Jailing 'negative' analysts - Amazing

[JJsushi]

harlequinbkk said:

[color:"red"]That document needs to be rewritten. Hopefully George Bush will see to that [/color]

 

Um, you really should put down the business pages once in a while and read the front page of your newspaper. Mr. Bush is rewriting that document. What do you thing the Patriot Act is about?

 

 

Dude the Bush administration is just getting started, wait until his second term and then we will really see some changes!!!

[JJsushi]

jxxxl said:

 

You may have some data on this, but the sell off of the SET suggests that money is NOT flowing into the Thai capital markets. Direct foreign investment may be strong, but Thailands capital markets will be fucked if policies like the one we're talking about continue. It doesn't take much to trigger a massive sell off in Thailand e.g., 1997.

 

And yet they money came back, it always comes back.

[harlequinbkk]

[color:"red"] Dude the Bush administration is just getting started, wait until his second term and then we will really see some changes!!! [/color]

 

Let's wait until November before we talk about this, Sushiboy. It's looking more and more like George Jr. is following Daddy's (one-term) footsteps.

 

By the way, I think we get your point. There will continue to be foreign investment in Thailand. Perhaps you can elaborate on your rebuttal?

[Guest]

And yet the money still flows into the country.

Not true. The SET has seriously declined over the last six months. Just take a look at the index; this is very easy to verify and common knowledge to everyone here who is even remotely familiar with the market.

 

The biggest sellers have been foreigners. This is easy to track because Thailand's protectionist Alien Business Law requires that stocks of listed companies be split between shares available to Thais and stocks available to foreignors.

 

Foreign direct investment is also way down. Where is the money coming from? Well KTB, a government owned bank, is one of the biggest sources of funding. But then the Bank of Thailand issued a report warning about an alarming increase in non-performing loans at KTB. This triggered a sell off of shares, and then the warning against negative analysts. Oh yes, the Minister of Finance is threatening action against the Bank of Thailand for issuing the report about KTB and there were stories that the PM might fire the governor of the Bank of Thailand (sort of Thailand's Greenspan, but much less independant.) Connect the dots.

 

The threats against a negative analysts are a ill conceived and ham fisted attempt to reverse these declines: kill the messenger. Lord Toad is exactly right; it will do more harm than good because financial markets will recognize it for what it is.

[JJsushi]

Gadfly1 said:

And yet the money still flows into the country.

Not true. The SET has seriously declined over the last six months. Just take a look at the index; this is very easy to verify and common knowledge to everyone here who is even remotely familiar with the market.

 

 

A six month slide in the SET is not something to scream doom and gloom about. Put the move into perspective.

 

Dude with dividends reinvested the SET is still up 20.5% for a iyr period. The S&P Asia emerging market index is up 11% for the same period. The SET was also up 122% for the year ending 2003. So foreigners are taking profits- big deal. The global markets are nervous and investors are taking their gains off of the table. What is all this doom and gloom about the SET are you are referring too?

 

The US stock market by comparison is performiing worse. The DOW is only up 6% for a 1year period.

 

Protfolio managers are not selling Thai stocks because of fears about anti- foreigner sentiment from the government or analysts possibly getting jailed. People are selling as they are everywhere. Too much freaking uncertainty. Would you rather be in a quality investment such as US bonds or emerging market securities? Have you looked at the price of oil lately? Have you noticed US Treasury's gain even in spite of the Fed tightening?

 

 

Like I said the money always flows in, the difference is the strength of the flow. When things cheapen up enough or there is a compelling reason to own, it flows more.

 

Let's see, terrorism fears, US election coming up, high oil prices, increasing commodity prices, higher interest rates, anemic economic growth from industrialized nations, etc. Why would I want to continue to invest currently in an emerging market, export oriented economy such as Thailand? I have made money for the past 2 years in that market and the the risk reward is just not in my favor to continue to funnel money at this time. i will revist the place later when i see a compelling reason to commit my capital.

 

In other words I will return.

 

I myself cashed in my Thai mutual funds last year because the market was too hot and irrational. Eventually I will return.

[JJsushi]

harlequinbkk said:

 

By the way, I think we get your point. There will continue to be foreign investment in Thailand. Perhaps you can elaborate on your rebuttal?

 

Sure. Simple really, if you tack on an adequate risk premium, investors will invest. That is why banana republics will always attract money. Take South America for example, they default on their debt every decade or so, yet all of the major banks lline up to give them more capital. These investors demand a hefty risk premium but they always return even after they get burned.

[Paillote]

jjsushi said:

 

I have made money for the past 2 years in that market and the the risk reward is just not in my favor to continue to funnel money at this time. i will revist the place later when i see a compelling reason to commit my capital.

 

In other words I will return.

 

Fot the risk orientated maybe now is the time to do just that. The SET have slid so much the last 4 weeks, that at least in the short term it looks like the bottom is reached. Foreign investments have started to flow back in again and the reported 2Q earnings showed an overall average earnings increase of 17% YOY. The banking sector was a disapointment, and excluding that, the rise was a whopping 35%.

 

If the price of oil take a downturn in the not to distant future, well, draw your own conclusions...

 

Paillote

[harlequinbkk]

[color:"red"] Sure. Simple really, if you tack on an adequate risk premium, investors will invest [/color]

 

Yes, simple and obvious, but you are still dancing around the issue here. If the 'cost' of investment funds (i.e. interest on debt or expected return on equity) is too high, it will have a negative effect on the nation's economy relative to countries with more sensible economic policies.

 

Yeah, in the short run investors get burned, but at the end of the day, a Third-world country with dysfunctional economic policies will continue to be a Third-world country.

[gummigut]

Yes a lot depends on oil as it is a major source of economic jitters. It stabilizes and descends then we'll see more flows to riskier markets.

 

jjsushi, you are bandying things about and making correlations that really don't make a lot of sense. Talking about the six-month slide in the SET, you say to put it in perspective and that foreign investors are profit taking. Umm, six-month long slide of profit taking? That doesn't figure. Your point about capital flight from riskier markets though is right on the money.

 

The point is that jailing negative analysts (who back up their assertions) is not the sign of a mature capital market. Making it a riskier investment and thus capital flight (though how much can be argued considering analyst reports here aren't the most in depth to begin with).

 

<<burp>>

[JJsushi]

harlequinbkk said:

[color:"red"] Sure. Simple really, if you tack on an adequate risk premium, investors will invest [/color]

 

Yes, simple and obvious, but you are still dancing around the issue here. If the 'cost' of investment funds (i.e. interest on debt or expected return on equity) is too high, it will have a negative effect on the nation's economy relative to countries with more sensible economic policies.

 

Yeah, in the short run investors get burned, but at the end of the day, a Third-world country with dysfunctional economic policies will continue to be a Third-world country.

 

What does all of what you say have to do with the obvious fact that money continues and will continue to be invested in Thailand. Like I said tack on an acceptable risk premium and people will invest, regardless of if it is an emerging market.