Thai Stocks, Baht Drop on Concern Protests Will Deter Investment

Thailand’s stocks fell by the most in six weeks and the baht dropped on speculation protests against a bill granting amnesty for political offenses will escalate and deter investment.

The opposition Democrat party led a street rally in Bangkok today to demonstrate against the government’s plan to pass a blanket amnesty bill for political crimes that occurred after the 2006 military coup. The party claims the law would annul legal cases against former Prime Minister Thaksin Shinawatra, brother of current premier Yingluck Shinawatra. The bill will next be debated in the Senate.

The SET Index fell 2.9 percent, the most since Sept. 23, to a one-month low of 1,388.40 at its close. The baht dropped 0.2 percent to 31.26 per dollar as of 4:40 p.m. in Bangkok and touched a two-week low of 31.358 earlier, data compiled by Bloomberg show. The yield on the 3.875 percent bonds due June 2019 held steady at 3.6 percent.

“Most investors have just stopped any new investment in Thai equities to assess the situation and the development of anti-government demonstrations,” said Jitra Amornthum, the head of research at Finansia Syrus Securities Pcl in Bangkok. “The tourism sector, which has been the only bright spot for the Thai economy, will certainly be affected.”

Hurting Confidence

Global funds sold $323 million more Thai bonds than they bought last week and pulled a net $91 million from equities, official data show.

The Internal Security Act has been imposed in three districts of Bangkok near Government House and Parliament until Nov. 30 to control anti-government protests. Major unrest in the past seven years included an airport seizure, business center blockages and arson attacks in Bangkok.

Thaksin is advising the ruling Pheu Thai party to promote the amnesty bill and, if it’s not approved by the Senate or is later overturned by the Constitutional Court, may call an early election to seek a fresh mandate, according to a Bangkok Post report today, which cited an unidentified party source.

“We are now into day five of the public protests against the passage of the amnesty bill in Thailand,” Sophia Ng, a Singapore-based assistant analyst at Bank of Tokyo-Mitsubishi UFJ Ltd., wrote in a research note today. “Heightened social unrest, which may lead to violence, is weighing on investor confidence.”

One-month implied volatility in the baht, a measure of expected moves in exchange rates used to price options, rose 15 basis points, or 0.15 percentage point, to 5.92 percent.