Thai shares slipped 1.68% to below the 1,400-mark yesterday as investors fretted over potential confrontation between pro- and anti-government protesters, who will hold a mass rally this weekend, and see no end to the political mess after Wednesday’s court ruling that led to the removal of Prime Minister Yingluck Shinawatra and several ministers involved in the transfer of a high security official.
The SET index started on a negative note and headed further south to close the market at 1,379.02 points, a 23.59-point decline in a single day. The main gauge lost almost 3% in three trading days as investors tracked political cues following the escalating political turmoil. However, foreign investors bought Thai shares with a net amount of 1.17 billion baht yesterday, after selling 2.02 billion baht more than they bought on Wednesday.
The Constitutional Court removed Ms Yingluck and nine other ministers from office on the ground that the earlier transfer of National Security Council chief Thawil Pliensri was unconstitutional and an abuse of power.
“The court ruling does not unlock the political impasse and we don’t know how long the situation will continue to drag on,” said Thanachart Securities analyst Adisak Phupiphathirungul.
A technical rebound could be seen in coming days following the losing streak, but it is unlikely to be sustained as political tension still clouds market sentiment, he said.
CLSA (Thailand) managing director Prinn Panitchpakdi said foreign investors are extremely concerned about Thailand’s political situation now as it is unpredictable.
However, the impact could be short run on expectation that the country will have a new functioning government by July.
CLSA forecasts Thailand’s gross domestic product this year will grow 2.5%, and targeted the SET index at 1,290. However, the projections will be revised down if a new government fails to be set up by July.
“In my opinion, I think violence this year won’t be as bad as it was in 2010. I hope they will avoid fighting,” he said.
Chaiyaporn Nompitakcharoen, head of research at Bualuang Securities (BLS), was more optimistic.
“I believe that investors are not worried about the political violence as it could lead to an exit from the situation,” he said.
The broker has revised upward the SET index target this year to 1,480 points on expectations that the political morass could end by June.
“We expect to see higher foreign fund flows in the second half as investors look beyond the political effect and they are investing for the future,” he said.