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Baht/$ 33.39/42
Bid/Ask
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GOLD |
14,650
+ 150
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STOCKS
NUNTAWUN POLKUAMDEE & WICHIT CHANTANUSORNSIRI
Thai stocks dropped 1.1% in the first trading session of the third quarter yesterday as investors sold off energy and bank stocks over concerns of rising energy prices and inflation. The Stock Exchange of Thailand index closed at 760.01 points, down 8.58, in trade worth 12.87 billion baht. Energy stocks fell 0.26%, banks 2.9% and property stocks dropped 3.4% for the day.
Foreign investors were net sellers of 2.18 billion baht yesterday, while local investors were net buyers of 2.4 billion and local institutions were net sellers of 224.2 million.
Analysts said investors were switching to cash or commodities in anticipation of slower global economic growth due to high oil prices and inflation.
Oil prices rose above $141 per barrel on concerns over supply constraints and tensions in the Middle East.The doubling of oil prices over the past year helped push Thailand's annual inflation rate in June to a 10-year high at 8.9%. Core inflation, which excludes food and energy prices, rose to 3.6%, exceeding the central bank's inflation target.
Political uncertainties also weighed on local sentiment, as analysts view a cabinet reshuffle as imminent after last month's censure debate in Parliament.
Chaiyaporn Nompitakcharoen, the research head at Bualuang Securities, said the market was ''decidedly bearish'', with investors moving from equities to gold, bonds or cash.
Global economic conditions were also weakening, with growth in the US and Europe both expected to slow as inflation continues to rise.
Mr Chaiyaporn said inflation in July could reach double digits and the trade balance fall into a deficit as payments for oil shipments last month are made over the next several weeks.
''We could see the SET index fall by another 20 to 30 points from now if oil prices continue to rise,'' he said.
Sarawut Taechochawalit, an assistant research manager at Sicco Securities, agreed that inflation was a growing concern across the globe.
''Investors are reducing their equity holdings in anticipation of a global economic slowdown as prices affect household spending,'' he said.
Higher prices and production costs, coupled with a decline in disposable household income and spending, would hurt listed company profitability and growth, affecting share valuations.
Meanwhile, Finance Minister Surapong Suebwonglee yesterday denied reports that he planned to resign after the Constitution Court's ruling on Monday.
The ruling deemed that an extension in the tenure of the Assets Scrutiny Committee was legal and constitutional.
Dr Surapong, also the secretary-general of the ruling People's Power Party, faces a possible suspension from office due to an ongoing investigation into the legality of a cabinet decision by the former Thaksin Shinawatra government to approve two- and three-digit lotteries.
The ASC ruled the lottery decision as illegal, with culpability resting with all members of the Thaksin cabinet who approved the policy. Dr Surapong was the Information and Communication Technology minister at the time.
The ASC was set up after the Sept 2006 coup with the authority of the National Counter-Corruption Commission. Officials have argued that an accusation by the ASC is sufficient grounds for a serving politician to vacate office.
But Dr Surapong said the law was unclear on whether he was required to resign on the basis of the ASC judgement.
''I haven't thought about [resigning], as I want to see clarity in what the law requires first,'' he said yesterday, adding that he was consulting with constitutional law experts about the case.
At issue was whether Dr Surapong was required to step down as finance minister now, given that at the time the lottery policy was passed he served in a different ministry.
He said he would consult with Anurak Jureemart, the deputy transport minister, and Uraiwan Thienthong, the labour minister, before any final decision.
Both Mr Anurak and Mrs Uraiwan also served in the Thaksin cabinet with Dr Surapong.
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