Thaksin times in Thailand

Thailand now has its first female prime minister in Yingluck Shinawatra, the younger sister of Thaksin.

The view is that Thaksin will be in no hurry to come back to Thailand from his exile in Dubai and will simply spend an awful lot of time on the phone to his younger sister who he has described, perhaps a little undiplomatically, as his clone.

As to what this all means for the economy and the stock market, the SET performed strongly last time Thaksin was in power: from lowly beginnings as a humble copper he moved into computer sales and eventually built up a huge telecommunications empire.

If you come to Thailand and use your UK mobile phone, odds on it is via a roaming agreement with Thaksin’s Advanced Info Services. Thaksin is perceived, not unfairly, as very pro business. So far so good. Equally, it has seldom been a profitable exercise to short coups here. All of which suggests that the outlook is quite rosy. Things are never quite so simple however.

What the markets hate more than anything else is uncertainty and everyone knows that Yingluck will try to bring her elder brother home at some point.

People also know that the army would have to swallow a ton of humble steamed rice pie to allow that to happen.

They got rid of him five years ago in a remarkably quiet and bloodless coup, resenting, as they saw it, his presidential style, which many felt and still feel has no place in a country where the monarchy is genuinely revered.

In the short-term the market may well gyrate in both directions as it tries to gauge the public and political mood accurately.

Given the uncertainties, foreign direct and portfolio investors may well calculate that the risk/reward ratio is not tilted, at least for now, in their favour.

While the Thai economy remains strong, however, and while Thai businessmen have proved they can cope with the most testing of times (Bangkok’s Skytrain was built in the midst of a Baht collapse and in the middle of the worst traffic in Asia), the best that can be said for the stock market over the next year, particularly when one factors in what the lese majeste laws prevent me from mentioning, is that Thailand will become what the index trackers and closet trackers hate – a stock-pickers market.

Stephen Simmons is client relationship and marketing director at BDT Invest. The views expressed here are his own.