SET Reports Huge Sell-Off By Foreign Investors Over Political Uncertainty

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SET Reports Huge Sell-off by Foreign Investors Over Political Uncertainty

The Stock Exchange of Thailand, along with seven economic and media organizations, speculates that there is a good chance violence will break out after the election.

Meanwhile, some foreign investors have already sold off their shares in Thai companies due to concerns about the outcome of the July 3 poll and the possible repercussions.

President of the Stock Exchange of Thailand or SET Charamporn Jotikasthira said the SET, along with five economic organizations and two media associations, foresees a high probability of political violence after the July 3 election.

The seven economic and media organizations are the Federation of Thai Capital Market Organizations, the Thai Bankers Association, the Thai Chamber of Commerce, the Federation of Thai Industries, the Tourism Council of Thailand, the Thai Journalists Association, and the Thai Broadcast Journalists Association.

Charamporn noted that local and foreign investors will likely sell off their shares in Thailand and shift investment to other markets of a similar size, as they do not want to risk investing in a country still ridden with political uncertainty.

The group called on all political parties to accept the election results and express commitment to reconciliation efforts.

The SET president went on to say the SET has prepared measures to cope with the massive dumping of shares, including a circuit breaker in the event that the SET index falls more than ten percent.

Citing historical data, he said foreign investors are ready to abandon the Thai market in the event of political violence.

Charamporn referred to last year's riots which reportedly resulted in international investors selling 60 billion baht worth of shares in just one month.

He noted that in the past three weeks, more than 20 billion baht worth of shares has been sold by foreign shareholders.

Executive Vice President of Kasikorn Bank Pakorn Pattanapat said national reconciliation and a stop to political violence should be the goal of all political parties, as past incidents have demonstrated how violence takes a toll on the country's economy and tourism.

Chairman of the Thai Chamber of Commerce Dusit Nontanakorn said any politician who intends to serve the country must be committed to promoting harmony and addressing problems the country faces.

He urged politicians to take more action and talk less.

Deputy Secretary-General of the Federation of Thai Industries Kriengkrai Thiennukul said with Thailand to become part of the ASEAN Economic Community in less than four years, it cannot afford to remain in the vicious loop of conflict.

He added that disruptions during the election campaign period have caused both local and foreign investors to delay their investments due to concerns over political uncertainty.

President of the Federation of Thai Capital Market Organizations Paiboon Nalintarangkura stressed that it is very likely that a new round of political violence could erupt following the election.

He said though political parties are raising reconciliation issues in their campaigns, there is no guarantee that they will act accordingly as the problem must be mediated by an independent party under a process that is accepted as fair for all.

-- Tan Network 2011-06-21

[lannachiangrai]

Interesting that the President of the SET is predicting violence. I would assume Jotikasthira would be working to pacify the market and insure investors it is only a temporary storm . . .

[rreddin]

Interesting that the President of the SET is predicting violence. I would assume Jotikasthira would be working to pacify the market and insure investors it is only a temporary storm . . .

Profit taking ahead of the election in the expectancy that the market will fall, so they can buy back in at a lower price and make more profits?

[drdoom6996]

What's the problem? Farangs/expats are not trusted here anyway. This has been said by several people in several political parties.

[MILT]

We all knew this was coming. WE all know that Thailand will plunge into turmoil and violence no matter what the outcome of the Thai election will be. The wife and I have made plans to be away from all this nonsense after she cast's her vote. It is all just a waste of time and energy that could be focused on real challenges. Even Yingluck admits that she cannot control the reds from harassing Abhisit, so what does one think is going to take place when the PTP/Reds realize that their plans were thwarted by the peace loving silent majority. They will cry foul as will the Dems if they don't manage to stay in power. It's lose lose situation. The blame for this lays with all the people who can't seem to be able to see past their own noses.

Everyone no matter who they think is the best choice should pray for this country and it's people in these sad times. times we all are witnessing.

[tragickingdom]

It is actually quite funny that investors claim to be nervous (although it seems a worldwide problem and probably has nothing to do with Thailand anyhow) after all under Thaksin the stock exchange and the free market flourished. I would argue that the ultra Nationalistic Yellow Shirt sponsored governments are much more unfriendly to (foreign) business than Thaksin. The difference is of course clearly visible when you see a rich industrialist (Thaksin) and you compare him with technocrats and bureaucrats like Mark Abhisit or Chuan.

[givenall]

Well wait till the condo excessive builds causes the drop inthe condo price too

[BigJohnnyBKK]

Interesting that the President of the SET is predicting violence. I would assume Jotikasthira would be working to pacify the market and insure investors it is only a temporary storm . . .

Profit taking ahead of the election in the expectancy that the market will fall, so they can buy back in at a lower price and make more profits?

Actually it's very wise to try to keep pushing the market down to realistic levels over a period of time - helps prevent a much more sudden and therefore drastic crash if the big external investors are surprised by the (IMO very likely) disruptions.

Lots of US Wall Street insiders knew the 2006-2008 housing / financing situation was an unsustainable bubble - if more of them had spoken up the bubble might not have grown quite so outrageously, and there would have been a much softer landing.

It's possible they're just acting responsibly. . .

[samran]

It is actually quite funny that investors claim to be nervous (although it seems a worldwide problem and probably has nothing to do with Thailand anyhow) after all under Thaksin the stock exchange and the free market flourished. I would argue that the ultra Nationalistic Yellow Shirt sponsored governments are much more unfriendly to (foreign) business than Thaksin. The difference is of course clearly visible when you see a rich industrialist (Thaksin) and you compare him with technocrats and bureaucrats like Mark Abhisit or Chuan.

By the 'free market' you mean things like the PTT IPO, where retail shares somehow ended up in the hands of connected insiders (myself included) and not one new share got into the hands of retail investors who had lined up at banks and applied for a quota?

Is that an example of the 'free market'?

Or do you mean when Thaksin convienently changed foreign ownership levels, depending on whether he wanted to by or sell an asset to foriengers, or protect it from foreign competition (Telecoms)?

Is that what you mean?

Or what about de-regulation of the aviation industry. He was implacably opposed to it, until of course, it suited him to set up Air Asia for himself and then de-regulated the industry.

I guess that is an example of free market capitalism....

[pooket]

"Charamporn referred to last year's riots which reportedly resulted in international investors selling 60 billion baht worth of shares in just one month."

I hate when they say this. ALL stock markets in the world went down during that time period. Just look at any chart - it's obvious. Thailand was no different. And the year before, when taxi drivers were burning buses, the SET went UP. You just never know.

This time it does look a bit bad. Political problem stress could explain why the SET has been trending lower, while Malaysia's market has been trending up this month.