Contagion fears send global markets in tailspin
Thai shares further nose dived today, in line with global markets which are spooked by a more likely contagious effect in the euzo zones.
At mid-day, the Stock Exchange of Thailand index fell by 23.82 points or 2.03 per cent, on turnover of Bt13.4 billion. At the mid-day closing of 1,149.74 points, the index slightly recovered from its morning low of 1,148.81 points.
Still, Securities Analysts Association Secretary-General Sombat Naravuthichai believed that if Greece makes an exit from the eurozone, the impacts on Thai shares would be short-lived and would be of lesser degree compared to the impacts from the sub-prime crisis in 2008.
He said that the Greek crisis has been discounted and that the International Monetary Fund and the European Union are prepared to relax the austerity measures to ease public dissent in Greece.
While saying that it can't be estimated now how much foreign capital would flow out of Thailand, he said it would eventually return thanks to the strong economic fundamentals here. He said that the higher wage and bachelor degree holders' pay hike would drive up domestic spending.
Sell-offs took place globally as Moody's Investors Service downgraded the two biggest banks in Spain by three levels - Banco Santander and Banco Bilbao Vizcaya Argentaria, sparking fears of the contagious effects from Greece to other nations in the euro zone.
In Greece, political wrangling is underway as the leaders of Greece's two biggest parties clashed over how the country could stay in the euro. The conflict between Syriza leader Alexis Tsipras, who opposes the austerity demanded by the European Union bailout, and Antonis Samaras, leader of New Democracy, points to the June 17 vote as a referendum on Greece staying in the 17-nation currency bloc.
On Thursday, Fitch ratings agency downgraded debt-crippled Greece deeper into junk territory, warning of a ``probable'' Greek exit from the euro currency union if new national elections next month produce an anti-bailout government.
``The downgrade of Greece's sovereign ratings reflects the heightened risk that Greece may not be able to sustain its membership of Economic and Monetary Union,'' the agency said in a statement.
