Sell or hold Thailand?
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Does the new administration in Bangkok have a grip on the economy? Or is it time to bail out of Thailand with the removal of Thaksin?
BANGKOK - Thai stocks suffered their biggest drop since Asia's 1997 financial crisis as foreign investors took fright at drastic measures to rein in the baht, prompting calls for a central bank U-turn.
The currency dropped 2 per cent from Monday's 9-1/2-year high after the central bank, worried strength in Asia's best-performing currency would hurt exporters, slapped controls on short-term speculative money inflows.
The main stock index plunged more than 13 per cent to a two-year low at one point, wiping more than US$20 billion (S$31 billion) off the value of South-east Asia's third-largest bourse.
Other Asian stocks also fell in tandem with the plunge in Thai shares. The Straits Times Index in Singapore dived 51.37 points to 2,912.07 at 4.15 pm.
Reaction in the bond markets was equally ruthless as foreign investors rushed for the exit, forcing prices sharply lower and pushing yields up 20 to 30 basis points for all maturities.
'Please call an ambulance, there is a bloodbath,' a dealer at a domestic brokerage said.
'Foreign players seem to be selling all maturities today, but I think it's only the first round. There is a lot of money already in the Thai markets. If they're pulling out, we're dead,' he said. 'I'm not sure if we're going to get a bonus this year.'
After the stock index ended the morning 11.76 per cent down, bourse president Patareeya Benjapolchai begged the Bank of Thailand to review its policies.
Too soon for baht review: central bank
But the central bank retorted it was too soon for any review of a measure analysts described as 'draconian' and a 'straitjacket' for equity investors.
Selling frenzy
The reaction was far more severe than the 4 per cent stock market fall - and quick recovery - that followed the bloodless Sept 19 coup that ousted Prime Minister Thaksin Shinawatra and ended a long political crisis.
The stock market decline threatened to be the biggest one-day sell-off since the 1997/98 meltdown, which was caused in part by massive international speculation against the baht.
In an unprecedented move in the stock market's 31-year history, officials halted trading for half an hour when the index fell 10 per cent. When it resumed, the slide continued.
If it dropped a further 10 per cent, trading would be halted again for an hour, one official said.
'There's heavy selling from foreign investors because the new measures are quite aggressive towards foreign fund flows,' Tisco Securities strategist Viwat Techapoonpol said. 'It is hard to forecast how many per cent the SET will fall.'
The baht, the fastest-rising Asian currency against the greenback this year, was trading around 35.70 per US dollar at 0540 GMT (1.40pm Singapore time), down 1.8 per cent from 35.06 early on Monday before the central bank announced its latest steps to halt currency speculation.
It dropped as low as 35.97 per dollar after the central bank announced the baht restrictions.
Under the measures, investors will have to keep their money in Thailand for at least a year or face stiff financial penalties. The new regulation affects all sums over US$20,000 not linked to trade or foreign direct investment. -- REUTERS
(Straits times 18 Dec) -
All thanks to Temasek Holdings.
But, I might sterotype here. -
Bear market on its way?? Anyway... asian markets Bull so long already... Time to consolidate?
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I believed there'll be ripple effects... Take care Guys~!
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Anyone knows wat time the selling starts?
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NEW YORK (MarketWatch) -- The Thai government has reversed a decision to impose tough capital controls on foreign investors in the stock market after the benchmark SET index lost 15% overnight, according to Forex.com, a division of Gain Capital. The Thai central bank on Monday announced measures that would lock up 30% of new foreign currency deposits for a year and said the measures would become effective Tuesday. The central bank said it was trying to curb speculation that had caused the Thai baht to appreciate by about 17% against the dollar this year. "The government has now reversed the decision after seeing the effect," said Forex.com. The sell-off in Thailand spilled over into other Asian markets overnight.
Selldown should be over today.
Markets should rebound, maybe not for Thailand though.
Now is the best time for Temasek to show that they are long term investors by holding all their stocks lah! (All the way down?
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after loosing 23 Billion US dollar in a single day... i would have shot their finance minister for incompetence.... if i am the thai general lah.
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Bought at opening today but planning to sell soon...think this episode has eroded confidence in the military government's ability to run the economy. Foreign investors are not rushing back....analysts think they'll park their money in safe havens like Singapore instead..
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10 years ago, Asia financial crisis started with Thailand, hope this is not a repeat of history.
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sg always came back stronger...Originally posted by sgdiehard:10 years ago, Asia financial crisis started with Thailand, hope this is not a repeat of history.
Our financial Pillar is the strongest among all... Dun worry...