Global investors given reassurance by military government

A group of 30 major foreign investors attended a seminar in early August which was designed to allay any fears they may have had regarding the future long-term political direction of Thailand.

The 30 investors hold a combined 500 billion baht in the local capital market. All of them have had substantial sums invested in Thailand for most of the last decade, so they are well aware of the political traumas the nation has lived through over that time. From the street protests against the Thaksin Shinawatra administration in early 2006, to the coup in the same year, the military government which held sway until late 2007, the election of Samak Sundaravej and his subsequent removal from power by a court, the rise of Abhisit Vejjajiva, the riots of 2010 and the burning of Bangkok, the election of 2011 which brought Yingluck Shinawatra to power, the protests of late 2013 and into 2014 which eventually led to a second military coup, these investors have seen it all and continued to put their long-term faith in the resilience of brand Thailand.

The seminar was headed up by the chairman of the Stock Exchange of Thailand (SET), the president of the SET, the chairman of the Federation of Thai Capital Market Organisations, and the chairwoman of the Association of Securities Companies.

Between them, they assured the global investors that the military government is well advanced in its plans to return parliamentary democracy to Thailand. General Prayuth Chan-ocha, the NCPO leader, was unanimously elected as interim prime minister in August and has guaranteed that a return to elected democratic rule will take place, apparently some time in 2015.

In the meantime, the processes of day-to-day governance continues, with around 400 new pieces of legislation set to be enacted into law and priority given to planning a major overhaul of Thailand’s infrastructure.

The seminar was told that during 2013 foreign investors had sold Thai shares with a net value of almost 200 billion baht. That sell-off had extended into the early part of this year with 26.1 billion baht coming out of the SET.

However, since the end of street protests following the military coup of May, foreign capital had started re-entering the Thai stock market. In June, around 12.8 billion baht returned to the SET and the resurgence continued into July.

By the end of July, Thai shares had surged 18 percent in 2014, which compared favourably with the Philippines (up by 20 percent), Singapore (four percent) and Malaysia (just 0.3 percent) in the same period.

Foreign investors account for between 31 and 34 percent of the SET’s market capitalization, which stands at around 14 billion baht.