Stock plunge nightmare

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BUSINESS
Stock plunge nightmare
ERICH PARPART
THE NATION



Somkid puts on brave face despite big SET fall on his first day in charge of economy

BANGKOK: -- 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.

For the month to date, foreigner net-sells of Thai shares stands at Bt29.2 billion.

The index was at an 18-month low when it closed at 1,325.33 points on February 28, 2014.

"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.

Source: http://www.nationmultimedia.com/business/Stock-plunge-nightmare-30267351.html


-- The Nation 2015-08-25

[PattayaPhom]

Now, or in the next week or so is the time to buy....my shares although 30% down in the past 5 months are still 15% more than last September....long term or cost averaging always works. I would be more worried if I was a Brit buy to letter with the impending tax implications coming in on mortgage relieve.

[Pattaya46]

Hi. Some statistics about what happened in the past

at the 28 times we got a more than 5% drop :

Source: Bloomberg: http://www.bloomberg.com/news/articles/2015-08-24/here-s-what-usually-happens-to-markets-after-the-s-p-500-drops-five-percent-in-a-week

I really hope we are not in a 10/9/87 or 10/3/08 case...

[Orac]

Picked up a couple yesterday and will buy some more small lots today. I think it has a lot further to fall but having small holdings makes me feel much better buying later when how much cheaper I got them at is more apparent.

Still a lot more bad news for Thailand to come in tourism and manufacturing me thinks - see Toyota have just announced ceasing production of Prius in Thailand.

[konying]

1. Got to love the optimism, again with the may be we get lucky attitude and ignore the problem and it might go away

2. I posted before, my accountant, whose sister works for ministry of finance, advised that crash was coming in September, according to sister, would appear it was true. May be ministry is ready for it, but need the smiling face to save the face

[Srikcir]

Prayut, Somkid and et al might want to talk to Thailand's BFF Chinese Trading Partner about how to best protect Thailand from further economic impacts from the Chinese economic crisis.

What are trading partners for if not open communication, transparency and coordination on economic policies? However, I suspect the Chinese could care less about Thailand's economic survival if there is no POLITICAL advantage.

The fact that the Chinese have taken no initiative to consult with Thailand on China's recent currency policies shows what China thinks of Thailand's leadership - IRRELEVANT

[elgordo38]

Most importantly, he said the government would prepare the country during this transition period so that it was more internationally competitive.

Hmm here comes a devaluation. Welcome to the race to the bottom club. These guys always use general terms never pinpoint anything

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.

Other factors hmm like people overburdened with debt? Poor politicians? Greedy corporations? The countries reserves are in US dollars. If the dollar starts to tank lookout below.

Edited August 25, 2015 by elgordo38

[Kannikapor88]

Are we not gonna hear : "No effect on Thai Economy or Thai Tourism" ...

[pattayasnowman]

Just the beginning

[BuaBS]

Some-one's nightmare , is another man's dream come true.

[Pinot]

I expect this week to continue to be volitile with a recovery next week. Stocks go up and down. Buy quality dividend/income producing stock and don't sweat the volatility.

No one knows what's going to happen in the short term. Long term markets always rise. Stay away from gold/metals. That's just pure speculation and not an investment.

I would be looking for bargains at the current valuations.

Edited August 27, 2015 by Pinot

[MacWalen]

Nightmare for some, an opportunity for others.