Assurance vital to future

“Foreign investors have asked about the flood situation in the country. Many are worried that floods will affect their business operations in Thailand, especially those who have invested directly in expansion plans,” said Kongkiat Opaswongkarn, chief executive officer of Asia Plus Securities.
He suggested that the government work quickly to regain long-term investor confidence in future flood prevention.
“The state will have to make it clear what will be done to protect [investors] from flooding in the future,” he said.
He added that US-based Western Digital Corp, the world’s second-largest producer of hard-disk drives, had two factories with investment totalling Bt400 billion in the flood-hit industrial estates in the Central region. The company has conceded that it might see a net loss in the current fourth quarter of the year.
“Personally, if I were an investor and preparing to expand my investment, I would have to think twice about it unless the government can ensure flood protection,” Kongkiat said.
Gross domestic product in the fourth quarter is expected to be dragged down by the flooding, and this should continue towards the next quarter, he said.
The brokerage business has not been affected by the flooding yet, he said. However, this is subject to where flood waters flow. The Stock Exchange of Thailand’s uninterruptible power system is in the basement of its headquarters on Ratchadapisek Road.
“The Thai capital market will be highly volatile because of the flooding crisis and the European Union’s debt problem. To date, foreign investors have sold Bt19 billion of Thai stocks more than they bought, while Bt660 billion in capital has flowed into the bond market, causing the Bank of Thailand to cap its policy rate.”
Meanwhile, Kim Eng Securities reiterated that if Bangkok is inundated, it expected to see the property sector report poor results in the fourth quarter, especially those whose projects are in flooded-affected areas, such as Pruksa Real Estate, Quality Houses, Land and Houses, Supalai, Sansiri and Asian Property Development.
The brokerage said in a research note that the property companies would see an apparent drop in sales in the current quarter against a previous estimate of Bt153 billion, an increase of 7 per cent from last year. Pruksa Real Estate recently lowered its revenue estimate for this year from Bt42 billion to Bt34 billion. Meanwhile, the government’s first-home scheme will not benefit any developers, Kim Eng said.
The brokerage predicted that after the flooding subsides, there would be a change of homebuyers’ behaviour, avoiding the west and the northwest of Bangkok, resulting in a drop in land prices in those zones.