SET proves biggest loser in the region

Heavy-weighted energy stocks took the hardest blow as they were also hit by the lowest crude oil price in one week traded in Nymex overnight and the Thai government's request to oil refiners to trim the ex-factory price for diesel by up to Bt1 per litre. The sharp drop in energy stocks also exacerbated the Thai stock market situation overall.

The market started the day with a mild decline at 853.60 from 855.60 at the close on Tuesday and headed further down to end at the day's trough of 832.99. Turnover was moderate at Bt22 billion.

The composite SET index yesterday extended a three-day losing streak and it has fallen nearly 5 per cent from last Friday's market close at 875.59. The four refiners alone have lost totally Bt32.86 billion in market capitalisation within three trading days.

PTT was off 3.95 per cent at Bt340, PTT Exploration and Production tumbled 4.7 per cent at Bt184, Banpu fell 3.33 per cent at Bt464 and Thai Oil slid 3.15 per cent to Bt61. The Taiwan stock market was the second biggest loser, slumping 1.3 per cent to a near two-month low of 8665.73, Japan's Nikkei dropped 1.32 per cent.

Kiatnakin Securities assistant vice president Wiriya Lappromrattana said the steep decline in the Thai stock market could be attributed to foreign investors' investment portfolio adjustment as they sold Thai shares to mitigate risks due to the tense political situation. The Thai stock market would move sideways down within a range of 830-850 points on the condition that there is no violence, she said.

She said her house still maintained a SET index target this year of 730-950 points as the target is already based on an assumption that political conflict would not develop into violence.

The new government's plan to amend the Constitution - adopted by the former army-appointed government after a referendum last year - has sparked street protests in Bangkok and is feeding media speculation of another coup, said Kim Eng Securities analyst Pongpan Apinyakul. "Political risk is weighing more on sentiment and will probably fuel further losses, especially when the stock market is already pressured by other problems such as soaring inflation," he said.

"It's hard to predict how the political page will turn from this point, but one thing we can be certain of is that the social conflict will linger. Even if the government drops the idea of constitutional amendment, resistance against it will still remain."

Thai Finance Minister Surapong Suebwonglee said yesterday the escalating global oil price threatens the country's economic growth more than the ongoing anti-government protests.

He said he still believes Thailand's economy can grow 6 per cent this year so long as the oil price doesn't shoot up to something like US$200 (Bt6,480) a barrel.