Thai Bonds Suffer Record Outflows as King’s Death Sparks Concern

  • ‘Selling is overdone,’ according to ING Groep’s Tim Condon
  • Thai baht slumped last week to lowest level since January

Global funds sold a record $1 billion of Thai bonds last week as the passing of King Bhumibol Adulyadej marked the loss of a stabilizing influence in the nation’s political landscape.

Overseas investors cut debt holdings for five straight days through Friday, trimming purchases for the year to $10.7 billion, data compiled by Bloomberg show. The baht slumped to the lowest since January last week as the death of the 88 year-old monarch whose seven-decade reign helped to unite the country rocked by 10 coups.

“The selling is overdone because I just think that it’s not going to be a consequential economic development for Thailand,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. “It’s obviously a special time for Thai people and this is a very delicate transition, but I expect it to be a smooth one for financial markets.”

National development efforts will continue while Thais mourn the passing of their king, and the cabinet will meet as scheduled on Tuesday, government spokesman Sansern Kaewkamnerd told reporters in Bangkok on Sunday.

Baht Weakens

The baht fell 0.1 percent to 35.361 per dollar as of 11:12 a.m. in Bangkok after sliding to 35.902 on Oct. 12, the weakest level since Jan. 26. The currency dropped 1.3 percent last week, the most since the period ended Sept. 25, 2015. 

The yield on Thailand’s 10-year bonds ended last week little changed at 2.21 percent after climbing to 2.32 percent on Wednesday, the highest level in eight months, according to data compiled by Bloomberg. The benchmark SET Index of shares retreated 0.2 percent Monday after dropping 1.8 percent last week.

Tens of thousands of Thais flooded the streets of the capital on the weekend to pay respects to the king as his body was transported from the hospital to the palace. Prime Minister Prayuth Chan-Ocha said the monarch’s death and a delay in his son taking the throne will not derail plans for a return to elections which had been scheduled from late 2017.

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