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NUNTAWUN POLKUAMDEE and DARANA CHUDASRI
Thai stocks gained 2.89% yesterday as Democrat Party leader Abhisit Vejjajiva formally was named Thailand's 27th prime minister by Parliament.
Asian markets closed mostly up as well on optimism that the US government would approve a bailout package for the ailing US auto industry despite its rejection by the Senate last week.
The Stock Exchange of Thailand index closed at 437.06, up 12.27 points, in trade worth 19.48 billion baht. Energy stocks led the market, gaining 4.04%, while banks closed up 2.39%.
Analysts, however, expressed concern for the stability of the new government, particularly after supporters of former prime minister Thaksin Shinawatra rallied yesterday at Parliament in an effort to disrupt the vote.
Patareeya Benjapolchai, the SET president, said political instability had certainly had an impact on the capital market and economy.
She said investors hoped that the government would appoint a strong, qualified economic team that could tackle the crisis in a unified, comprehensive manner.
"The stock market has gained [over 10% over the past week]. Further gains will now depend on the economic team and their effectiveness in setting new policy," Mrs Patareeya said.
Voravan Tarapoom, the president of the Association of Investment Management Companies, said that while Mr Abhisit was relatively young at age 44, he had 17 years of experience in national politics.
The economy should be the main priority for the government, she said, with sectors such as exports and agriculture facing an immediate need for assistance and unemployment sure to rise in 2009.
Mrs Voravan, also managing director of BBL Asset Management, hoped the government would name qualified and credible ministers to the cabinet to help rebuild investor confidence.
Sombat Narawutthichai, the secretary-general of the Securities Analysts Association, said sentiment would remain positive over the next several days, but that the next hurdle was for the Democrats to enact policies that met with public expectations in addressing the economic problems.
He agreed that new jobs programmes and progress in the infrastructure megaprojects should be two key priorities for the government.
"[The new government] can build up market confidence. But it's still difficult to say for how long," Dr Sombat said.
"There remains risk that pressure from economic, social or political problems [will lead to a change]. For now, I don't think protest groups will do anything for at least two months, as the new government has yet to begin work."
Dr Sombat said political problems would ease over the next several months, with the focus now shifting primarily to corporate fundamentals and the impact of the global crisis on local firms.
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