fears of rising inflation and slowing growth hurt market sentiment.

The Stock Exchange of Thailand index closed at 821.71 points, down 10.92, in trade worth 22.43 billion baht. The index rose as high as 839.58 in morning trade on buying of large-cap energy stocks before falling sharply in the afternoon.

Energy stocks led the market, closing down 2.76%, while banks lost 1.32% and technology stocks gained 0.89%.

Kosin Sripaiboon, research manager at UOB Kay Hian Securities, said the market was expected to remain volatile through the end of the month.

''We expect the SET index to swing throughout the month, until we see the shape of the new government and their policy priorities,'' he said.

The Election Commission has endorsed 397 winning candidates from the Dec 23 polls, but is investigating possible fraud for the remaining 83 candidates. Of the 83 under investigation, 65 are from the People Power Party, which led all parties in preliminary results.

Mr Kosin said foreign investors would likely be sellers of Thai stocks until the new government was formed. Foreign net sales were 2.89 billion baht yesterday, while local institutions were net sellers of 412.18 million and local individuals net buyers of 3.3 billion.

Mr Kosin said oil prices were another concern for investors, after crude briefly broke $100 per barrel earlier this week. Higher oil prices would push up inflation, while the US sub-prime mortgage crisis was expected to continue to escalate until mid-year, he said.

Phuvadol Labudomsuk, a senior analyst at Asia Plus Securities, said high oil prices, while benefiting energy stocks, were a negative for other industries as operating expenses increased.

He said foreign investors remained concerned about PTT and the impact on the country's largest company from last month's court order to return its gas pipeline network to state ownership.

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