"Foreign investors are deciding to completely abandon Thailand's market .... in the next six months, we'll see a major cooling off in all Southeast Asian regional markets," an analyst with a prominent foreign brokerage in Bangkok said. "Already, people can't be bothered with the Thai market, and the other regional markets are likely to suffer greatly as well." "Even major, positive economic news (in Southeast Asia) just triggers one-day recoveries, and then nothing more. It's an ever-decreasing, very dangerous circle... except in Singapore, which is stronger."

Thailand's stock exchange has lost nearly twenty-five of its value since January 1, while the Indonesian bourse has lost approximately twenty percent and the Philippine market has lost twenty-seven percent over that time. Foreign investors have already sold seven Times more Thai stocks in 2000 than they did in all of 1999.

The Bank of Thailand has hired external consultants to study stimulating the Bangkok bourse, and the Thai cabinet held an "emergency meeting" on May 11 to examine whether the stock drop will cause an economic collapse. It is unclear whether the cabinet or the consultants will have any effect. Despite high praise from the IMF, which on May 9 lauded Thailand's "impressive" economic recovery, many foreign and local retail investors believe Southeast Asia's alleged economic and political reform is just a smoke screen.

Many investors are concerned that Thai and Indonesian banks under report their non-performing loans, that Thailand faces mounting public debt and that Southeast Asian states have failed to establish a government-backed institution to manage insolvent companies' assets, one analyst said. In addition, few Southeast Asian states have the kind of sexy Internet companies that still attract investors despite recent losses on the Nasdaq index, he said. And political uncertainty throughout the region also is deterring foreigners. Indonesia remains plagued by violence in Aceh, the Maluku islands and even the main island of Java.

The southern Philippines has witnessed several recent hostage crises, and Thailand is due for a general election before the fall. Because of this political uncertainty, as well as many citizens' belief that Asia's economic recovery is still fragile, consumer spending in Southeast Asia remains much lower than in pre-crisis years. Because of its huge public debt, the government has been unable to adequately stimulate Thais to open their wallets, said Merrill Lynch Phatra Securities' Theerapong Vachirapong. The govt "has basically failed to encourage more consumer spending," he said.

-- AFP