By Amy Kazmin in Bangkok
Thursday, December 21, 2006
Thailand's stock market gained 11.2 per cent yesterday, driven by bargain- hunting investors snapping up cheap equities, as Thai economic policymakers sought to dismiss Tuesday's market chaos as the result of a “misunderstanding”.
The bounce, a day after the steepest one-day plunge in Thai shares since 1990, followed Bangkok's abrupt retreat from plans to impose a 10 per cent withholding tax on short-term foreign equity investment, a plan originally intended to ease speculative pressure on the baht.
However, foreign investors – who dumped about Bt25bn ($691m, �24m, £352m) of Thai shares in the wave of panic that gripped the market on Tuesday – were net sellers again yesterday, offloading Bt2.8bn of shares as the market rallied.
In an effort to bolster Thai confidence, the stock market authorities predicted that the equity markets – which saw about Bt773bn in value wiped out on Tuesday – would soon recover fully.
But analysts said that foreign investors, in spite of optimism on prospects for the economy and the currency, were likely to remain skittish about the Thai markets in the short-term, given that there are worries about erratic policymaking and apparent official indifference towards foreign investors.
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