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POLITICAL SHOWDOWN
SET jumps 3%, but not on local factors
DARANA CHUDASRI & PHUSADEE ARUNMAS
The government should move quickly to lift the current state of emergency in Bangkok, according to the Federation of Thai Capital Market Organisations.
The group, which represents listed companies, stockbrokers, fund managers and securities analysts, said the decree should be scrapped if it was ineffective or impractical for addressing the standoff between the government and the People's Alliance for Democracy.
Last Tuesday, Prime Minister Samak Sundaravej announced a state of emergency in Bangkok after violence broke out between PAD members and pro-government groups.
Prasert Bunsumpun, the Fetco chairman, said the prolonged deadlock between PAD and the government was clearly taking a toll on the capital markets and economy.
''The state of emergency should be lifted as soon as possible. It is creating a lack of confidence among both foreign investors and travellers,'' he said.
The Stock Exchange of Thailand index has fallen by a quarter since the beginning of the year, with much of the losses coming since late May when PAD began its protests.
The SET index yesterday gained 19.86 points to 665.66, as most markets posted gains on reports that the US government would move to shore up the financial position of the home mortgage lenders Fannie Mae and Freddie Mac.
In any case, Mr Prasert, also the president of the energy giant PTT Plc, noted that a survey of listed companies last week showed that executives were clearly worried that the political turmoil would affect corporate performance.
''The capital markets and the economy cannot be separated. We want all the parties to hold talks to find an acceptable solution. The impact is being felt not only by the capital markets, but by provident funds and the Government Pension Fund, affecting workers across the country,'' he said.
SET president Patareeya Benjapolchai said since the end of 2007, the market capitalisation of the SET had fallen by 1.5 trillion baht to 5.11 trillion now. Daily turnover had fallen to less than 10 billion baht from 18 billion, affecting broker income.
Mrs Patareeya said foreign investors had been net sellers of 109.57 billion baht for the year to date, mostly since May 26 when PAD began their protests.
Meanwhile, a new poll by the University of the Thai Chamber of Commerce showed businesses expected economic growth to fall to between 3.5% and 4.5% this year if the current unrest drags on. The government currently projects growth this year at over 5%.
Thanavath Phonvichai, the director of the university's Economic and Business Forecasting Centre, said an earlier poll in August had consensus growth forecasts at 4.5% to 5% this year.
The survey of 820 businesses conducted last week found 17.3% putting political turmoil as their top priority, 15.9% listing the economic slowdown and 15.8% oil prices.
Some 38.7% of respondents wanted the government to negotiate with PAD to ease political tensions as quickly as possible, while 30.4% suggested a dissolution of Parliament as a means of addressing the programme. Nearly one-quarter said the government should resign to break the deadlock.
''Should the PAD rally drag on for more than one month, the economy will sustain greater damage. What businessmen are concerned most is that the longer the rally persists, the more sluggish the economy will become,'' Mr Thanavath said.
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