• 20 Sep 2006 at 1:01 PM
  • Analysts

But You Know, Not If It Means Making Less Money

Bush Says U.S. Will Keep Pressing Spread of Democracy
–Bloomberg News Service
Bear Stearns Upgrades Thailand Following Military Coup
–Dow Jones Newswire
  • 20 Sep 2006 at 12:26 PM
  • Thailand

Thai Coup Leads To Upgrade

thailandtank.jpgWe were speaking to one of our trader friends yesterday who told us he was frantically buying up anything having to do with Thailand that slipped during the initial coup news-cycle. His figured that the risk of a coup had already been priced in, some of the selling was coming from irrational panic and now that the coup had actually happened, well, that was one source of risk that Thailand had put behind it.
Today we learned that it’s not just our independent trader friends who think like this. Bear Stearns, among other major financial institutions agrees.

Bear Stearns has raised its recommendation on Thai stocks to overweight from market weight and cut Indonesian equities to market weight from overweight.
“While any descent from constitutional democracy (however imperfect) is regrettable, we think the developments in Thailand set up a net reduction in political uncertainty and could speed a resumption of decisive governance that boosts already sagging consumer and business spirits,” the investment house said in a Wednesday report.
“Investors have heavily penalized Thai stocks since last year amid deepening political uncertainty, with the benchmark SET index having gained just 9% in U.S. dollar terms since January 2005, versus a 38% (advance) for the S&P/IFC regional benchmark and 50% for Jakarta stocks,” Bear Stearns said, adding that Thai stocks now offer some of the region’s deepest valuation discounts.

Bear Stearns Upgrades Thai Stocks To Overweight Vs Marketweight
[Dow Jones Newswire on EasyBourse]

  • 20 Sep 2006 at 10:56 AM
  • Thailand

One Night In Bangkok

bangkokbizasusual.jpgThere is frustratingly little good information out there on exactly what is behind the military coup in Thailand. The coupsters don’t seem to be all that bad—except, you know the whole “take over the country with our guns” thing—and the word is that they plan to reopen the financial markets tomorrow. They don’t seem to be about the cancel their countries bonds or nationalize industry. They keep saying things like they are just going to run the country until a new leader can be chosen.
We’ve heard a few different explanations. One of our friends thinks the Thai coup is an ethnic conflict between the Thai military and the ethnic Chinese who have done so well in business there. The ousted president was born to two Chinese parents. Another friend said it is just competing business factions—one based in the military, the other in the civilian government—taking the competition to the next level. Yet another says the military are simply good government reformers who were worried their country was being plundered by its leadership.
But this is DealBreaker, so we’ve been digging into the financial effects of the coup. The cost of credit-default swaps on Thailand’s debt jumped more than 100% yesterday, from $36,000 to $75,000 for a $10 million contract, before settling down to a $54,000. That’s not exactly a panic premium from the coup.
Reports from the Stalwart seem to confirm the market’s reading of the situation. Half the Stalwart team is in Thailand and reporting that the day after the coup was declared an official holiday and that Starbucks was still open.
Coup? What Coup? Got My Starbucks [The Stalwar]