SET gains on good news from Europe
The Stock Exchange of Thailand managed to stay in the positive territory, as good news from Europe overshadows potential damage from the historical floods.
At the close, the SET Index gained 14 points or 1.54 per cent to end the day at 923.17 points, on turnover of Bt19.5 billion, though the Finance Ministry revealed that flood damage could range Bt60-Bt80 billion, or cost the gross domestic product by 0.6-0.9 percentage point.
At 12.08pm, the SET Index lost 11.74 points or 1.29 per cent to 897.43 points.
Thailand's bourse rose in line with European markets as investors welcomed a Franco-German pact to support troubled banks, while Dexia became the first lender to succumb to the eurozone debt crisis. In another development, Russia said that it was ready to help Europe recover from its debt crisis as soon as its leading nations put aside their differences and came up with a clear rescue plan. The Bank of Greece also said it has activated a bank rescue fund to save Proton Bank, the first lender to be nationalised under the Financial Stability Fund.
Brokerage houses expect the Thai bourse to continue its nosedive in October and November, due to a series of negative external factors as well as the severe floods.
On Oct 15, markets are waiting for the euro zone countries to raise the European Financial Stability Facility's size from 440 billion euro to 780 billion as well as the fund's power in bank recapitalisation.
"The index should not breach 936 points, or if hitting 950 points, it would head down again," Tisco Securities said. The index could fall to 840 points next month, it added.
Meanwhile, UBS targets SET in the next 12 months at 1,300 points, worst to fall to 750 in the fourth quarter this year or the first quarter next year.
DBS Vickers Securities (Thailand) admitted that the flood situation is worse than expected.
"With most industrial plants in Ayutthaya being mainly electronics and automotive & parts sectors, we could see some hiccup in production and export of these two industries," it said in a research note.
Narapote Thewtanom, deputy governor of the IEAT, was quoted as saying that Saharattana Nakorn Industrial Estate was likely to take more than five months to fully recover.
The University of Thai Chamber of Commerce (UTCC) earlier estimated total damage from flooding at about Bt104-Bt130 billion, or about 1-1.3 percentage points of gross domestic product.
