Politics and inflation threaten Thailand’s stock index
Economy March 2nd, 2010
Thailand’s benchmark stock index that had the biggest gain in 6 years, is estimated to fall down the middle of next year due to political instability and high inflation.
Siam City Securities analyst Sukit Udomsirikul Co. predicts the SET Index fell to the lowest level at 540 Second or third quarter of 2010. That means fell 26% from yesterday’s closing position.
“There was a sharp correction in the Thai market in the mid of next year due to political confrontation which could reach a critical point. Interest rates may start rising in the second half due to acceleration of inflation,” said Sukit, which ranked third best analyst of the Securities Analysts Association selection in 2008, the day it.
Thai stock index followed in Indonesia, Malaysia, Philippines, and Singapore since the 2006 coup which removed former Prime Minister Thaksin Shinawatra. While PM Abhisit Vejjajiva, who came to power about a year, facing pressure of demonstrations security of Thaksin’s supporters in April.
Moody’s Investors Service in September of Thailand held a negative credit rating outlook by considerations of political unrest and the potential collapse of confidence. Inflation rate probably rose to 3% -4% this year and continue early next year due to fuel prices.
SET Index rose 63% during this year which is the best performance since 2003 and better than 2008 which fell 48%. Expectations of economic recovery that will be able to raise revenue to support stock index.
Ministry of Finance reported Thailand’s economic growth estimated at 4% in 2010 supported by higher government spending and exports rebound.
Sukit explains stock index could rebound to the level of 880 in the first quarter triggered IV/2010 government spending to stimulate consumption and rising exports following the restoration of global conditions.
Abhisit implement a stimulus package worth 116.7 billion baht (U.S. $ 3.5 billion) for the construction of roads, bridges, and other public purposes to create jobs and economic growth.
