Thai Coup Is Just Another Day at Office for Stock Traders

For investors in Thai stocks and bonds, trading after a military coup was a lot like any other day at the office.

The SET Index (SET) of shares slipped 0.6 percent as it opened for the first time after Thailand’s military seized control of the country. That’s a smaller move than the average daily swing of 1.2 percent since 1987, according to data compiled by Bloomberg. The two basis-point drop in 10-year government notes to 3.77 percent compares with an average move of about four basis points since 2000. The baht was little changed, after falling 0.6 percent when the coup was announced yesterday.

The calm in Thai markets shows investors have come to expect political turmoil in a country that’s endured 12 military coups since 1932. Templeton Emerging Markets Group and Capital Economics said the takeover may bring more stability after a six-month political stalemate that weighed on the economy.


“For Western countries, if you see a government overthrown by the army, it’s very serious,” said Daphne Roth, the Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $207 billion. Today in Thailand, “things seem to be business as usual. People see this as an end to the crisis.”

Traffic was light in Bangkok after the army ordered schools and universities closed until May 25. Army Chief Prayuth Chan-Ocha, who announced the coup on national television yesterday, imposed a nationwide curfew from 10 p.m. until 5 a.m. and banned political protests.

Political Divide

The rift between the largely rural-based support for former Prime Minister Thaksin Shinawatra, who was ousted in a 2006 coup, and his royalist opponents has polarized Thai society and weighed on production and tourism. The nation will probably have the slowest expansion among its major Southeast Asian peers this year, according to Bloomberg surveys.

Thailand's Troubled Democracy

Stocks have rallied in 2014 despite deteriorating growth prospects. The SET index has climbed 7.6 percent, versus a 0.4 percent drop in the MSCI Asia Pacific Index. The Thai gauge is valued at 13 times estimated earnings for the next 12 months, versus a multiple of 12 for the regional gauge, according to data compiled by Bloomberg.

There are no signs of panic among investors, said Andrew Yates, the head of international equities at Asia Plus Securities Pcl, the country’s second-biggest stock brokerage by market value.

Outflows Limited

“Net foreign trading for us appears to be flat, while local funds are net buyers,” he said.

Thailand’s central bank said lenders and payment systems were operating normally after the coup and that policy makers will step in to maintain baht stability. Any capital outflows should be limited and markets are stable because participants see the coup as a possible turning point in the period of political uncertainty, Bank of Thailand spokeswoman Roong Mallikamas said.

The next few days will be important for investors trying to determine how the nation’s political crisis will end, Roth said. Prayuth has not spelled out his plans other than seeking to restore peace quickly.

“There should be a neutral technocrat prime minister being announced,” Roth said. “If that comes true, and there’s no violence subsequent to the coup, we should see positive sentiment again.”

To contact the reporters on this story: Weiyi Lim in Singapore at; Anuchit Nguyen in Bangkok at

To contact the editors responsible for this story: Michael Patterson at Richard Frost

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