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Thai Stocks Lose 23 bn $ in Value in Today's Session

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posted on Dec, 19 2006 @ 10:30 AM
The greatest plunge in 16 years, worse than the July 1997's fall of the tiger economies of SE Asia, happened today as a reaction to clampdown on speculation in the Thai currency. Yesterday Bank of Thailand's announced new rules for foreign investments. Requirements of keeping 30% of foreign currency bound on non-interest paying accounts for at least one year was introduced, an action that send the stock market in panic as it opened this morning. Allegedly the measures were taken to stop the Thai baht's rise against the dollar. The baht was yesterday traded at a nine-year high of 35.11 to the dollar. Before the collapse of 97 it was 60 to 70 to the dollar and in recent years it has been around 40. The baht is tied up to the dollar and has gained nearly 15% against it since January, which only goes to show how much the dollar has weakened.
Thailand's SET Index sank 108.41, or 15 percent, to 622.14, its lowest since Oct. 29, 2004, as the lockup took effect today. Shares of PTT Pcl and Bangkok Bank Pcl led benchmark's steepest slide since Aug. 7, 1990.

International investors today sold 25.1 billion baht ($699 million) more Thai stocks than they bought, their largest net sales since at least Jan. 4, 1999, according to data compiled by Bloomberg.

Government bonds slumped, pushing the yield on the 10-year note up 0.332 percentage point to 5.203 percent. The baht lost as much as 1.5 percent to 36.08, and recently traded at 35.88.

Benchmarks fell in India, Malaysia, Indonesia, the Philippines, Pakistan, Poland and Turkey as the currency controls heightened concern about investing in emerging markets. Thailand in 1997 triggered currency collapses in South Korea and Indonesia, leaving much of Asia in a financial crisis that required an international bailout.

Please visit the link provided for the complete story.

I'm not an economist, but I think this is an attempt to prevent over-heating of the economy, which after a 7 month deadlock of politic turmoil brought by the ousted Thaksin administration, suddenly saw the light again with the junta restoring order. But it seems to me an odd measure to inhibit the influx of capital by only allowing 70% to be spend immediately.

Anyway it worked, the baht lost 3% to the dollar, which I suspect to be the real problem here. Dollar going down means baht goes up, a problem for an exporting economy in competition with the Chinese yuan. Unfortunately the cure highlights the risks of investing in developing economies.

The side effect on the stock market doesn't seem to have been foreseen either, and with the chaos it has created the jackals are attracted, thus bringing all parameters in place for another meltdown of SE Asian economies. The crack of 1997 was caused by speculations in the currency and these measures are said to be exactly against that.

LATEST: Just in time for NY stock exchange to open, it has been announced the controls imposed will be lifted. The 30% will be dropped, reporters were told by the president of Thailand's stock exchange after meeting with Finance Ministry and Bank of Thailand officials. So WHAT is it really about?

This has to do with the yuan and the dollar, but how? That the hysterical bitches of the stock market are panicking is obvious.

What is the real agenda behind this? A meltdown for Christmas? Please come forward with your thoughts.

Related News Links:

[edit on 19/12/2006 by Mirthful Me]

[edit on 19-12-2006 by UM_Gazz]

posted on Dec, 19 2006 @ 03:14 PM
damn I wish I knew what this all really meant, last night I expected dramatic moves in the in all the currencies after Saxo bank said they weren't accepting any new positions for the baht, but I think what happened was that traders didn't quite grasp what was going on and while the asian currencies reacted, the U.S dollar once again shrugged off the news, just like this morning's not so great news.

posted on Dec, 19 2006 @ 08:10 PM
They cancelled it! They changed their mind! Tomorrow the stocks will skyrocket like helium balloons!

CNN: Thailand lifts new capital curbs

Foreign investors bailed out of the Thai stock market in droves Tuesday, forcing Thailand's military government to abandon just-announced measures aimed at stemming the country's surging currency. The Thai government said it would lift controls -- announced a day earlier -- on foreign investment in stocks after the market plunged nearly 15 percent, rattling regional bourses amid worries about a repeat of the 1997 Asian financial crisis. Jittery investors dumped stocks in Hong Kong, India, Indonesia, Malaysia, South Korea and the Philippines.

"Since we changed it a day after it was implemented, it has yet to cause damage and it is not too late," he said. "The stock market will go back to normal as the overall economy is still in good shape." Analysts said the government's reversal was expected to bring some relief to the markets Wednesday. On Tuesday, the Thai stock market had its worst day ever.

Please visit the link provided for the complete story.

posted on Dec, 19 2006 @ 08:21 PM

Curbs lifted as market crashes

Red faces as B800bn wiped off share values

Authorities were forced to make an embarrassing U-turn yesterday and eased stringent currency controls on foreign investors one day after the Stock Exchange of Thailand lost 800 billion baht in value _ the largest one-day drop in its 31-year history. Effective today, stock and foreign direct investment will be waived from the new Bank of Thailand rule requiring a 30% reserve on currency transactions.

M.R. Pridiyathorn Devakula, the finance minister and deputy prime minister, acknowledged that authorities had ''underestimated'' the impact that the controls would have on the market.

He met yesterday evening with market regulators, securities brokers and banks to discuss the fallout from the measures.

Please visit the link provided for the complete story.

Comments this morning are about how it goes when non-economist and their ilk, little experienced and conservative one of the trade, try to run a dynamic economy.

Money talk, and when they talk back you better listen.

As far as I understand, the inhibiting measures are only lifted for influx into actual investment in stocks and developing projects. How they are gonna distinguish, I have no idea.

Living in Thailand, it's easy to see that the economy is near boiling.

Take the share of the continiously rising number of new cars on the roads, it is obvious their part exceed that of most other countries.

Doing ninety miles an hour down a dead end road.

Only a crash can stop them. They cannot limit the measures only to currency speculators. Though controls today are in place with many countries, nobody really ask about the color of your money in Thailand.

I think watching markets the last couple of weeks this year, will be very interesting. Panic before closing time?

posted on Dec, 20 2006 @ 08:50 PM
The reversing of the Central Bank's decision yesterday partly calmed down the market and made it a partial recovery from Tuesday's 800 bn baht plunge gaining 550 bn.

Today's story from Bkk Post.

The intent, the reduction of the baht to the dollar somehow seems to work.

The breaking of the 35 barrier released the attempt to control by the regulating authorities. This morning the dollar trades above 36.

posted on Jan, 3 2007 @ 04:07 AM
The effect of New Year's Eve bomb blast takes it toll in the shaken economy of Thailand. Today was the first weekday with the stockmarket open. Once again the biggest mover in global benchmarks.
The explosions further undermined investor confidence following a September military coup that ousted Thaksin Shinawatra as prime minister and an attempt by the central bank last month to penalize overseas investment in Thai assets.

"Investors are going to be pretty negative," said Adithep Vanabriksha, who helps manage $1.9 billion at Aberdeen Asset Management Co. in Bangkok. The bombings are "going to sap confidence even further, particularly with what happened with the implementation of currency controls in December."

The SET Index dropped 22.43, or 3.3 percent, to 657.41 at 3:37 p.m. in Bangkok, heading for its lowest close since Dec. 19. The stock market was shut yesterday and Jan. 1 for the New Year holiday. The baht lost 1 percent to 35.77 against the dollar as of 3:30 p.m. in Bangkok, according to data compiled by Bloomberg.

Please visit the link provided for the complete story.

In cool cash it means they lost 150+ bn baht of the 550 they managed to gain back after the December 19th turmoil.

No stabilization is expected in the near future.


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