We 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]