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Thailand's new leaders may just have found a place in the political record books.
But in all likelihood, it's not an honour they'd be proud of - the Thai government may just have performed the most rapid U-turn in the history of government.
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OK, we haven't looked into this enough to be sure - there's doubtless been more rapid policy shifts somewhere, at some point in history.
But the country's cack-handed attempts to keep its currency weak may give second thoughts to those who saw the tanks in the streets earlier this year as 'a buying opportunity'...
Thailand's stock market dived 15% yesterday. The culprit was a fumbled attempt by the Bank of Thailand to control flows of speculative money into the country.
Before trading opened yesterday, the Thai central bank governor, Tarisa Watanagase, said that all financial institutions would have to keep 30% of any money put into the country as 'a reserve requirement' for at least a year. In other words, nearly a third of all foreign money invested would be effectively unusable for a year.
The impact on the stock market was immediate - it dived by 10% at the open as foreign equity investors raced for the exit. To his credit, the Thai finance minister recognised this was not a good thing, and has now reversed the requirement partly - it will no longer apply to foreign direct investment.
It's the third time in recent months that the Bank of Thailand has tried to restrict inflows of 'hot' money. The baht has risen 16% against the dollar this year, which has hammered the country's export market. The baht is attractive to foreign investors for a number of reasons - there's the Asian growth story in general, and then there's the fact that interest rates in Thailand are at 6%.
But a strong currency carries its own problems - particularly when your economy still has a significant export sector. As Andrew Drummond says in The Times, 'successful exporting companies were already starting to lay off workers as prices exceeded what Western buyers were willing to pay. Even the country's rice market was in danger.'
But as David Fuller says on Fullermoney.com, if a strong currency is the big worry, then "why didn't Thailand just cut short-term interest rates?" It's a question many investors will be asking.
As James Harding points out in The Times, 'above all, foreign investors want stability, political as well as economic.' Concerns that the government particularly a newly appointed one that took over by force, albeit in a mild-mannered way will make other similar mistakes, are likely to continue to hang over the market.
However, as Fuller puts it, "selling at an historic pe of 8.61 and a yield of 5.27%, Thailand is arguably the best value play in Asia today." It's a good point and anyone currently invested in Thailand shouldn't be selling out. But in terms of new investors buying in, we'd be inclined to hold off until the new government beds in a little.
Meanwhile, news of government mismanagement far closer to home - the Organisation for Economic Cooperation and Development reports that Britain's total state spending as a proportion of national income (GDP) is set to rise above Germany's in 2007. That's the first time this has happened since 1989. 18 out of 28 rich nations will see their tax burdens fall as a share of GDP between now and 2008 - Britain is one of seven where it will rise.
Economic commentators on the Chancellor often talk of his 'golden' rule and warn sternly of how at some point, he will have to raise taxes to meet it. No one seems to have quite realised the truth yet - he's already raising taxes, and he has been raising taxes for quite some time now.
We have huge public borrowing, combined with a massive tax take - and this is during the good times, the 'Goldilocks' years. We dread to think what'll happen to our tax burden when the global economy falls on harder times.
Turning to the stock markets
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In London, the FTSE 100 ended the day 43 points lower yesterday, at 6,203, due to profit-taking and weakness amongst mining stocks. Pharma AstraZeneca was the day's biggest faller following a patent rejection.
Elsewhere in Europe, the Paris CAC-40 was 45 points lower, at 5,484, whilst the Frankfurt DAX-30 ended the day at 6,553, a 43-point fall.
Across the Atlantic, the Dow Jones set a fresh record close yesterday, gaining 30 points to end the day at 12,471. The index was lifted by energy stock Exxon-Mobil which benefited from the higher price of crude. Overall, stocks were mixed: the S&P 500 rose 3 points to end the day at 1,425, whereas the tech-heavy Nasdaq ended the day 6 points lower, at 2,429.
In Asia, the Nikkei broke the 17,000 barrier today, haivng gained 234 points to close at 17,011.
Crude oil futures had fallen slightly this morning to $63.43 a barrel, having jumped over 1% yesterday. In London, Brent spot was 19c lower at $61.98.
Spot gold was last trading at an intra-day high of $623 today, up from $621.70 in New York late last night.
And in London this morning, HMV - owner of the eponymous music stores and bookseller Waterstones - announced that full-year profits would be at the lower end of expectations. The trend for digital downloading and intense competition from supermarkets and Amazon.com has hit compact disk sales hard. The UK music market fell 14% in value over the past two months, as did the DVD market. HMV shares were down by as much as 5.4% today.
And our two recommended articles for today...
Are stock market levels sustainable?
- A host of investment experts, including Anthony Bolton, are predicting a significant stockmarket downturn in the next two years. Why are they so bearish? ask the RH Asset Management team. To find out what the leading indicators suggest now, read: Are stock market levels sustainable?
Why a dollar correction is unavoidable
- What to do about the US dollar? asks Dr Hans Sennholz. Everyone has there own opinion, but we can all agree on one thing: there will be a correction. For more on the difficult choices ahead for policy-makers, see: Why a dollar correction is unavoidable
John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
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