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06 July 2011: SH: Thai election: a new era for a promising economy?

THAILANDIA A

–  The sister of exiled former PM  Thaksin Shinawatwa is to form  a government following a decisive victory in the country’s general election.
–  We view the outcome of elections as a positive development for Thailand’s economy and its markets, and it should bring much-needed political stability to the country. 
We view the economic fundamentals of Thailand as strong, with growth driven by demographics and urbanisation.
….


Team Asia Pacific di Schroders


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    The sister of exiled former premier Thaksin Shinawatra is to form Thailand’s next government following a landslide victory in the country’s general election. The win gives Thailand its first female prime minster and has been largely welcomed by the markets. Thailand’s baht rose by the most in three years yesterday, while shares rallied on expectations that the win by Yingluck Shinawatra’s Pheu Thai party would bring foreign investment back into the country.  
     
    News of the decisiveness of the victory allayed market fears of a hung result and an ensuing political impasse. We view the outcome as a positive development for Thailand’s economy and its markets, and it should bring much-needed political stability to the country.  
     
    The risk, however, remains that the Democrats and/or the military might stage a revolt. The likelihood of this occurring is, at present, very low in light of the
    Democrat Party leader Abhisit Vejjajiva conceding defeat and the army announcing that it had accepted the poll verdict and would not intervene.
     
    Away from the politics, we view the economic fundamentals of Thailand as strong, with growth driven by demographics and urbanisation. Secular trends – including high agriculture prices, growth in provincial areas on infrastructure improvements, as well as a pick up in foreign direct investments – are at the core of the country’s long-term outlook. While we were conscious of an overhang in the market prompted by the political uncertainty leading up to this year’s elections, we have been increasingly positive on Thailand over the course of 2011.  
     
    Despite short-term headwinds, we have focused our investment decisions on Thailand’s promising long-term trends. In terms of our positioning, we have been adding to favoured names since the fourth quarter of last year. While we are positive overall, our focus continues to be on valuations. We are poised to take advantage of any interim volatility, which may provide us with an opportunity to add to our preferred names in the market, particularly in consumer-related sectors.


    Important Information:

    The views and opinions contained herein are those of Azad Zangana, European economist, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. For professional investors and advisers only. This document is not suitable for retail clients. This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Schroders has expressed its own views and opinions in this document and these may change. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Services Authority. For your security, communications may be taped or monitored.


     Source: ETFWorld – Schroders

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