Stock plunge nightmare
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Somkid puts on brave face despite big SET fall on his first day in charge of economy
HUGE external pressures, especially China’s stock market rout, pushed down Thai share prices by as much as 4.7 per cent yesterday – and dealt a deadly blow to any immediate positive result from the government naming a new economic team.
But Deputy Premier Somkid Jatusripitak, the leader of the team, remained undaunted on his first day at work in the new position yesterday, saying he would do his best in directing the new line-up to tackle pressing economic issues.
Meanwhile, Finance Minister Apisak Tantivorawong said external factors had obviously played a key role in the sharp falls of share prices worldwide.
The government’s new economic measures are expected to lift confidence in the economy, and would boost the stock market, Apisak said, adding that share prices are influenced by correlated internal and external factors.
The SET yesterday closed at 1,301, down 4.73 per cent from Friday, while the Shanghai Composite Index nosedived 8.49 per cent, Hong Kong’s Hang Seng plummeted 5.17 per cent and Japan’s Nikkei dropped 4.6 per cent.
Yesterday morning, the SET Index plunged 52.43 points to 1,313.18 points, following a week in which Bangkok was rattled by the deadly Bangkok bombing.
Foreign net-sell continued yesterday, with the value worth Bt4.78 billion. The month-to-date net-sells reached Bt33.96 billion.
The index was at an 18-month low.
“Do you remember the last ‘Black Monday’ when the US was in trouble and it dragged down other capital markets?” said Apisak, a close friend of Somkid.
Somkid viewed the stock market routs as an unwelcome sign for him and the economic ministers’ first day on the job after a their swearing-in ceremony on the weekend.
Somkid, who will oversee finance, commerce, transport, energy and other related ministries, said he had laid down his policies for all economic ministries under his supervision, with short-term stimulus measures to be implemented along with other moves aimed at revitalising the economy.
Most importantly, he said the government would prepare the country during this transition period so that it was more internationally competitive.
Somkid said he did not feel pressure due to the public’s high expectations of his team, adding that the country had been through the 1997 financial and economic crisis.
He would do his best as a team leader to solve the country’s economic problems, while asking the public and the private sector to cooperate with the government.
‘Thai corporates in good shape’
Comparing today’s economic challenges with the 1997 crisis, he said this time most Thai corporates were in good shape but the grassroots population faced severe difficulties due to low commodity prices and other factors.
Prinn Panitchpakdi, country head of CLSA Securities (Thailand), said stock market investors were closely watching the new economic team’s measures to boost the economy
“The panic sale in China, created by a lack of investor confidence in the government’s policy, led to the panic sale in Thailand due to the lack of confidence in Thai shares, which was caused by concerns over less demand from the mainland [China],” he said.
“The lower confidence in exports as a result of the China [economic] slowdown and the panic sale in the morning here means that investors and asset managers have taken, and will continue to take, a defensive position in the short term while the new economic team has yet to lift confidence since people are still in a wait-and-see mode,” he said.
Prinn expects the US Federal Reserve to delay the hike of its interest rate, after most markets expected it to occur in September, because China has caused a currency war in the region by dropping the yuan’s value and sparking a global export deflation.
“The US economy could experience a double-dipped repression in terms of quarter-to-quarter economic expansion if their rate is lifted in September following the latest development in China. And they are also nowhere near their inflation target at the moment,” he said.
