(13-12-2013, 12:54 PM)specuvestor Wrote: This recent editorial talks about the political conundrum which we addressed above. But missed an important ingredient to make the analysis complete: the driving force behind the Democrats and the Yellow Shirts.
http://www.bloomberg.com/news/2013-12-10...ystem.html
"The demonstrators who have filled the streets of Bangkok over the past several weeks say snap elections called by Prime Minister Yingluck Shinawatra are no concession, because her ruling party is certain to win."
I'm not even sure how to respond to this statement. Frustration is now an understatement... more like exasperation.
I think nowhere else in the world is a coup considered positive... I think the King cannot wait anymore
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Thai Baht Plunge Is No Bear Market Sign to Coup-Savvy Investors
2014-05-23 00:40:31.977 GMT
By Weiyi Lim, Zahra Hankir and Anchalee Worrachate
May 23 (Bloomberg) -- Within a minute of Thailand’s army
announcing a coup, the baht fell 0.6 percent versus the dollar.
Templeton Emerging Markets Group and Samsung Asean Equity Fund
say any market weakness will be shortlived.
“We view the current military coup as likely overall
positive as it creates a more stable environment,” Mark Mobius,
who oversees about $50 billion as Templeton Emerging Markets
Group’s executive chairman, said by e-mail. “The prognosis for
Thailand is good given that direct foreign investors want
stability in the country.”
Overseas investors pulled $408 million from Thai stocks
since martial law was declared early on May 20, according to
exchange data, helping send the benchmark SET Index in Bangkok
down 0.7 percent this month. The baht, the worst-performing
currency in Asia in May, was 0.1 percent stronger today at
32.563 per dollar as of 7:19 a.m. in Bangkok following a 0.4
percent decline yesterday.
While Credit Agricole CIB, Commonwealth Bank of Australia
and Mizuho Bank Ltd. expect short-term weakness in the baht, the
coup may provide certainty in a market that has endured 12
military takeovers since 1932, Mark Williams, chief Asia
economist at Capital Economics in London, said by phone.
“The stock market could fall tomorrow on a knee-jerk
reaction to heightened perceived political risk, but it should
be an opportunity to start buying near the point of maximum
pessimism,” Alan Richardson, whose Samsung equity fund beat 96
percent of peers tracked by Bloomberg in the past five years,
said in a phone interview from Hong Kong. “We are approaching
the end game to the political crisis.”
Lasting Resolution
The SET Index of shares gained 0.2 percent in Bangkok
yesterday before the coup announcement, extending this year’s
advance to 8.2 percent. The yield on Thailand’s 10-year bonds
climbed two basis points to 3.79 percent. The iShares MSCI
Thailand Capped exchange-traded fund fell 1.1 percent to $73.69
in U.S. trading hours.
“It could be positive for financial markets in the near
term by reducing uncertainty and reducing the risk of the
political standoff turning violent,” Williams at Capital
Economics said. “But it underlines the scale of the divide in
Thailand and suggests that a lasting resolution to the political
conflict is a long way off.”
The rift between the largely rural-based support for former
Prime Minister Thaksin Shinawatra, who was ousted in a 2006
coup, and his royalist opponents has polarized Thai society and
weighed on production and tourism. The nation will probably have
the slowest growth among its major Southeast Asian peers this
year, according to Bloomberg surveys.
‘Economic Standstill’
While yesterday’s military takeover “probably helped
prevent further bloodshed and full-blown political
confrontation, the problem is that the uncertainty that follows
may lead to an economic standstill,” said Kelvin Tay, chief
investment officer of South Asia Pacific at UBS Wealth
Management, which oversees $2 trillion.
UBS Wealth has been underweight Thai stocks since November
and is unlikely to change its position until there’s a
government in place and a resolution to the crisis, he said.
Stocks on the 528-member SET Index trade at 13 times
projected 12-month earnings, compared with multiples of 11.4 for
the MSCI All Country Asia ex Japan Index and 10.8 for the MSCI
Emerging Markets Index.
Baht Outlook
“The rubric goes that one should buy any market when there
is blood on the streets, but that suggestion arose because blood
on the streets historically caused the market in question to dip
to levels that were too cheap to ignore,” Sally Macdonald, head
of Asian equities at Marlborough Fund Managers in London, said
by e-mail. “That cannot be said of the Thai market at
present.”
The baht may weaken 1.4 percent to 33 per dollar “in the
next couple of sessions,” according to Frances Cheung, head of
Asian rates strategy at Credit Agricole in Hong Kong. Mizuho
Bank’s senior economist Vishnu Varathan said the baht may drop
to 33.5 per dollar. The currency’s one-month implied volatility
jumped 36 basis points to 6.07 percent yesterday, the biggest
increase since August, and was little changed today, according
to data compiled by Bloomberg.
The imposition of martial law was “credit negative” and
will further damp economic growth,’’ Moody’s Investors Service,
which along with Fitch Ratings and Standard & Poor’s rates
Thailand at the third-lowest investment grade, said in a note
yesterday. Fitch will monitor events closely, according to
Andrew Colquhoun, head of Asia-Pacific sovereigns in Hong Kong.
Thailand’s economy shrank 0.6 percent in the three months
through March from a year earlier, data showed this week,
missing the median estimate for a 0.4 percent expansion in a
Bloomberg News survey of 23 analysts.
“There would be negative implications for the sovereign
ratings” if political developments suggest that widespread
violence has become likely, said Agost Benard, associate
director of sovereign ratings at S&P.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
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