Thai stocks plunge over fears of revered King's health

BANGKOK, Oct 15, 2009 (AFP) - Thai stocks dived as low as eight percent in trading Thursday as anxiety over the health of the nation's revered king and fears of political instability pummelled the market for a second day running.

The 81-year-old King Bhumibol Adulyadej, the world's longest-reigning monarch and a unifying figure in a fragile country, has been in hospital for more than three weeks recovering from a lung infection and fever.

Global rumours of his deteriorating condition have rattled the Stock Exchange of Thailand (SET), which plunged 8.22 percent at one point in trading Thursday, following a 2.04 percent drop at Wednesday's close.

Concerns continued to linger despite a palace announcement late Wednesday that the king's "general condition is good". The statement also said he would need to stay in hospital for treatment and a full recovery could take a while.

"Foreign investors continue to sell blue-chip shares on concerns about the same rumour," said Thanachart Securities' senior vice president Pichai Lertsupongkit on Thursday, without mentioning the king directly.

Another analyst with a Bangkok-based brokerage, asking not to be named, told AFP that doubts about the monarch's health were a "major concern".

"The king is a key institution for political stability in Thailand so the market is closely watching his health," he added.

"Volatility will likely remain in place as long as the uncertainty is not completely lifted," added Sebastien Barbe, head of emerging market research and strategy at the Calyon investment bank in Hong Kong.

Although a constitutional monarch, the king has projected an image throughout his 63-year reign as the only unifying figure in the country, where he is revered as a demi-god by many Thais.

Media watchdogs have criticised the increased use of harsh lese majeste laws, which state that anyone who insults the king or other royals can be jailed for up to 15 years, preventing fully open reporting about the palace.

Thailand's English-language Nation newspaper Thursday said stocks had fallen "on rumours from Hong Kong and other overseas financial markets on the sensitive political situation here", but made no mention of the king.

His health is a particularly sensitive topic in light of the political turmoil that has rocked Thailand for three years, since former prime minister Thaksin Shinawatra was toppled in a 2006 coup.

The country remains deeply divided between Thaksin's supporters, mainly in the rural north and northeast, and his foes in the Bangkok-based power cliques of the palace, military and bureaucracy.

On October 17 and 24, thousands of Thaksin's "Red Shirt" supporters, who regularly hold mass protests, are planning rallies in the Thai capital -- another factor cited by analysts for the market's instability.

The rival, anti-Thaksin "Yellow Shirts" -- who staged a crippling blockade of Bangkok's main airports late last year, causing huge economic damage -- also remain highly active, recently forming a new political party.

Thaksin himself fled the country last year to avoid a jail term for corruption.

Amid such political fragility, many look to the king as a father figure. In August, he issued the latest in a series of warnings that the country could "collapse" if Thailand's feuding political factions did not unite.

"From school and in the media, people are told that the monarchy is central to what it means to be Thai," said Kevin Hewison, a Thai politics researcher at the University of North Carolina at Chapel Hill in the US.

"The monarchy is a large part of the way many people believe Thailand operates at the moment," he added.

Source: AFP

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