Thai Stocks Drop as Protesters Shut Airport; Thai Air Declines

By Ian C. Sayson and Chan Tien Hin

Nov. 26 (Bloomberg) -- Thai stocks dropped, with the benchmark index set for its lowest close since 2003, after anti- government protesters shut Bangkok’s airport.

The SET Index fell 7.76, or 2 percent, to 384.09 as of the 12:30 p.m. local time break. Thai Airways International Pcl sank 5.8 percent, set for its biggest loss in a month, while Laguna Resorts & Hotel Pcl plunged 14 percent. The index has lost 56 percent since May 25, when the campaigners took to the streets. Thailand’s baht slid to the lowest since February 2007.

Four people were wounded by a grenade thrown this morning at the protesters occupying the airport, police said. The SET Index is on course for its worst year since the 1997 financial crisis as the anti-government alliance seeks to topple a third prime minister since the 2006 coup d’etat that ousted ex-Premier Thaksin Shinawatra.

“It is possible that this regime change in the making could push Thailand to the economic brink,” said Michael Auyeung, who manages about $500 million as chief investment officer at Pacific Mutual Fund Bhd. in Petaling Jaya, outside Kuala Lumpur. “The next two quarters could see attractive investment opportunities.”

The baht fell earlier today to a 21-month low at 35.35 against the U.S. dollar, adding signs that the political turmoil is eroding confidence in Southeast Asia’s second-biggest economy.

The demonstrators, who want Prime Minister Somchai Wongsawat to take responsibility for deadly clashes with police last month, may force him to declare a state of emergency to prevent escalating violence. The premier, set to return today from the Asia-Pacific Economic Cooperation forum in Peru, has rejected the resignation calls and police have avoided using force since the Oct. 7 clash in which two people died and 470 were injured.

Flights Canceled

Cathay Pacific Airways Ltd., Singapore Airlines Ltd. and other airlines have canceled flights to Bangkok as Thai authorities warned the protest will harm the tourism industry.

“It’s going to slow down arrivals as we are going into the peak season,” Andrew Stotz, head of research at CLSA Ltd. in Thailand, said in an interview today. “Tourism is a huge part of the Thai economy.” Slowing tourist arrivals will hurt the economy at the same time as exports of autos and electronic components slow, Stotz said.

The government targets 600 billion baht ($17 billion) of spending by tourists this year, about 7 percent of gross domestic product. Tourist arrivals tumbled 17 percent to 900,000 in September, compared with the prior month’s 0.2 percent increase, according to preliminary tourism statistics from the Bank of Thailand in Bangkok. That’s the biggest slide since January 2005, a month after an Indian Ocean tsunami killed 220,000 people.

Laguna Resorts

Thai Airways, the nation’s largest carrier, fell 5.8 percent to 7.35 baht, set for its sharpest loss since Oct. 24. Laguna Resorts, a hotel operator, sank 14 percent to 21.5 baht, heading for its worst day since Sept. 1999. Airports of Thailand Pcl, the nation’s largest airport operator, slid 4.5 percent to 17 baht.

The Bangkok-based People’s Alliance for Democracy, which includes many middle-class Thais and receives support from the country’s royalist elite, accuses Somchai’s ruling party of buying votes to win elections. He’s also accused of trying to protect Thaksin Shinawatra, a former prime minister ousted in a 2006 coup who fled the country to escape corruption charges.

“The seizure of the international airport is the most serious damage,” said Jumpon Saimala, senior executive vice president of ING Funds Thailand Ltd., which has about 220 billion baht of assets. “Tourism, which had been the only bright sector, will be hit hard as most people will try to avoid coming to Thailand.”

Leisure Index

A measure of hotel and resort operators fell for an eighth day, sliding 3.3 percent to 190.10. The measure, made up of 15 companies, is heading for its lowest close since Jan. 19, 2005.

Minor International Pcl, the biggest local operator of restaurants and hotel resorts, lost 8 percent to 5.75 baht, on course for its lowest since December 2005. Erawan Group Pcl, a Thai hotel operator, decreased 9.1 percent to 1.5 baht, heading for its lowest close since Dec. 1, 2005.

Auyeung said Pacific Mutual has been out of Thai stocks since the end of the first quarter.

“The economic headwinds are daunting enough, and the government would already have had its hands full,” he said. “That they are totally distracted and unable to effect any policy counter-measures bodes ill for the country’s outlook.”

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net; Chan Tien Hin in Kuala Lumpur thchan@bloomberg.net.