Brokers skeptical about Thai market rescue drive<\/p>\n
By Vithoon Amorn<\/p>\n
BANGKOK (Reuter): The Thai government and private sector have
\nstepped up a joint campaign this week to rescue a battered Thai
\nstock market but analysts were skeptical it could revive
\nconfidence and convince investors to return.<\/p>\n
Government and private banks have joined brokerage firms to
\nlaunch two market support funds that would provide a total of up
\nto 25.7 billion baht ($1.03 billion) for buying stocks and
\nlending to investors facing the prospect of being forced to sell
\nshares to pay off debts.<\/p>\n
Deputy Prime Minister Amnuay Viravan on Tuesday announced a
\nbroad tax and industry support package designed to help weak Thai
\nexports that had widened the current account deficit and reduced
\nThai economic growth to its slowest pace in a decade.<\/p>\n
Thai exports rose only 3.8 percent year-on-year between
\nJanuary and July, against 26.2 percent a year ago.<\/p>\n
Private economists project annual Thai gross domestic product
\ngrowth will slow to growth of as low as 6.2 percent in 1996
\nagainst 1995's 8.6 percent.<\/p>\n
\"The rescue efforts would give only a short psychological
\nboost but market jitters would return as long as underlying
\neconomic and political problems are not addressed,\" said
\nNanthawat Chouysong of Poonpipat Finance and Securities.<\/p>\n
Buoyed by buying of bluechips by part of a 15.27 billion baht
\nrescue fund set up in August -- originally sized at 20 billion
\nbaht before being whittled down -- the stock index rallied on
\nThursday to close up 3.02 percent or 30.05 points.<\/p>\n
It finished at 1026.21, well above the key psychological level
\nof 1,000.<\/p>\n
Another analyst at Seamico Securities Plc said stock buying by
\nthe rescue funds would provide an opportunity for foreign fund
\nmanagers, who were recent major sellers of Thai stocks, to
\nfurther unload Thai stocks in their portfolios.<\/p>\n
Analysts said sentiment had also been eroded by political
\nuncertainty ahead of a no-confidence debate against embattled
\nPrime Minister Banharn Silpa-archa in parliament next week.<\/p>\n
They said regardless of the outcome of the no-confidence vote,
\nThailand would likely see a change in its premiership later this
\nmonth.<\/p>\n
Banharn faces opposition allegations that accuse him of
\neconomic mismanagement, a land deal scandal involving his family,
\nand plagiarism on the thesis of his master's law degree. He has
\ndenied the charges.<\/p>\n
The Thai stock market declined 20.8 percent between July 2 and
\nSeptember 10 before it rebounded 4.5 percent on Wednesday and
\nThursday mainly on the reported launch of the two funds.<\/p>\n
The Bank of Thailand has in the past week also helped by
\nassuring the market that no finance and brokerage firms faced
\nfinancial troubles although their earnings this year may have
\nbeen hurt by prolonged weakness in the market.<\/p>\n
The central bank said it was prepared to maintain stock and
\nmoney market stability by injecting funds to sustain baht
\nliquidity.<\/p>\n
Analysts expect the market to greet Banharn's departure with a
\nrally but they said how long the euphoria would last would depend
\non who parliament would pick as his successor.<\/p>\n
They said although the launch of a 10-billion-baht rescue fund
\nby state-owned Government Savings Bank had triggered a debate on
\nthe legitimacy of diverting public funds to help private stock
\ninvestors, it probably came at a right time when an unpopular
\ngovernment leadership was heading for a change.<\/p>",
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