Thread: In or Out: Thai Stock Investors Weigh Escalating Political Risk

In a span of three days, more than $3.85 billion has been erased from Thailand’s stock market as political risks heightened ahead of national elections.

The nation’s benchmark SET Index slid 1.3 percent in that period. In a twist, Thai Raksa Chart, the party linked to exiled former leader Thaksin Shinawatra, saw a bid to make Princess Ubolratana Rajakanya its prime ministerial candidate rapidly unravel Feb. 8 as her brother, King Maha Vajiralongkorn, publicly opposed the move. Activists petitioned the Election Commission about disbanding Thai Raksa Chart for violating election rules.

Uncertainty surrounding the Thai ballot will have an impact on equities, said Nader Naeimi, head of dynamic markets at AMP Capital Investors Ltd. in Sydney. Investors are bound to be involved in some profit taking after markets started the year by pricing in “a lot of good news around the Fed, around central-bank policy,” he explained.

Foreign investors have sold $71 million net in Thai stocks in the past two days, according to data compiled by Bloomberg. On Monday, the SET Index fell the most in almost a month, and stocks linked to Thaksin also had a wild ride: SC Asset Corp. and Praram 9 Hospital Pcl, both companies controlled by his family, slumped after rallying last week, while Intouch Holdings Pcl -- which Thaksin founded before selling the entity to Temasek Holdings Pte -- slipped almost 5 percent.

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Foreign Investors Fleeing Thai Markets Prior to March Election

BANGKOK – Foreign investors have dumped 10.5 billion baht in Thai equities in seven straight sessions, the longest losing streak in more than two months, as worries about potential political instability grip the nation ahead of elections in March.


The Stock Exchange of Thailand main index has lost about 175 billion baht of its market value since the surprise, short-lived entry of the sister of His Majesty the King into politics threw the election into turmoil.


Until recently, overseas inventors had bought a net 8.3 billion baht of Thai shares between Jan 1 and Feb 7.


After Feb 7, things turned down with foreign sales of 2.3 billion baht for the year-to-date. In 2018, foreign net selling was nearly 300 billion baht.

Investors may return after the election, fund managers say.


“That’s because of political uncertainty. The political heat is still here,” said Prapas Tonpibulsak, chief investment officer of Talis Asset Management.


“Some investors may want to sell some and are in no rush to come back until there is clarity after the poll,” he said.

Thai stocks are still a good bet because economic fundamentals remain solid, with growth of more than 3% expected this year, said Saharat Chudsuwan, head of marketing and wealth advisory of TISCO Asset Management.


“This is just political noise and it will go away,” he said.


The key risk for the economy is the possibility of violent protests ahead of the elections, said Capital Economics.


“Another outbreak of protests and violent conflict, would deal a significant blow to the economy,” it said, estimating that the last outbreak of violence in 2013-2014 knocked around 0.7 percentage point off economic growth.


Southeast Asia’s second-largest economy grew slightly faster than expected in the fourth quarter, with 2018 growth of 4.1%– the fastest pace in six years.


But growth this year could be hurt by politics.


“We maintain our forecast of below-potential GDP growth of 3.7% in 2019, with downside risks increasing from export slowdown and political uncertainty,” said Charnon Boonnuch, economist of Nomura in Singapore.



By Orathai Sriring and Satawasin Staporncharnchai
Thompson Reuters

Be nice if the baht would also start going down.

Yet some say it's still important that the people get to choose what stripe of crook they want.

With the help of a few hundred baht inducement for the kamnan, of course.