Advertisement
Features

Tension is mounting in turbulent Thailand

Thailand has been in political turmoil for years, and the constant tension has hampered efforts to introduce structural reforms to boost efficiency.

934_MW_P04_Markets_Bottom
Princess Ubolratana: vetoed

Investors can be very skittish and bolt at the first sign of trouble. Those with money in Thailand, however, "are generally comfortable with the possibility of a turbulent ride," say Anuchit Nguyen and Randy Thanthong-Knight on Bloomberg.

They have to be: southeast Asia's second-largest economy has been in political turmoil for years now, and the constant tension has hampered efforts to introduce structural reforms to boost efficiency.

Advertisement - Article continues below

This year, the country is due to hold a general election on 24 March. This would be the first vote since the military government seized power in 2014 during a period of unrest and bloody street protests. In the most recent twist, the Thai Raksa Chart party (which is linked to a former Thai leader, now exiled) announced that Princess Ubolratana would be their prime ministerial candidate. Given the royal family's popularity, her candidacy would have posed a serious challenge to the military regime if her brother, the king, had not vetoed the idea late last week.

"The only thing the episode appears to have achieved is to heighten tension" between the supporters of the junta and its opponents, says The Economist. Once again, Thailand's two camps "are at daggers drawn".

Some investors remain unfazed. "Every now and then these things flare up; it doesn't have a long-lasting impact," Nader Naeimi, head of dynamic markets at AMP Capital Investors told Bloomberg. But are the fundamentals impressive enough to make up for the enduring political dysfunction? In the 2000s, the economy used to expand by an average of 4.6% a year. But GDP only grew by 3.3% year-on-year in the third quarter of 2018. It's not just the absence of structural reforms.

Ever since the military coup five years ago, investment has suffered. Meanwhile, both consumers and businesses are grappling with high debt levels.

Around 70% of GDP comes from exports, and this motor is stuttering. Nor can valuations compensate for this inauspicious backdrop. Thai shares are on a price/earnings ratio (p/e) of 15; Chinese companies only trade at around 13. There are better opportunities elsewhere in the region .

Advertisement
Advertisement

Recommended

Bullish investors return to emerging markets
Stockmarkets

Bullish investors return to emerging markets

The ink had barely dried on the US-China trade deal before the bulls began pouring into emerging markets.
27 Jan 2020
Beware the hidden risks when investing in emerging markets
Investment strategy

Beware the hidden risks when investing in emerging markets

Emerging markets look cheap compared with developed countries, but earnings may be less trustworthy.
23 Dec 2019
How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Emerging markets: buy when the news is bad
Emerging markets

Emerging markets: buy when the news is bad

Emerging markets are being squeezed by local turmoil and by more general factors. But bad news can spell opportunity for investors.
5 Nov 2019

Most Popular

Eagle Lightweight GT: the reincarnation of the E-type Jag
Toys and gadgets

Eagle Lightweight GT: the reincarnation of the E-type Jag

Jaguar’s classic E-type sports car has been reinvented for the modern age. The result – the Eagle Lightweight GT – is a thing of beauty.
7 Aug 2020
Platinum: the precious metal that looks set to play catch-up with silver and gold
Silver and other precious metals

Platinum: the precious metal that looks set to play catch-up with silver and gold

Gold and silver continue to soar, but there's still time to get in. And there's another precious metal that looks set to go on a bull run too, says Jo…
7 Aug 2020
Don’t despair on dividends – these companies could be set to bring them back
Income investing

Don’t despair on dividends – these companies could be set to bring them back

The value of dividends paid out by UK stocks has plummeted this year as companies “rebase” their payment policies. But things could soon start to look…
6 Aug 2020