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Political turmoil affects Thailand’s credit ratings

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The chairman of the Stock Exchange of Thailand (SET) on Wednesday said Thailand’s credit ratings outlook if downgraded by two credit rating agencies will erode confidence among foreign investors.

SET chairman Sompol Kiatphaibool said that Moody’s Investors Service and Standard & Poor’s credit ratings companies are likely to lower Thailand’s ratings due to the country’s political chaos, which has now become an important indicator to Thailand’s credibility. That means it will become more expensive for Thailand to borrow money from overseas. In addition, the interest rate on both government and corporate bonds would have to become higher in order to accompany the higher-risk premium.

via SET: Bourse chief concedes political turmoil affects Thailand’s credit ratings.

hailand’s equity market bounced back strongly from the global crisis in 2009, with a total shareholder return (TSR) of 90.8% for the year against a 36% decline the year before. Ultra-lax monetary policies and massive public spending across the globe helped spur a quick turnaround from the worst global downturn since the Great Depression.

With economic pundits forecasting that Asian economies will lead global growth over the next few years, led by emerging giants China and India, it seems logical that investors will shift their funds to Thai and Asian equity markets in search of higher yields. Yet a glance through the 2009 Post/ AWR Lloyd-PYI Shareholder Scorecard shows that some sectors clearly benefited more than others.Homeand office products led all sectors with a 267% gain in 2009, followed by agribusiness at 238% and property development at 132%. Lagging the chart was paper and printing materials, with a -1.3% TSR for 2009, professional services with a meagre 4.5% gain, and property funds up 31%.

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