Thai Stocks Advance With Baht as State of Emergency Seen Ending

Thailand’s benchmark stock index rose to a three-month high and the baht strengthened after the national police chief said the government may end Bangkok’s state of emergency amid easing political tensions.

The SET Index (SET) climbed 1.1 percent to 1,364.28, its highest close since Dec. 11. Airports of Thailand Pcl, the nation’s biggest airport operator, added 2.4 percent. Asia Aviation Pcl (AAV), which controls the largest budget airline, jumped 5.5 percent to its highest close in 11 weeks. The baht gained 0.3 percent to 32.290 per dollar, halting a three-day drop.

The government may lift the state of emergency before its expiration on March 23 because of an improving political situation, national police chief Adul Sangsingkeo said yesterday. The advance in Thai markets reflects optimism that the nation’s economy and tourism may recover from street protests in Bangkok during the past four months, according to KGI Securities (Thailand) Pcl.

“Removal of the emergency decree will significantly help the overall economy, especially the tourism sector,” Rakpong Chaisuparakul, an investment strategist at KGI, said by phone. “It provides a positive catalyst for investors to buy domestic stocks even as the political deadlock is still unresolved.”

Rate Decision

Stocks gained even after Morgan Stanley cut its rating on Thailand to underweight from equalweight, citing decelerating economic growth and prolonged political instability. Global funds bought a net $168 million of Thai equities this month through yesterday and poured $552 million into bonds.

The Bank of Thailand may cut borrowing costs at a policy meeting tomorrow. The central bank will probably lower its benchmark interest rate to 2 percent from 2.25 percent, according to 16 of 26 economists in a Bloomberg survey. The rest forecast no change.

Thai Prime Minister Yingluck Shinawatra, accused by protest leaders of corruption and abuse of power, declared a 60-day state of emergency in Bangkok on Jan. 21 as she strived to combat violence. At least 23 people have been killed by grenade attacks and gunshots at political rallies in the country since the demonstrations began on Oct. 31.

Average daily foreign travelers to Thailand dropped to 45,000 in the first two months this year from 70,000 in the same period last year, according to Tourism & Sports Minister Somsak Pureesrisak.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Phani Varahabhotla

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