Tags: baht, coups and other bullish signs, terminated constitutions, Thailand
Thailand is used to coups; it’s had so many in the last 80 years that experts are not really sure how to count them. So only an amateur would allow the sight of a general declaring the country’s two-year-old constitution “terminated” to take whatever they can get for their baht; the old hands know that military rule, while bad—very bad—for democracy, is good for business. And, of course, since none of them live in Bangkok or are currently subject to gag orders or curfews, themselves.
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….”
“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….”
“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.”
Thai Baht Plunge Is No Bear Market Sign to Coup-Savvy Investors [Bloomberg]
Thai Baht Weakness After Military Declares Coup [WSJ]