Thai stocks fell 3% Wednesday amid worries that a string of bombings over New Year's would further shake investor confidence in the Asian nation. The market was closed Monday and Tuesday.
Several bombings in Bangkok, the capital, on New Year's Eve and New Year's Day killed three people and wounded nearly 40.
The attacks, which authorities blamed on politicians and renegade army officers loyal to ousted Prime Minister Thaksin Shinawatra, also have raised concerns about Thailand's stability, economy and thriving tourism industry.
The bombings are another blow to the Thai stock market, which was roiled the week before Christmas after the central bank imposed capital controls on Dec. 19 to stem the baht's surge, sending the market down nearly 15%. The measure was quickly amended to exclude foreign stock investments, causing the market to bounce back 11 percent the following day.
The bombings certainly do little to instill investor confidence in Thailand, but analysts said the market is unlikely to suffer as much upheaval as it did two weeks ago.
Standard & Poor's Rating Service said the bombings have negatively affected Thailand's creditworthiness, but it said a rating change will depend on how things develop in the coming weeks.
"Coming in the wake of a string of negative events in 2006, the latest bombings certainly have dealt a further serious blow to the kingdom's credit support," said Kim Eng Tan, an associate director for sovereign and international public finance ratings at S&P. "Our chief concern is the impact on investment sentiments in Thailand."
The Thai stock market trades at eight times price to earnings compared with 13-16 times for other Southeast Asian stock markets, according to Reuters data and the Thai stock exchange.
The surprise capital controls on Dec. 19 triggered a near 15% drop in the main stock index. The baht slipped 4% over the course of 4 days. "We expect the capital inflow controls to be watered down quite quickly, but this is unlikely to induce fresh investment until a formal constitution is written," Nomura International (Hong Kong) Ltd. analyst Sean Darby said in a
note to clients.
Deputy Finance Minister Sommai Phasee said the government planned no special measures to help boost investor confidence after the Bangkok bombings and expected the weak sentiment to be short lived. "We don't think the bombings will cause panic among stock investors. It's
just a political quarrel, not violence like bombings in the south," he said.