[ASIA] Stocks Gain After Thailand Lesson
- Asia's stocks gain after a lesson from Thailand
From Bloomberg News and Reuters
Asian emerging stock markets rallied Wednesday as central banks in
Malaysia, the Philippines and Indonesia said they wouldn't follow
Thailand's move to restrict foreign capital inflows.
Many of the markets failed to recoup all of their losses suffered
Tuesday, after Thailand's surprise decision. But analysts were
encouraged that investors quickly returned.
Thailand late Monday slapped controls on foreign investment, in a
move the government said was necessary to slow capital inflows that
were pushing up the Thai currency, the baht. The rising baht was
boosting the prices of Thai exports.
But investors' reaction to the capital controls was to flee Thai
stocks. The market's benchmark index plummeted nearly 15% on Tuesday
and fueled selling across the region.
Late Tuesday the Thai government backtracked somewhat, saying the
investment limits wouldn't apply to stocks.
The Thai market index surged 69.41 points, or 11.2%, to 691.55 on
Wednesday, regaining about two-thirds of Tuesday's decline.
Malaysia's main market index gained 1.5% on Wednesday after losing 2%
on Tuesday. The Indonesian market rallied 1.7% after falling 2.8% on
Tuesday. South Korea's market was up 1% after a 0.4% drop the
Tuesday was "a valuable lesson in telling the emerging markets what
not to do," said Raymond Tang, who manages $1.7 billion at CIMB-
Principal Asset Management in Kuala Lumpur. Other countries won't
follow "unless they want to send the economy back 10 years."
Central banks in Malaysia, the Philippines and Indonesia responded to
the rout in Thailand by saying they wouldn't use capital restrictions
to try to control their currencies. That helped restore confidence in
the region, analysts said.
Still, the decision by the new Thai government, which was installed
by a military coup in September, may continue to haunt that country's
markets, some analysts said.
"Foreign investors will now be far more wary of investing in Thai
financial markets," said Kim Eng Tan, an analyst at Standard & Poor's.
Many Thai individual investors were furious with the government.
"Foreign confidence is gone," said Kongkarn Keerativitayoros, a 35-
year-old Bangkok investor. "Today you see a market rebound, but what
about tomorrow? Who knows if anyone would impose crazy measures and
hurt the market again."