Thai Poll Worries World Bank

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JULY 3 GENERAL ELECTION

Thai poll worries World Bank

By WICHIT CHAITRONG

SIRIPORN CHANJINDAMANEE

THE NATION

Thailand's state-run banks are under the scrutiny of the World Bank, especially ahead of the election, as they are widely used to implement economic policies.

Political parties are fighting hard for seats in Parliament, particularly with promises to boost consumption. Lack of long-term economic management policies and concern over political uncertainty after the election were cited as the main reasons for the recent fall in the Thai bourse.

The composite index yesterday tumbled 20.17 points, or 2 per cent, to 1,014.58, the lowest since March 18. Foreign investors turned to net sellers, with sells outpacing buys by Bt6.31 billion.

In response to a question whether the balance sheet of state banks might be adversely impacted by the populist policies, World Bank country economist Frederico Gil Sander said: "State banks would be closely monitored."

BALANCE SHEETS IN GOOD SHAPE

Sander said political parties' promises to have state banks extend loans to farmers and consumers could further increase these banks' outstanding loans. The loans increased sharply during the economic downturn in 2009, while commercial banks' lending activities just picked up last year.

Kirida Bhaopichitr, a World Bank senior economist, said the banks' balance sheets were in good shape now. The World Bank is working closely with the Finance Ministry on improving these institutions' management, she said.

Kirida is concerned more with inflationary pressure fuelled by government spending. Higher inflation would adversely affect the poor and the government should introduce measures to ease the cost of living of targeted groups, she said. She hopes the new government will uphold fiscal discipline.

"Thai governments are usually worried about their reputation on public finance matters. It's unlikely that the new government will borrow too much."

In the Global Economic Prospects report released yesterday, the institution urged developing countries to focus on tackling country-specific challenges such as achieving balanced growth through structural reforms, coping with inflationary pressure and dealing with high commodity prices.

In a teleconference from Washington, Hans Timmer, director of development prospects, said there was a chance for further rise in inflation in many nations as pressure from international markets was being passed on to domestic markets.

Despite risk factors, including slower growth in China and a sovereign debt crisis in Europe, the World Bank is maintaining its economic growth forecast of 3.7 per cent for Thailand. Sander noted that the growth rate could be higher if there was political stability after the July 3 poll, thanks to higher private investment.

Meanwhile, Stock Exchange of Thailand (SET) president Charam-porn Jotikasthira admitted that domestic political uncertainties were putting pressure on the local bourse, aside from renewed concerns over the global economy, particularly the US and Europe, which are showing signs of a fresh slowdown.

However, he believes Goldman Sachs Group's decision to lower its rating for Thailand should have only a short-term impact on investment in the Thai stock market, thanks to strong earnings growth. He is hopeful that foreign investors will regain their confidence after the election.

POLL ADDS TO PRESSURE

"Despite the 20-per-cent earnings growth forecast, the Thai market is subject to selling pressure due to political concerns and high inflation," said Tientip Subhanij, head of the SET's Capital Market Research Institute. "This exacerbates the situation, as due to the fragile recovery in the US, investors worldwide are already selling equities and investing in commodities like gold as a safe haven."

Arpaporn Sawaengpak, head of research at DBS Vickers Securities (Thailand), said the Thai market yesterday plunged more than other regional bourses due to the "underweighting" recommendation from Goldman Sachs. Credit Suisse also lowered its rating of Thai shares to "neutral", driven by polls suggesting the Pheu Thai Party would win the next election, which could lead to political conflict and violence.

In May, the Thai stock market gained the most in Asia, second only to South Korea, as the composite index rose 3.98 per cent from the end of last year. Foreign investors were net sellers of Bt16.7 billion, compared with net buyers of Bt29.54 billion. However, they were still net buyers of Bt1.21 billion since early this year.

-- The Nation 2011-06-09

[tlansford]

Arpaporn Sawaengpak, head of research at DBS Vickers Securities (Thailand), said the Thai market yesterday plunged more than other regional bourses due to the "underweighting" recommendation from Goldman Sachs. Credit Suisse also lowered its rating of Thai shares to "neutral", driven by polls suggesting the Pheu Thai Party would win the next election, which could lead to political conflict and violence.

Goldman Sachs was instrumental in the global financial meltdown, maybe the investors in the Thai markets should pay less attention to them. Not to mention that the Credit Suisse conclusion about violence after the next election is pure speculation. Finally, it is also ... what's the right word... nah, it's just speculation, one *could* also call it BS.

Anyway, it seems that if PTP wins, Credit Suisse thinks there could be violence - sounds like they are placing their market-bets on a would-be military coup - ?? Any thoughts?

[kg1947]

Thinking outside the box :

There are MORE poor people in Thailand than rich people , so percentage wise

IF : ALL the poor people exercise their right to vote and DO vote , they will

achieve a MAJORITY - right ?

So : despite all the mud being thrown around , ANY politician WHO utilize this

reality and work to take advantage of this statistic - MUST in the end become

the WINNER ( mathematical & logical conclusion ) - agree ?

So : now it doesn't matter WHICH group/color/party who take advantage of this

fact must be recognized as THE WINNER - UNLESS there's interference from

dissatisfied group/color/party & organization who then use their OWN method

to force a CHANGE in the natural outcome.

To FORCE a change, it will cost MONEY, lots of money !!

So : its been known that to FIND the real reason WHY certain things happen,

you MUST FOLLOW the money trail and forget about slogans & speeches.

I think the POOR people are more EDUCATED now - thanks to the INTERNET &

other media that allows instant communication - UNLESS it's CENSORED !!

This is called the AWAKENING and you see that happening in many countries

around the world , even in Europe and later in North America.

GET USED TO IT , it will happen sooner or later.

[kfjanet]

so true

[rishi]

Which Thai banks are state run? - All of them? - If not, which Thai banks are not state run?

[jfchandler]

I think it's a pretty long list...

Government Savings Bank

Government Housing Bank

Bank of Agriculture (or something like that)

Islamic Bank (or something like that)

Krung Thai Bank (I believe is controlled by the Finance Ministry)

and some others as well...

[JurgenG]

Put it simple. After the coup, people were sent out to explain the outside world the new "sufficiency economy".

Nobody really understood what those weird people were talking about ...

Thaksin makes sense with foreigners. He gets along with Japan, China ... actually most of the countries of the outside world.

If you think that Thailand is an island that can survive with little relation with the outside world, so maybe the democrats are the right choice for you.

If you want to be a world citizen, maybe you should pay attention to what Thaksin has to say.