Investors shun Thailand as growth weakens, political protests heat up

By Tom Westbrook and Scott Murdoch

 

FILE PHOTO: FILE PHOTO: Thailand's Prime Minister Prayuth Chan-ocha attends a family photo session with new cabinet ministers at the Government House in Bangkok, Thailand August 13, 2020. REUTERS/Jorge Silva

 

SINGAPORE/HONG KONG (Reuters) - A selloff in the Thai baht, underperforming stocks and pressure on the bond market reflect growing concern from global investors over political instability and the growth outlook in Southeast Asia's second-biggest economy, analysts and fund managers say.

 

Thailand suffered its deepest economic contraction in two decades last quarter and a long haul to recovery looms as the COVID-19 pandemic has hammered its mainstay tourism industry.

 

At the same time, the government is facing a student protest movement which is gathering momentum and disruption to its policy agenda by the surprise resignation of Finance Minister Predee Daochai on Tuesday, after less than a month in the job.

 

"I think no other country has these two or three problems going on at the same time, as if the COVID-19 situation isn't bad enough," said OCBC Bank economist Howie Lee.

 

Prime Minister Prayuth Chan-ocha has said Predee's exit, for health reasons, would not affect economic plans, but he did not outline a timetable for appointing a new minister.

 

The baht fell and has dropped about 0.6% on the dollar since Tuesday on the news, its steepest two-day slide in about two weeks. It now sits where it traded in June despite a slide in the greenback over the past few months.

 

Thailand's benchmark stock index is down 17% for the year, having suffered foreign outflows in every month till August - lagging a 5% gain in Asian markets.

 

"The only foreigners left in Thai equities really are the passive investors, the ETFs and the funds which track the index. The active managers are gone," said Jeep Chatikavanij, founder of the Ton Poh Fund which manages $150 million.

 

A global selloff in longer-dated government bonds has also hit Thailand slightly harder than elsewhere, as investors struggle to digest the big debt sales that are paying for governments' spending.

 

Widening corporate credit spreads, as investors demand a greater premium for lending to Thai firms, also shows creeping default risk, said BNP Paribas' head of ASEAN Economics, Arup Raha.

 

"With headline inflation now being negative for several months, income growth is poor. That is causing some stress in the corporate sector."

 

(Reporting by Tom Westbrook in Singapore, Scott Murdoch in Hong Kong, Chayut Setboonsarng and Orathai Sriring in Bangkok and Patturaja Murugaboopathy in Bengaluru, Editing by William Maclean)

 

-- © Copyright Reuters 2020-09-03

 

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21 minutes ago, webfact said:

Investors shun Thailand as growth weakens, political protests heat up

It's almost like they're weakening the currency in such a way that they won't be accused of manipulating it by some other country which likes to think it rules the world ????

 

 

Oh no the mighty baht is going down the plug hole man the subs general quarters sos ready the red notices ????

Yeah but, but, but ............

“Thailand Marks 100 Days Without Any Local Virus Cases“

1 hour ago, webfact said:

Thailand suffered its deepest economic contraction in two decades last quarter and a long haul to recovery looms as the COVID-19 pandemic has hammered its mainstay tourism industry.

As bad as it looks, I wouldn't read much into this because if you look at other countries many are in as bad a state or worse, Australia for instance is officially in recession although most feel it had been for the past couple of years with high unemployment and an exorbitant cost of living. Thailand will weather the storm and come out of it with sails full once a vaccine is produced and quarantine is removed.   

And i don't blame those investors... There are many more problems, deep rooted problems that investors doesn't like and students unrest is one of them, enough to read several foreign publications to get the gist of the problems bowing on the horizon of this country...

The one trick pony is having some issues.

Oh well.  Sometimes these one tricks plays into the long term goal, sometimes not.  

3 hours ago, webfact said:

Guess who´s fault that is?

But hey at least tourism is back rocking in hua hin ! 

3 hours ago, ukrules said:

It's almost like they're weakening the currency in such a way that they won't be accused of manipulating it by some other country which likes to think it rules the world ????

 

 

China?

I read yesterday that the eleven micro-parties were proposing that Prayut becomes the finance minister. 

 

This is what happens when there's no real opposition allowed and you let a few people (and I literally mean a few) consolidate all the power for themselves. 

 

You get Thing 1 and Thing 2 making all the big decisions that they're dangerously unqualified to make because they're suffering more than ever from grandiose narcissism/ the Dunning/Kruger Effect. And you get all the feckless and impotent sycophants just saying and doing whatever they think the real bosses want in the hope they can have access to that teat, too.

 

Meanwhile, the people they're supposed to be working for just suffer more and more until the water finally spills over (a more commonly used Thai analogy). 

Cracks are starting to open wider... the wheels are wobbling..

Now; how did the song go...''One Wheel on my Wagon and i'm still rolling along......''

The emperor has no clothes.  Predee steps down.  Currency traders look elsewhere to speculate.  Students protest.  Baht drops a little more.  Happy days.

No problem they just need to let the baht drift a bit further and 'big players' in Bsngkok will making Millions selling out of the €£$ ..

 

Looks like the beginning of a very difficult period for Thailand ......unfortunately the only people to really suffer will be the poor and lower middle classes......as is the case all over the world I guess. 

 

Money breeds money and in this climate the rich just get richer.

 

At least the poor have the submarines to look forward to......some light on the horizon

That any potential investor would face major inconvenience getting into the country might also be a factor.

 

It's going to be interesting to see what happens when all the people

who lost their jobs or businesses have to default on their loans ... which will be very soon !

 

The economic crisis has not even started yet !!!

 

If tourism is 10% of GDP and is down 90% then you lose 9% of GDP just on this part.

If the rest of the economy loses just 6% then it's a total of 15% already !!!

 

... 20-25% seems more realistic and it will show very soon !

Watch out for the banks to go into trouble next.

I am sure they have a scheme for this in the works.....

8 hours ago, webfact said:

Investors shun Thailand

This is actually quite ironic given Mr. Prayuth's assurances just about two weeks ago that a gigantic army of foreign investors was already beleaguering Thailand's doorstep and just couldn't wait to flood in.

4 minutes ago, 86Tiger said:

I am sure they have a scheme for this in the works.....

Go cashless will be the first step.

Move everything to the central bank and enslave the whole country through the central banking system !

 

You don't agree they just cut you off the system .... pure evil but also genius if you want the perfect slave system !!!

3 hours ago, rkidlad said:

I read yesterday that the eleven micro-parties were proposing that Prayut becomes the finance minister. 

 

This is what happens when there's no real opposition allowed and you let a few people (and I literally mean a few) consolidate all the power for themselves. 

 

You get Thing 1 and Thing 2 making all the big decisions that they're dangerously unqualified to make because they're suffering more than ever from grandiose narcissism/ the Dunning/Kruger Effect. And you get all the feckless and impotent sycophants just saying and doing whatever they think the real bosses want in the hope they can have access to that teat, too.

 

Meanwhile, the people they're supposed to be working for just suffer more and more until the water finally spills over (a more commonly used Thai analogy). 

Do you actually mean 'Thing 1 and Thing 2' - or do you simply mean 'The Prat in the hat?'

Never mind that many more of the poor will be out of work the rich can buy distressed assets and Thailand has been covid19 free for 100 days and no tourists will be allowed in this year. Thank you Uncle Tu. 

No worries; the Chinese started letting 500 people a day out this morning on International Flights, so the Brainless of Bangkok will open the floodgates to Chinese Tourism in short order (from Beijing) and Thaitanic will be saved from the Iceberg !

22 hours ago, steven100 said:

As bad as it looks, I wouldn't read much into this because if you look at other countries many are in as bad a state or worse, Australia for instance is officially in recession although most feel it had been for the past couple of years with high unemployment and an exorbitant cost of living. Thailand will weather the storm and come out of it with sails full once a vaccine is produced and quarantine is removed.   

Realy???? Don't hold ya breath bud. Thailand has been in a slow downword spiral for the last frw years since the ???? took over only now accelerated due to the china virus

Makes no difference to me if tomorrow I can suddenly purchase 60 baht to 1 GBP.  I'm not going to LOS anytime soon so mostly irrelevant.  

 

If such an outlandish scenario should occur then I would obviously send money to my Bangkok Bank account to enjoy the benefit of the exchange rate but that's all and that wouldn't be of any benefit to the Thai economy.  

22 hours ago, steven100 said:

As bad as it looks, I wouldn't read much into this because if you look at other countries many are in as bad a state or worse, Australia for instance is officially in recession although most feel it had been for the past couple of years with high unemployment and an exorbitant cost of living. Thailand will weather the storm and come out of it with sails full once a vaccine is produced and quarantine is removed.   

Thailand’s boat has been sinking for quite a while now