Thai stocks lost 1.37% yesterday on thin trade as political risk took a sharp upward turn with the surprise seizure of several government agencies by protesters under the People's Alliance for Democracy.
The Stock Exchange of Thailand index closed yesterday at 668.92 points, down 9.28, in trade worth 9.087 billion baht. Energy stocks lost 1.2%, banks fell 1.72% and property dropped 1.92%.
Foreign investors were net sellers of 375 million baht, while local institutions were net sellers of 702 million and retail investors net buyers of 1.07 billion.
SET president Patareeya Benjapolchai said politics and the PAD rallies was the main factor for the markets yesterday.
''I personally hope these protests are not extended or expanded elsewhere. Investors are now waiting on the sidelines to see what will happen. Hopefully things remain peaceful and we will not see any further declines,'' Mrs Patareeya said.
She added that the SET was aiming to set up an eight-billion-baht matching fund next month to take advantage of recent selling in blue-chip stocks.
Mrs Patareeya acknowledged that the uncertainties would also have an impact on the primary market, with potential listings likely to delay their initial public offering plans for the near future.
The SET currently has a new listing target of 30 companies for the year, down from a target of 37 set at the beginning of the year. Only seven new listings were recorded in 2007.
Robert Penazola, chief executive officer at Aberdeen Asset Management, said the market, down 18.58% over the past three months, had largely factored in political risk into prices.
For long-term investors, buying opportunities were plentiful among firms with solid fundamentals and earnings prospects, he said.
In the bond market, yields fell by four to five basis points ahead of today's Monetary Policy Committee meeting.
Ariya Tiranaprakit, an executive of the Thai Bond Market Association, said politics had little impact on the market, with traders focusing instead on speculation that the central bank could keep its one-day repurchase rate, now 3.5%, unchanged at today's meeting due to slowing inflation and economic growth.
But Rob Subbaraman, Asia chief economist for Lehman Brothers, said the central bank was likely to raise rates by a quarter-point.
There is a 60% chance that the central bank will increase interest rates, he said. ''It will be the last hike. Inflation is high. But oil prices have started to decline,'' Mr Subbaraman said, adding that the economy and exports would slow in the second half with the world economy.