Friday, March 30, 2007

Reuters: Foreign Investors Tired of Thai Government's Bungling of Economic Policy

Foreign investors fed up with Thai fumbles

By Jeffrey Hodgson and Umesh Desai

HONG KONG (Reuters) - Foreign investors are fed up with repeated policy fumbles and flip flops by Thailand's financial authorities to the point that many shun Thai markets and consider selling existing holdings.

International money managers said on Thursday the latest confusion about whether Thailand's central bank would put a ceiling on the baht currency pushed what little faith they may have had in policymakers to new lows.

Thai authorities, worried about the baht's strength and the impact it could have on the export-dependent economy, have sought to curb the currency for months with the imposition of capital controls in December and sporadic intervention.

But both domestic and foreign investors have been scathing in their criticism of the handling of these matters by the government appointed by the military leaders who ousted Prime Minister Thaksin Shinawatra in a September 19 coup.

"There doesn't appear to be a coherent policy being articulated ... it's a state of confusion and it's eroding confidence," said Anthony Muh, executive director at AT Asset Management, which manages about $1 billion (510 million pounds) in Asian equities.

"We are still continuously re-evaluating the situation to see at what point do we say, 'This is all getting too hard'. We're not quite there yet, but certainly the recent developments haven't helped."

The Hong Kong-based fund manager said the firm was definitely not looking to increase holdings of Thai stocks, which make up about 2.5 percent of its Asian portfolio.

Thai shares have lagged their regional peers and the benchmark Bangkok index <.SETI> is Asia's worst performer so far this year with a 1.36 percent loss.


Thailand's central bank said on Tuesday it would not put a ceiling on the baht, but called on commercial banks to refrain from pushing the currency higher.

It was forced to clarify its position after a newspaper report sparked market speculation the central bank planned to fix the baht's exchange rate. Continued ...

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