Thailand looks cheap – so is it time to buy?
By Cris Sholto Heaton
This article is from MoneyWeek Asia, a FREE weekly email of investment ideas and news every Monday from MoneyWeek magazine, covering the world's fastest-developing and most exciting region.
"The time to buy is when there's blood in the street," is one of investing's most famous clichés. When all is chaos, fear is widespread and investors are fleeing, it's time to do the opposite. To the brave go the biggest returns – or so the theory goes.
But like most advice that urges you to buy at the bottom, there's a problem. How do you know there's enough blood on the streets? After all, in anything short of a nuclear war, things can always get worse. What looks like carnage now may look like a nosebleed just a short while later.
Thailand is a classic example of this dilemma. Its political problems have been building steadily for months. At each stage, the question rises: is it time to buy? So far the answer is "probably not yet"...
Thailand's tangled mess
Thailand's political problems are a tangled mess. But they come down to the ongoing struggle between associates of former prime minister Thaksin Shinawatra and a loose grouping of urban residents, royalists and businessmen, who call themselves the People's Alliance for Democracy (PAD).
The Thaksin faction has comfortably won the last three elections with support from rural Thais. Some vote-buying and electoral fraud probably took place, but these are generally seen as the fairest elections in Thailand's history and Thaksin won on the strength of his policies: he is genuinely popular with the rural poor for providing improved healthcare and microcredit schemes.
But the PAD refused to accept both Thaksin - who was pushed out in a military coup in 2006 - and the two Thaksin-friendly prime ministers who have held office since democratic rule was restored last year. Through a combination of increasingly violent protests - including occupying government buildings and Bangkok's airports - and increasingly petty lawsuits, they've succeeded in making it impossible for the government to work.
Earlier this year, prime minister Samak Sundaravej was ludicrously forced to step down when the constitutional court found he had violated the constitution by hosting a cooking show on Thai television.
Last week, the PAD won a major victory when Sundaravej's successor Somchai Wongsawat (who is also Thaksin's brother-in-law) and several other senior politicians were banned from politics for five years for vote-buying and three Thaksin-supporting political parties dissolved. Thaksin himself is in exile after being convicted in absentia of corruption charges, although he continues to meddle from outside the country.
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