Selling wave hits tsunami-affected region


STOCK markets in the tsunami-affected region were hit by a selling wave yesterday, the economies seen being hit to different extents. However, some bourses managed to recover and finish the day higher. 

The Thai market registered the biggest fall in the region amid worries that the tsunami on Sunday would badly hurt the country's tourism-dependent economy. The SET Index skidded 14.4 points or 2% to a day's low of 655.6 points before recouping some losses to close at 664, down 6.5 points or nearly 1%. 

Other bourses in Asia that ended in the negative were Bursa Malaysia and Singapore, although the island republic was not affected by the tsunami that resulted from an undersea earthquake off Sumatra. 

The KLSE Composite Index closed 0.31 point lower at 906.9, recovering from a low of 901 in the afternoon. Singapore's Straits Times Index dropped 4.6 points or 0.22% to 2,051, from an intra-day low of 2,043. 

However, in Indonesia and India – the two worst-hit countries – stock markets finished the day on a high note. The Jakarta Stock Exchange Index was up 11 points or 1.12% to 997.5 despite the benchmark index dipping to a day's low of 984.7, while Mumbai's Sensex Index added 15 points or 0.23% to 6,513. 

Analysts said Thailand was likely to suffer the most, as tourism accounted for about 6% of its economy. Phuket – one of the most popular tourist destinations in Thailand – suffered much damage. 

Such stocks as Thai Airways, AirAsia Bhd, and tourism-related Thai-based hotel owner Royal Garden Resort PCL came under selling pressure due to fears that travel will dwindle following the disaster that swept across more than five countries. 

“Tourism will be at a standstill in this region for now,'' CLAS investment analyst Prabodh Agarwal as quoted by Reuters as saying. 

Thai Airways slid 1.75 baht or 3.5% to 48.75 baht, and SIA Ltd dropped 10 cents to S$11.50. 

On Bursa Malaysia, no-frills carrier AirAsia fell four sen to RM1.71 on fears that a contraction in traffic to Phuket would affect AirAsia's earnings, as it relies rather heavily on holidaymakers. Malaysia Airlines was unchanged at RM4.50. 

Analysts do not expect any major impact on Malaysia's economy given that the tsunami only affected the coastal areas in the northern west coast states, not industrial zones housing plants producing for export. 

TA Asset Management senior general manager Ang Kok Heng said he did not re-jig his investment portfolio after Sunday's disaster. 

“There shouldn't be any big economic impact on Malaysia, or even other countries, because the tsunami did not slam into any financial centres or manufacturing areas,'' he said. 

Asked if Malaysian construction companies would benefit from rebuilding activities, especially in India, Ang said there would be such jobs for builders in Penang as well as in other countries. 

However, he noted that the tsunami hit mostly remote areas in India and Sri Lanka, where infrastructure and buildings were likely to be just the bare minimum. 

E&O Property Bhd, which has a large water-front development project in Penang, slid 3.5 sen or 5% to 63.5 sen. Analysts said the disaster might affect demand for its soon-to-be-launched properties in Tanjong Tokong. 

The selling wave also spilled over to European markets. Shares in tour operators, insurance companies and hotel owners were hammered when these markets reopened after the Christmas break. 

According to Bloomberg, European tour operators, including Thomas Cook AG, had cancelled trips to the affected countries for the remainder of the year. 

“For travel companies, this means fewer reservations,'' B*Capital's fund manager in Paris, Franck Beretta, was quoted by Bloomberg as saying. “The potential cost of damage is weighing on insurance shares.”

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