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Thailand's economy at risk from flu

Thailand's stock market and tourism industry risk being severely damaged by the bird flu outbreak, analysts said Friday as confirmation of the disease forced a halt to the billion-dollar poultry export business.

Major agricultural companies saw their share prices slump after the government announced it had detected bird flu in two young boys from west of Bangkok and in chickens in the same area.

Just before the close, Thai stocks had fallen 1.28 percent to 750.47 points while food giant Charoen Pokphand's had plummeted 12 percent to 3.52 baht and shares in another major exporter, GFPT, sank 16 percent to 18.20.

However, Prime Thaksin Shinawatra said he was confident investors would not panic and sell out of the Thai market.

"It's a short-term effect as the bourse is sensitive to psychological factors. The hardest hit sector will be the poultry industry," he told reporters.

Siam FN vice president Amarit Singnarong said that confirmation of bird flu in Thailand along with the subsequent halt to poultry exports had had an immediate effect on trading.

"There's no doubt this will cause panic within the market, with big poultry exporters likly to see more losses," said Amarit, adding that bargain-hunters were unlikely to emerge due to the long-term implications.

The news intensified the gloom that set in Thursday when Thailand's biggest customer for chicken products, Japan, ordered an import ban. The European Union had threatened to follow suit if the disease was confirmed here.

KGI Securities analyst Pat Pattaphongse said major agricultural firms had been sold down since the scare began in November, when the government reported what it insisted was an outbreak of fowl cholera and bronchitis.

Analysts said the Thai economy could withstand the crisis but the chicken exporting industry said it feared the outbreak could cripple its international and domestic sales.

Chaveevan Kampa, chairman of the Chaveevan Group told the <> the Japanese ban alone spelled disaster for Thailand's export industry.

Kim Eng Securities analyst Michael Stead said that after weeks of denials from the Thai government, open and transparent handling of the crisis was needed to restore market confidence.

"Long-term market prospects still look good but it depends how long it takes to clear up this matter," he said.

The analyst said the damage could also spread to other lucrative sectors of the Thai economy.

"It's hurt market sentiment hard in the agri-business sector but as well as its affect on agri-business it will hurt tourism," he said of Thailand's biggest foreign exchange earner, which is notoriously sensitive to safety scares.

Pacific Asia Travel Association director John Koldowski said a downturn in tourism across the region was inevitable, particularly because tourists were concerned about the lack of transparency in dealing with the disease.

"The feeling among tourists is if there is a problem, face it, deal with it, and get back on track," said Kowalski.

"People heard for so long that there were no terrorists in Thailand and then there were and now they are being told there is no problem with this outbreak but they don't believe it," he added.
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