Spreaders of Conspiracy Theories: Unmasking the Motivations Behind the Lies

[LaoPo]

Mods: this topic is not meant to discuss the political situation, just the Stock Market itself and how it could unfold after possible scenarios, as described below in Reuters' article.

Scenarios: How is Thailand's crisis likely to play out?

Mon, Apr 26 2010

By Jason Szep

BANGKOK (Reuters) - Predicting the next step in Thailand's political crisis requires some bravery after six weeks of street protests, deadly clashes, a department store blockade and grenade attacks, with few signs of compromise.

Attitudes have hardened on both sides since troops and protesters clashed in Bangkok on April 10, killing 25 people and wounding more than 800 during a chaotic army crackdown that has intensified a five-year political crisis.

Following are scenarios about what could happen next with tens of thousands of the red-shirted supporters of ousted former prime minister Thaksin Shinawatra still on the streets.

RED SHIRT PROTESTERS PROVOKE FURTHER VIOLENT CLASHES

High casualties and the possibility of a failed military operation could be enough to force Prime Minister Abhisit Vejjajiva to step down, setting in motion a snap election -- the ultimate demand of the red shirts.

With that in mind, the protesters may try to provoke the military or spark a clash with rival pro-government protesters, drawing upon shadowy militants led by retired generals whose presence among the red shirts has added a dangerous element to their bid for elections.

Some protesters are believed to be armed with assault rifles and M-79 grenades, both of which were used at an April 10 clash with the army that killed 25 people. The government accuses them of leading Thursday's grenade attacks that killed one person and wounded 88 in Bangkok's business district. Army sources say they believe this group has stockpiled weapons at their protest site.

The army chief has repeatedly ruled out a crackdown on the shopping area given the risk of high civilian casualties, but if provoked, the military may have no choice.

MARKET REACTION: Thai assets have been seen as undervalued, pricing in a relatively high degree of political risk.

Thai stocks, which jumped 15 percent from mid-February to April 9 on a $1.8 billion wave of foreign buying, are likely to remain volatile, with unrest triggering price falls followed by tentative buying by bargain-hunters looking to tap one of Asia's cheapest markets.

The baht currency, which has gained 0.71 percent in the past 30 days and 0.1 percent in the past week, would likely weaken to around 32.50 if the government lost control in the wake of a crackdown and finds it hard to stay in office, dealers say.

Five-year bond yields would likely test the seven-month lows reached on Friday as investors seek the relative safety of government debt.

PRO-GOVERNMENT PROTESTERS CLASH WITH RED SHIRTS

As the protests drag into a seventh week, royalist and pro-government demonstrators take matters into their own hands, frustrated by the army's reluctance to intervene.

This leads to skirmishes between red shirts and rival protest groups such as the royalist yellow shirts. Bottle-throwing is followed by petrol bombs and possibly guns.

The army is drawn in and launches a harsh crackdown on the red shirts, who respond with heavy arms, including M79 grenades.

The army, after failing to disperse the red shirts for weeks, faces intense pressure to finish the job. Large numbers of soldiers are deployed. Fighting continues for hours or even days with many casualties before the red shirts are eventually overpowered by about 50,000 troops deployed in Bangkok.

The red shirts regroup in the northern provinces and other areas of Bangkok, creating a low-level rebellion that causes a new wave of political uncertainty, but they fail to pose a force strong enough to topple the government immediately.

MARKET REACTION: Thai stocks and the baht rise as relatively high dividend yields and low valuations in the stock market tempt investors, who begin to focus less on political risk and more on the region's strong economic outlook. Five-year Thai bond yields rise as debt prices fall on a growing appetite for Thai risk.

ARMY CRACKDOWN ON PROTEST SITE, RED SHIRTS REGROUP

ELSEWHERE

The military moves in unannounced during the early hours of the morning when the number of demonstrators is considerably lower than in the evening and daytime. Clashes ensue, causing many casualties. Militants within the ranks of the protesters wage a fierce fight.

The military surrounds the site in huge numbers. Many protesters agree to leave, others are chased away by troops, who secure the site and establish a perimeter. The government swiftly announces it has taken control.

Protest leaders vow to regroup. After a flurry of phone calls and text messages, and "red shirt" radio issuing a call to mass at another site, thousands begin a new demonstration elsewhere.

MARKET IMPACT: The resilient bourse falls on the violence but there is no mass selling. However, investors are aware this is a quick-fix and not a long term solution and many remain on the sidelines, setting the stage for choppy trading. The baht takes its lead from stocks, easing slightly, while five-year Thai bond yields test seven-month lows on a flight to safety.

COALITION BREAKS APART, ELECTIONS FOLLOW

The pressure to find a political solution to buy time and calm down inflamed passions in the country is growing. Failure to do so means the crisis drags on with hardliners from both camps dominating the agenda.

Under one scenario for a political formula, Abhisit's uneasy coalition partners hold behind-the-scenes meetings, perhaps with Thaksin or his representatives involved. This leads to a deal to end the ruling alliance and focus on a new election.

Abhisit's Democrat Party could try to rule as a minority government, but his former allies echo red shirt calls for an immediate dissolution of parliament. Faced with a vote of no confidence in parliament, Abhisit agrees to dissolve the house.

Or the Democrats could dump Abhisit as leader in favor of another figure, who then produces a timetable for an early election.

These are unlikely scenarios. Any political deal would have to satisfy the army and the palace. Coalition partners may not be happy with Abhisit, but he is still their best bet right now.

MARKET IMPACT: A political deal would be seen as positive for the market. Stocks would rise, with the market's low valuations tempting investors with an appetite for risk. It may not improve Thailand's credit ratings, though, because any political deal would be a bandaid on the problem until new elections -- which may only yield a result that restarts the cycle of protests in the polarized nation.

STALEMATE PERSISTS, GOVERNMENT WEAKENS, ARMY LAUNCHES COUP

Abhisit maintains a tough line, resisting talks and allowing tension to build on the streets in the hope of wearing down the protesters enough so they slowly disperse.

However, with no agreement for talks, frustration grows in Bangkok as the economic toll mounts. Abhisit's position becomes untenable. He defies his military and establishment allies and dissolves parliament.

Aware polls would almost certainly return a government allied with Thaksin -- the de facto red shirt leader despised by the establishment elites -- the military stages a coup saying it is upholding national security and protecting the revered king.

This is not likely either. Abhisit will not call an election without a nod from the military and the palace. The climate may be ripe for a putsch, but the army wants to keep the prime minister in power, as long as he stands firm against the supporters of Thaksin, who was ousted in the last coup in 2006.

MARKET IMPACT: A coup would cause stocks to plunge, and the baht to slide. Concerns about fiscal mismanagement, poor governance, and a public backlash -- even civil war -- would curtail long-term investment. Thailand's credit ratings would be downgraded. There could even be a contagion effect in Southeast Asian emerging markets.

(Additional reporting by Martin Petty. Editing by Bill Tarrant)

http://www.reuters.com/article/idUSTRE63P1...38:b33358234:z0

LaoPo

[Slaps]

Good post mate

The boys will be along soon to sort it all out

[Microwave]

Excellent, thoughtful post. Thanks!

[fletchsmile]

Article looks a bit over contrived to me.

No idea when / how this crisis will end, and wouldn't like to call it. Particularly timing.

Whichever scenario comes up it will pass. Politics in Thailand has been messed up for decades. Economics just carries on and treats them as temporary blips even though volatile ones.

Mid-longer term market will be fine. Chill out and ride it out. If you live here keep adding small baht cost averaging as you need THB expsoures long term if you're living here - unless you'll be packing up and leaving.

If you really can't stomach Thailand's markets, check out Korea instead. Actually check out Korea anyway - better value than here right now, and much more stable - one of Asia's stars that's made something of itself! Personally I like both as a mid-longer term view. 2 of 3 best value Asian markets at the moment..

Let's face it. Thailand has shot itself in the foot so many times, it more or less has bullet-proof toes now!

If you're looking for stability in Thailand as a reason for coming here - you've taken a wrong turn. Thailand has a lot of great qualities. Stability isn't really one of them though...

Edited April 27, 2010 by fletchsmile

[samuibeachcomber]

the thai stock market will react the same as the thai baht exchange rate...............its resilience is astounding.A reply from Naam will be forthcoming soon.

[gregb]

Not a very insightful article. It leaves out what in my opinion is the most likely scenario. The Democrats are dissolved by the court for electoral violations, leading to a caretaker government and new elections. I would guess the market impact for this would mimic the "Coalition breaks apart" argument, but the likelihood of this outcome is substantially higher.

The other problem I have with this article is they clearly limit themselves to the short term impact. The long term impact of all of these scenarios is substantially different. In fact, the most devastating near term results are the same ones likely to push both sides to a final resolution of the conflict, rather than simply kicking the can further down the street.

For example, they portray new elections as being a positive event, however all this will really accomplish is a temporary end to hostilities before they flare up again after the next election is completed. On the other side, a coup, which may in fact cause the most near term damage, may be the only thing that can bring about long term solution to the crisis. (Of course, only after substantial chaos has reigned so people are willing to accept the military stepping in.) So while Reuters seems to imply that would be a highly unattractive option, it might in fact be the most viable solution and the best thing for Thailand's economy in the long run.

Difficult to say for sure, but I find their analysis way too simplistic for a long term investor. This article is clearly meant only for short term traders.

[andrisdg]

Politicians and commentators have an in built bias to be positive.

During the 90's president Bill Clinton avoided like the plague the use of the word genocide re Bosnia and Rwanda until the bleeding obvious could not be avoided

Civil war ,how does one define it ?. the political class in Iraq call it a insurgency ,yet the definition of civil war is armed conflict between citizens of the same country

The level or intensity of conflict is irrelevant to the definition of civil war

April 10 th can be seen as a defining moment ,a skirmish that is now spreading to civil disobedience in the provinces and a shattering in the cohesion of past and present power brokers ,particularly in the states security apparatus.

Civil wars like all wars start from small events and mushroom in a downward spiral

Currently the only difference between the situation in the south and the red shirt shirts is its ,location ,intent ,intensity and methodology

Civil insurrection be it ,called a liberation movement or whatever in the south and something else in the north at least have one common feature according to the defending power brokers ,they are terrorist organisations or harbour terrorists within them

[gamini]

an election in the present climate would result in a bloodbath. The reds would not allow the others to canvass in thier areas so the whole matter would be a farce as a democratic election. The results would probably result in a democratic led co-coalition again and the reds would come out protesting again.

There must be a cooling off period before any meaningful elections.

[midas]

an election in the present climate would result in a bloodbath. The reds would not allow the others to canvass in thier areas so the whole matter would be a farce as a democratic election. The results would probably result in a democratic led co-coalition again and the reds would come out protesting again.

There must be a cooling off period before any meaningful elections.

who told you this........ Abhisit ?

[LaoPo]

please

The OP article is meant to discuss the STOCK MARKET after the possible scenarios, as described in the article, and not the (non)-possible outcome of the political situation itself.

LaoPo