THAILAND NEW YEARS BOMBING
Apichart Weerawong  /  AP
A Thai soldier guards at a sky train station as commuters walk past in Bangkok, Thailand Wednesday. Thailand's powerful military council has vowed to punish those behind the bombings, which killed three people and wounded nearly 40 on the New Year's Eve.
By Associated Press Writer
updated 1/3/2007 7:49:38 AM ET 2007-01-03T12:49:38

Thai stocks tumbled 3 percent Wednesday as a string of bombings over New Year's in Bangkok further shook investor confidence in the Asian nation.

In its first trading day of the year, the Stock Exchange of Thailand's benchmark SET Index fell as much as 3.8 percent before recovering some to close at 659.25, down 3 percent from Friday. The market was closed Monday and Tuesday.

Other Asian markets were not affected, with Hong Kong's benchmark index hitting a record high.

Several bombings in Bangkok 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 tumbling nearly 15 percent. The measure was quickly amended to exclude foreign stock investments, causing the market to bounce back 11 percent the following day.

"In the near future, there will be a negative impact. The confidence has been shaken," said Kitti Nathisuwan, head of research for Macquarie Securities.

"Remember, the foreign investors were spooked by the big policy blunder on the baht in December," he said. "This is yet another bad surprise and will dent consumer confidence. If the bombings are allowed to happen again, then the economy will be under a lot of pressure."

In currency trading, the Thai baht, which strengthened to as much as 35.45 per U.S. dollar on Tuesday, weakened to 35.90 Wednesday. On Friday, before the bombings, the baht traded at 36.11 per dollar.

Shopping mall operator Central Pattana, whose Central World Plaza was near one of the bomb sites, plunged 7.96 percent to 20.80 baht, while Bangkok Bank was down 3.64 percent at 106 baht and state oil and gas company PTT was down 2.86 percent at 204 baht.

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."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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