In Thailand, investors wary of protests and stock markets fall

Escalating anti-government protests in Thailand could push one of this year's worst-performing stock markets even lower, some investors fear, as political instability adds another layer of risk to an already fragile economy that depends on tourism.

Thai stocks were the worst performers in Asia this week, falling 2.6%, as protests hit the capital Bangkok where tens of thousands of people defied a ban on demonstrations .

Thailand has already suffered a record capital outflow of $8.8 billion in the first nine months of this year, stock market data shows.

The Covid-19 pandemic has severely affected travel, threatening the economy and finance, as well as the stock market index, which is heavily dependent on industry.

"The bottom line is that this will add to the already negative sentiment," said Jeep Chatikavanij, founder of the Ton Poh fund, which manages $150 million.

"The Thai market is slowly dying, the protests are just one more thing."

Protesters have been seeking for months to oust Prime Minister Prayuth Chan-ocha and curb the powers of King Maha Vajiralongkorn .

Prayuth has pledged to stay and this week issued an emergency decree banning gatherings of more than five people.

At the same time, the economy has suffered its sharpest contraction in 22 years, the stock market has fallen 22% since the start of the year and, partly because of a lagging currency, it is among the worst performers globally against the dollar.

The fact that the baht has held up this week shows that there remains at least some confidence in a longer-term recovery.

“The resurgence of anti-government protests is concerning and suggests near-term downward pressure, as well as a higher risk premium on Thai equities than its Asian counterparts,” said Nader Naeimi, head of dynamic markets at AMP Capital.

However, he does not believe the current instability will derail the Southeast Asian country's recovery prospects.

"For those who don't believe global tourism is dead forever, Thai stocks are a great bet on a post-Covid world and an eventual return to travel and leisure."

See also:

Foreign investors question the situation in Thailand

Police dispersed protesters in Bangkok with high-powered water cannons, with more demonstrations planned for today

Source: hindustantimes.com