• 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]

  • 19 Sep 2006 at 1:04 PM
  • Thailand

The Military Coup in Thailand

A military coup is apparently underway in Thailand. Tanks have surrounded the main government building in Bangkok. Thai Prime Minister Thanksin Shinawatra is in New York for the United Nations General Assembly, which is said to be changing its schedule to allow him to address the body tonight.
According to a Red Alert from Stratfor:

“The tanks moved in shortly after Thaksin issued a state of emergency and ordered army Commander in Chief Sondhi Boonyaratkalin to report to Deputy Prime Minister Pol. Gen. Chidchai Wannasathit. It is unclear whether this is an attempted coup, preventative military action or a countercoup.
Meanwhile, things are relatively calm in Bankgkok. No soldiers have been patrolling the streets, no curfew has been declared and the airport is open.”

Thanksin is a wealthy businessman who has championed free-markets, economic stimulus and welcomed foreign investment. He has been popular in Thailand but has recently come underfire for corruption after his family sold a $1.88 billion stake in Shin Corp, the conglomerate he founded in 1983, to the Thai government. It apparently didn’t make opposition members any happier when it was revealed that the entire transaction would be tax-free and was made when share prices were at an eleven-year high. Thanksin defends the sale by saying it was an effort to eliminate conflicts-of-interest stemming from his family’s business connections.
The US and Japan are major trading partners with Thailand. The US is the largest importer of Thai goods and Japan is the largest exporter into Thailand.
So which US companies or investment funds have the most to lose in a Thai coup? We’re gathering together what information we can. Send us any information you might have: tips (at) dealbreaker (dot) com.
For now we’re trying to reach Quest Management’s Lance Depew and Doug Barnett, who run the only Thailand-specific foreign hedge fund—the $225-million Thai Focused Equity Fund.
Military Launches a Coup in Thailand [Associated Press]