Skip to main content

Investment firms boycott Thai debt

In the ongoing fallout over recent currency controls imposed on foreign investors, Bloomberg reports that some fund managers have stopped buying Thailand's debt.

Jan. 12 (Bloomberg) -- Global bond fund managers are boycotting Thailand's debt because of government curbs on foreign investors, raising borrowing costs in Southeast Asia's second-biggest economy.

ING Investment Management, part of the largest Dutch financial services company, won't buy Thai bonds after the central bank said Dec. 18 it will fine investors who sell assets within a year of purchase. Aberdeen Asset Management in Bangkok, part of the Scottish fund group focused on Asia, sold half its Thai bonds due in 10 years or more, said Pongtharin Sapayanon, who helps oversee $1.6 billion.

``We won't be investing,'' said Joel Kim, a Hong Kong-based fund manager who helps oversee $10 billion at ING. ``There's going to be very little foreign involvement.''

Fund managers are wary because the government has revised investment rules six times since September, when the military seized power in a bloodless coup. Standard & Poor's this week said it will lower the outlook on $44.1 billion of local debt should an exodus of investors slow economic growth.

Basically what we're seeing, in the wake of these currency control measures, is a continuation of the investment community's negative sentiment towards Thailand. The article goes on to describe how Thailand's borrowing costs will rise and also discusses the possibility of further debt downgrades.

Marc Faber is also quoted in the Bloomberg article, echoing the sentiments he made here in December and in his recent Bloomberg video appearance.

``The way the measures were implemented was wrong and eroded confidence,'' said Marc Faber, founder of Hong Kong-based Marc Faber Ltd., which manages about $300 million in assets. Faber, who lives in Thailand, says he won't invest in Thai bonds because a ``severe correction'' in global markets will push yields higher in emerging markets.

The investment community is still hoping that Thailand's experience will provide a lesson for other emerging market nations.

Popular posts from this blog

Nasdaq credit rating junked.

S&P cut Nasdaq's credit rating to junk status citing debt burdens and its questionable strategy to buy a controlling interest in the London Stock Exchange. Financial Times reported that the exchange's counterparty credit & bank loan rating were lowered fromm BBB- (lowest investment grade rating) to BB+. The change will increase Nasdaq's borrowing costs should it wish to pursue aquisition targets. For an earlier look at the exchange consolidation trend that brought about Nasdaq's push for a stake in the LSE, please see "Exchange fever" .

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and...

Finance Trends 2019 Mid-Year Markets Review

Email subscribers of the Finance Trends Newsletter receive the first look at new articles and market updates, such as the following piece, sent out to our email list on Sunday (6/14).   Hello and welcome, everyone! If you received our last email notice over the July 4th holiday, you'll know that this weekend's newsletter will serve as a mid-year market update and a follow-up to issue #29, " How to Reinvest in a Rising Market ".   Ladies and gentlemen, without further ado, let's start the show...  Finance Trends Newsletter: Our Mid-Year Market Review When we last spoke, back in February, the U.S. stock market was rallying off its December-January lows. As the S&P 500 and Nasdaq reclaimed their 200 day moving averages in February and March, it became increasingly apparent that a lot of retail investors (and perhaps some institutional investors) were left under-invested while watching this recovery move from the sidelines.  The U.S. stock ...