Photographer: Brent Lewin/Bloomberg

Thailand Stocks, Currency Slump Amid Concern Over King’s Health

  • SET Index declines 6.5% this week in biggest drop in world
  • Baht weakens after foreigners pull money from sovereign bonds

Thai stocks and the baht dropped, leading declines in Asia, amid concern over the health of the king and on the prospect of a U.S. rate increase this year.

The baht fell 1 percent against the dollar after being down as much as 1.5 percent earlier. The SET Index retreated as much as 6.9 percent before closing 2.5 percent lower. The stock measure has dropped 6.5 percent this week, the most among about 100 benchmark share indexes tracked by Bloomberg.

Thailand’s benchmark equity gauge and currency have fallen every day after the royal palace said Sunday that King Bhumibol Adulyadej’s condition was unstable. The 88-year-old monarch’s health is closely watched as he is revered by many for what they say has been his unifying presence during a seven-decade reign. Foreign funds pulled $426 million from Thai sovereign bonds in the first two days of the week, exchange data show.

The baht’s slide was “mostly related to the king’s health,” said Sean Yokota, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore. “It’s about the political stability that the king has provided and his being a reconciliatory buffer between the major parties.”

Thai Prime Minister Prayuth Chan-Ocha returned to Bangkok Wednesday to greet Crown Prince Maha Vajiralongkorn, who returned to the country, said Vilas Arunsri, secretary-general to the prime minister. The prime minister won’t make any announcement this afternoon, Vilas said, following rumors that an announcement was expected.

‘Challenging Time’

The Thai currency traded at 35.719 a dollar, headed for an eighth day of losses in the longest stretch since July 2015. It sank to 35.902, the lowest since Jan. 26, and is down 2.4 percent this week. The 10-year sovereign bond yield rose four basis points to 2.34 percent, the highest since January.

Futures contracts are showing a 68 percent chance of a Federal Reserve rate hike by December, up from 59 percent at the end of last month. Minutes of the Fed’s September review due later may yield clues on the U.S. rate outlook.

“Concern about the U.S. interest-rate increase and dollar strength will continue to damp sentiment and foreign fund flows,” said Koraphat Vorachet, an investment strategist at Capital Nomura Securities Pcl in Bangkok.

Thailand’s stock market faces a “challenging time” with a jump in volatility amid lingering concern over domestic and overseas factors, Kesara Manchusree, the Stock Exchange of Thailand’s president, said on Tuesday. The fundamentals of the Thai economy and listed companies’ earnings remain strong, she said.

— With assistance by Liau Y-Sing

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