(Bloomberg) — Analysts are bracing for outflows from Thai assets after the government declared a state of emergency but some said a selloff could present buying opportunities.
The benchmark SET Index of shares dropped as much as 0.8% in early trading. The baht slipped as much as 0.2% before rising while sovereign bonds were little changed.
Here’s what analysts and traders are saying:
StoneX Group (Currency trader Mingze Wu)
“The situation is definitely less than ideal for investors, especially if the protests escalate. We’ll likely see an exodus of funds from Thailand into other similar countries in the region. The baht will definitely be weaker”
RBC Capital Markets (head of Asia FX strategy Alvin Tan)
“It will have a negative effect on investor sentiment, but I don’t think it is a game-changer for the baht, which has been rangebound for about three months now and an underperformer among the Asian currency complex”“The Bangkok protests have been ongoing for a while too, so this is an escalation of the situation, and not a surprise development. I think it keeps the baht on the weak side”
Australia & New Zealand Banking (Head of Asia research Khoon Goh)
“The protests in Thailand had been going on for a while but the state of emergency being declared has escalated the situation, and is likely to weigh on the baht. Especially at a time when the BoT is taking steps to encourage outflows”
Oversea-Chinese Banking Corp (Economist Howie Lee)
“The latest measure is not going to do any favours for the baht. It is a situation worth close monitoring for sure. The absence of violence for now may mean selling of the baht may be capped, but if the situation takes a sharp turn for the worse it may be detrimental for an already-weak domestic consumption and investor sentiment”
Ktb Securities (Thailand) Pcl (Chairman Win Udomrachtavanich)
“This will be negative for equities in the short term. Still, we need to see further development whether this will escalate the protest and more serious clash”
Tellimer (Head of consumer sector equity research Nirgunan Tiruchelvam)
“This emergency is a buying opportunity. Thailand has had more than 12 coups since 1932 and all of them have been buying opportunities. The stock market and baht will weaken today but may rally sharply in the medium term. Thailand will rally sharply with the return of tourism”“The tourism and consumer stocks particularly Charoen Pokphand Foods and Minor International will decline in the short term because these are highly liquid and held heavily by foreign investors”’
DailyFX (strategist Margaret Yang)
“Rising political tension and uncertainties could inhibit risk appetite in the Thai stock market today. State of emergency may have bigger impact on tourism, aviation and entertainment sectors”
(Updates with SET Index’s opening move in the second paragraph.)
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