The falling stock market yesterday hit DTAC’s initial public offering, as parts of the 222 million shares offered to retail investors witnessed slow orders. The telecom firm’s chief executive Sigve Brekke, centre, looks at the electronic board displaying

Thai shares tumbled 1.42 per cent yesterday in a knee-jerk reaction after a lawyer of Thaksin Shinawatra said the ousted prime minister might return to Thailand to fight corruption charges.

The composite SET Index was in negative territory in the first trading session and headed further south when Noppadon Pattama said Thaksin might return.

The market closed at 743.42 points. Turnover was moderate at Bt14.8 billion.

Foreign investors remained as net buyers to the tune of Bt2.03 billion.

Stocks that were once owned by Thaksin's family - led by Advanced Info Service, Shin Satellite and SC Asset Corp -fell across the board.

Big market-cap stocks, including energy and banking, were also under selling pressure. PTT declined 1.53 per cent to Bt258, Bangkok Bank lost 1.74 per cent at Bt113 and Bank of Ayudhya declined almost one per cent to Bt22.10.

An analyst at a local brokerage said stock investors were concerned that Thaksin's return would provoke bigger protests.

Noppadon's remark came after the Assets Examination Committee (AEC) on Monday froze the assets of Thaksin, his wife and other relatives.

Shin Satellite took the hardest blow among stocks once linked to Thaksin, slumping 12.07 per cent to Bt10.20.

Advanced Info Service was down 3.91 per cent at Bt86, Shin Corp was down 0.88 per cent to Bt28 and SC Asset dropped 5 per cent to Bt9.50.

According to Stock Exchange of Thailand data, Thaksin's two daughters - Paetongtarn and Pinthongta - own a 28.97 per cent stake each in SC Asset. Thaksin's wife, Pojaman, holds 2.88 per cent while his brother-in-law, Banapoj Damaphong, owns 4.95 per cent.

An analyst at Kim Eng Securities (Thailand) said Shin Corp stock had been sold yesterday because of the risk associated with the advantageous telecom concession contract of Advanced Info Service, which was amended under the Thaksin administration.

Far East Securities recommended that investors avoid piling up stocks related to Thaksin. The brokerage said the consequences of the AEC's decision could go both ways.

Pro-Thaksin mobs might decline in numbers as funding to support their activities dried up, it said. However, the AEC might further investigate the telecom concession-contract amendment and the outcome could have a negative impact on Shin Corp. 

Tisco Securities said in a report that short-term political risk had again increased after the military-appointed AEC ordered that bank accounts worth Bt52.9 billion held by Thaksin, his wife and relatives be frozen.

However, the brokerage maintained its SET Index target at 800 points this year and 1,000 next year.

Confrontation between mobs of Thaksin supporters and security forces is a near-term risk, the report said.  

"Nonetheless, we remain positive on a medium- to long-term view in the expectation that the asset freeze will cut access to funding for agitators and investigations into alleged corruption by officials of the former administration are nearing an end," the report stated.

"We believe that security will be maintained ahead of the poll, enabling it to go ahead before year-end as scheduled, and assume that consumption and investment spending will gain momentum as the general election nears."

A consolidation of power by the military, if the interim government seems unable to control the situation, would be negative for Thailand's image, the report added. The Council for National Security may then decide to speed up the constitution referendum - or even push through a new constitution - and call an early election, it added.

The current tentative date for the general election is late December.

SCB Asset Management chief investment officer Chookiat Thitihiruncharoen said his company had maintained its SET Index target this year at 750 points.

However, the local political situation and Japan's interest rate are major risks.

If Japan raises its interest rate, hedge funds that borrow yen to buy stocks worldwide or carry trade will unload their stocks to service their debts, he said.