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Baht/$ 34.30/33 (Bid/Ask)
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GOLD |
13,450
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NINA SUEBSUKCHAROEN
Adipong: Local perspective different |
Far from being unnerved by the current political chaos, investors see it as the beginning of the end of the confrontations that have bedevilled Thailand since 2005, says Adipong Puttarawigorm, executive vice-president of the brokerage Merchant Partners.
The turning point, in his view, came two weeks ago when former prime minister Thaksin Shinawatra chose exile in the UK over facing trial in Thailand.
The rallies by the People's Alliance for Democracy, meanwhile, have not had as big an effect as many feared on the local stock market so far, although trading turnover has been markedly thin. The SET index did drop by 9.28 points on Tuesday when the latest PAD push began, but it held steady and rallies slightly through the rest of the week to close last Friday at 684.44.
Mr Adipong also noted that the plunge Tuesday tracked regional performance. ''This tension is practically not at all reflected in stock prices.''
Thai and foreign investment patterns since the start of the year also reveal how political assessments differ. After the Dec 23 election took place and the People Power Party government took office in January, foreign investors thought the situation had improved and channelled funds to the SET, which rose from February to April with the SET index reaching around 860 points.
However, Thais who know their own country better, were of the opinion that the confrontation would get worse.
When it became clear the political situation was deteriorating, foreigners became net sellers in June, July and August.
However Thai investors again assessed the situation differently, being of the opinion that the years-long confrontation would be winding down after Mr Thaksin left for the UK.
''Although there are mobs out there, I see this to be the beginning of the end of the confrontation I don't think PAD will dare to use more force and I don't think the government will dare to do so. Whoever uses force will be seen to be bad,'' said Mr Adipong.
He also does not foresee the current government bowing out because doing so would be setting a bad precedent.
''The previous government had to go because the Thaksin issue was very strong but the issues against this government are not strong. If the PAD can force this government out then in future it could push out any government at all.
''Even so, a new general election should take place around the end of the year or early next year but until then this government will stay in power.''
In any case, Mr Adipong expects Thailand to turn back to old-style politics with several parties representing different interest groups forming a large coalition government _ sometimes referred to derisively as a ''buffet cabinet''.
What is clear is that the country is not ready for a two-party system, which some analysts once thought was evolving with Mr Thaksin's Thai Rak Thai and the Democrats as the main contenders.
''People think [a multi-party coalition] is better because Thais are used to that type of system, but looking at the bright side there are checks and balances in the cabinet,'' Mr Adipong said.
The Thai economy should also improve slowly because inflation is seen to have peaked in the second quarter, and eased to 6.4% in August as oil prices fell from their July peaks. As well, Mr Adipong considers interest rates to have peaked with the Bank of Thailand's latest increase last Wednesday to 3.75%.
''Foreigners will also be back during the holiday season in November. They might then take a better look at Thailand and if that happens, if they study the situation carefully, I think they will realise there is no way things could get worse politically.''
While there is concern about the domino effect of the US sub-prime crisis, Mr Adipong notes two viewpoints, with some expecting the US economy to perform better in the second half after its GDP rose at 3.3% in the second quarter.
Significantly, the US stock market has been one of the world's best performers this year having dropped only 10% while other bourses have shed 20% or more.
In the local market, Mr Adipong sees stocks related to domestic activities, such as property, banks and finance companies, to be promising because they are sensitive to the interest rate direction and the underlying economy.
These stocks would also benefit greatly if sentiment improves and people start spending again. Any such positive turn would spread to the agricultural sector with farmers also expected to loosen their purse strings after having obtained good prices for their crops this year.
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