Political tensions in Thailand last week derailed a rally in which shares rose as much in January as they did during 2005. Analysts have said that the market is unlikely to get back on track until protests subside. Thailand’s main stock index, the SET, was Asia’s second-worst performer last week, after South Korea’s, because of worries that a weekend protest against Prime Minister Thaksin Shinawatra might turn violent. No major violence was reported.
The SET, which rose 6.8 percent last year, climbed 6.9 per cent in January. But the SET fell 1.9 percent last week, to 747.09 points, compared with a decline of 0.5 per cent among regional markets as measured by the Morgan Stanley Capital International Asia-Pacific index. US-listed shares of Asian companies dropped after local trading ended, suggesting that prices could fall further. Still, some investors said increasing government spending on infrastructure and relatively low stock prices were behind last month’s gains and could also drive a rebound.
Planned increases in government spending on mass transportation and housing may lift earnings at companies like Italian-Thai Development, Thailand’s biggest construction company, and Siam Cement, the country’s largest cement maker. Johnny Summers of Altima Partners in London said that "I’m not basing my whole investment strategy on these megaprojects, but there are some companies with relatively good earnings prospects."