View more on these topics

Coup de grace

Helen Pow considers the economic impact of last week’s military takeover in Thailand

Fund managers believe any short-term weakness in the Thai stockmarket due to last week’s military coup could bring good buying opportunities.

Thailand is no stranger to military coups. Since it became a constitutional monarchy in 1932, it has seen 18 coups or attempted coups and has been governed by 31 prime ministers. The administration of the ousted Thaksin Shinawatra was the first elected government to complete a full term in office but this year Thailand has had a string of political woes.

The most controversial was in February when prime minister Thaksin, who is a very wealthy businessman, caused havoc by selling shares in his family’s conglomerate tax-free for more than 1bn.

The urban middle classes in Bangkok demonstrated their anger on the capital’s streets almost daily.

Last week’s coup has been largely bloodless and seemingly has the backing of Thailand’s king Bhumibol Adulyadej although he has not officially declared his support.

The Thai market was down by 2-2.5 per cent when it reopened on Thursday last week but then rebounded. Friday was weaker for the market as local investors sold .

Cuffe says: “Everything related to investor spending has been hit. Some construction companies that were looking positive are down by 20-30 per cent.”

Ousted Prime Minister Thaksin’s company was down by 30 per cent but Cuffe says there is lots of buying interest in the market from big foreign investers hoping to get a good deal.

Invesco Perpetual head of Asian equities Stuart Parks says: “Our view is that this should have no effect in the medium term and any short-term weakness is a buying opportunity.”

Threadneedle Investments emerging markets fund manager Maxine Cuffe says: “Ideally, the military will transfer power quickly to an interim administration, all-owing confidence to return.”

General Sondhi said last week that a “caretaker prime minister” would be appointed within two weeks.

Close Finsbury Far East equity fund adviser Stephen Swift warns that the tourism industry will be affected in the short term, potentially hitting the stockmarket.

Axa Framlington fund manager William Calvert says he “would not expect any extreme negative reactions” in the market.

Templeton Asset Management director Mark Mobius says: “We will continue to watch the market carefully and if prices fall as a result of the political situation, we may add to some of our holdings.”

Aberdeen New Thai manager Hugh Young says: “From a fundamental perspective, we like Thailand. Our contrarian instinct tells us to look for bargains if more risk-averse investors turn tail.”

Fund managers say the long-term effects depend on the reinstatement of a stable government. Swift says: “Longer-term stability must return or foreign direct investment into Thailand, a key positive factor for the economy, could be threatened.”

A new constitution could take a year to draft, during which time the military would rule. Many fund managers do not believe this is necessarily bad news and think the change could be positive for Thailand’s market. Calvert says: “Military governments can be much more competent than some elected governments. In terms of the economy, the change of is certainly not negative.”

The last Thai coup took place in May 1992 and in its aftermath the market initially dropped by 8 per cent but after eight months it was up by 30 per cent.

Emerging market funds fell significantly in May and June this year but the last three months have seen an upward movement.

Calvert says: “The coup will have a very marginal impact for emerging markets as a whole.”

He believes there is no indication that neighbouring markets in the region will become unstable.


Dual strategies to recover Millfield advisers’ £5m debts

The 1,000 former Millfield advisers that owe the firm over £5m from advance commission paid will be split into two different classes. Former Millfield advisers that joined Bates Millfield will receive help, with the firm having agreed to pay off advisers’ debts up front and let them pay back on a monthly basis. Advisers that […]

Disclosure delusions

Aegon Scottish Equitable head of underwriting Matt Rann says people do not understand how critical-illness cover works and advisers and providers must educate them on what details must be disclosed

HR Trustees picks up Hoverspeed pension plan

HR Trustees has been appointed as independent trustee to the Hoverspeed pension plan by the Pensions Regulator.HR Trustees will pick up guardianship of Hoverspeed’s pension plan during its assessment period by the Pension Protection Fund, following the firm’s insolvency. The plan has around 1,000 members and assets of £16m. HR Trustees is responsible for ensuring […]

Adviser in court fight with Woolwich

Woolwich is being taken to court by a mortgage adviser seeking compensation for a series of alleged service blunders. Strategic Financial Solutions joint managing director Henri Berest has applied to the county court to recover over 2,000 in expenses after he says Woolwich sent plans for a new-build property to a borrower’s old address. Woolwich, […]

Greg Broomer 2

Survey looks at the challenges facing businesses post auto-enrolment

A survey conducted by Johnson Fleming at the Pension & Benefits Show 2014 highlighted the key challenges faced within organisations post auto-enrolment. The results showed that communicating the changes and the value of them to staff, and receiving timely data from the payroll provider proved to still be the most challenging aspects of managing an auto-enrolment scheme.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm