Thailand: Equities tend to struggle during unrest, THB performance is more mixed – ANZ

Thailand’s outlook is darkening as rising political tensions are adding downside risks to growth. The ongoing protests have weighed on Thai assets, and in the event of further escalation, history suggests that Thai equities will be hit harder than the currency, economists at ANZ Bank apprise.

Key quotes

“While the odds for more aggressive monetary stimulus have risen, their effectiveness will depend on the government’s ability to mobilise stimulus funds.”

“Whenever political tensions are heightened, Thai equities tend to underperform relative to regional bourses. In contrast, the THB’s comparative performance has been mixed during past periods of major political protests.” 

“Other factors beyond the recent escalation in protests may have contributed to the recent THB underperformance too, such as a relatively weaker growth outlook (given its outsized dependence on tourism) and the BoT’s plans to encourage outflows.”

“An improving current account surplus, whose upturn could be further accelerated by deeper import compression should political instability intensify and result in a change in government, could cap THB weakness.”