HONG KONG, Dec 19, 2006 (AFP) – Asian stocks were broadly lower Tuesday, with investors spooked by the worst ever losses in Bangkok where the military government imposed capital controls reminiscent of the 1997 Asian financial crisis.
The controls, aimed at curbing a massive appreciation in the local currency, stunned the region, prompting heavy stock sales in Thailand and undermining sentiment elsewhere.
The Thai baht has been a standout unit in the region after rising to a nine-year high against the greenback, putting pressure on the key exporters and prompting complaints by powerful union and business lobby groups.
The junta, however, may have overstepped the mark by seeking to rein in the baht with the Thai benchmark index plunging more than 10 percent at the open and forcing the Stock Exchange of Thailand (SET) to suspend trading.
On the resumption of trade, the SET 50 crashed 85.89 points or 11.76 percent to close the morning session at 644.66, off a low of 630.16. It was the biggest one day fall in the 31-history of the SET.
Among Thailand’s closest neighbours, Kuala Lumpur was down 2.91 percent in early afternoon trade, Jakarta slumped 1.93 percent, Singapore was off 1.76 percent while Hong Kong was down 1.2