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Pattaya Daily News

16 September 2008 :: 11:09:58 am 42489

Thai Shares Plunge on Concerns Over Lehman Collapse

BANGKOK, Sept 16 - Thai shares dropped sharply in early morning trading Tuesday in tandem with stock markets across the region in the aftermath of the demise of top US investment bank Lehman Brothers, even though the Bank of Thailand (BoT) initially held that the Lehman collapse would have only a limited impact on Thailand.
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The Stock Exchange of Thailand (SET) composite index opened at the morning session at 619.76, down 22.63 points. Shares in Japan, South Korea, China and Taiwan are down by 5 to 6 per cent.

The fourth-largest US investment bank, Lehman filed for bankruptcy protection on Monday, becoming the latest victim of the global credit crunch.

BoT Deputy Governor Bandid Nijathaworn on Monday held that Lehman Brothers sought bankruptcy protection would have only limited impact on Thailand since the US giant investment bank had not opened any branches here.

He said the central bank had checked the status of 14 local commercial banks and found they had altogether invested Bt4.3 billion in Lehman through lending and investment in instruments issued by the US bank.

As of the end of July, total assets invested by Thai commercial banks amounted to Bt102 billion or 1.3 per cent of the total assets in Thailand’s whole banking system.

So, investments made in Lehman are considered low and should not have any impact on the status and stability of the Thai banking system.

Mr. Bandid said the financial position of Thai commercial banks has been strong, with some 70 per cent of liquidity in the banking system stemming from local deposits rather than offshore loans.

At present, the capital-to-risk asset ratio of commercial banks is as high as 12 per cent. Mr. Bandid viewed that the Lehman’s bankruptcy might cause an outflow of capital from Asian stock markets since foreign investors, particularly those from the US, had to sell shares or assets held in Asia so that they could bring back money to help shore up the position of financial institutions in the US.

He predicted that foreign funds would flow out of the money and capital markets as had occurred early this year.

So, the central bank urged commercial banks to monitor the situation closely in the next one to two months so they could adjust to the situation.

He conceded the collapse of financial institutions in the US is likely not yet over, and that it would affect the economies of the US and many other countries.

Under the circumstances, Thailand’s exports to key destinations would expand at a slower pace.

However, he believed the US Federal Reserve (Fed) would be able to manage the impact of the Lehman bust to a limited extent because the Fed had been well-aware of the investment bank’s position. (TNA)

Reporter : PDN staff   Photo : Internet   Category : Thailand News

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