CEO Chayotid Kridakorn said last week after meeting foreign fund managers that offshore investors have been scooping up local stocks for their high-growth potential and the lowest prices in the region.

If the political situation clears up, some foreign investors hesitating to test the waters would pile into the stock market, he said.

"In fact, more capital should pour in than now. There is a group of foreign investors that still doesn't dare to invest in the Thai stock market.

Without political uncertainty, the SET Index should reach 800 points," he said.

However, politics remains a risk factor and foreign investors, who account for 35 to 38 per cent of trading volume now, might unload their

holdings if something serious crops up, he said.

"Risks lying ahead in the second half are political. If the situation gets worse, capital will run away very fast. However, if everything goes well, several times more capital will flow into the stock market," he said.

Exports are now the only engine driving economic growth while the other three - domestic consumption, private sector investment and government spending - are still idling due to the political circumstances.

However, he said the crisis of 1997 was unlikely to hit the country again because the private sector is in a strong financial position with debt-to-equity at below 1, compared with over 2 times in the pre-crisis period.

However, the worry now is indebtedness at the grassroots level,

he added.

Siriporn Chanjindamanee

 The Nation