May 20, 2014
Despite proclamations that markets would open ‘normally’, Thai SET50 (stock market) futures are indicated to open -4.2% – its biggest drop since January’s collapse. Thai CDS are modestly wider (+5 to 130bps) but early Bhat weakness has been rescued back by a mysterious bidder (rumored to be the central bank by several traders). The last 2 times martial law was invoked – in an entirely non-coupy-coup-like manner – general market weakness was less than we have seen so far. Of course, the army has decided that in the interests of avoiding the “provocation of unrest and triggering fear” it will “ban the broadcast and distribution of news.” Nothing like a military-coup, that is not a coup, with total media censorship to encourage capital flows and maintain peace in the nation.
But was rescued… by the central bank selling USD - USD/THB selling today in 32.650-660 area led by agents for Thailand central bank, according to an FX trader based in Asia.
These reactions are worse than the last 2 times martial law was invoked…
Thailand’s military imposed national martial law today for first time in 4 yrs. Here’s how assets responded on Asian trading day immediately after martial law was declared in the past:
April 8, 2010:
* 5yr CDS on Thai sovereign debt rose 5 bps, hitting 2 week high, according to CMA prices
* 5yr sovereign bond fell 5 bps
* USD/THB swung between +0.3% and -0.3%
* 1-yr IRS fell 5 bps
* Thai stocks fell 3.5%, most in more than 5 months, with Thai Airways, Airports of Thailand and Minor Intl among worst hit
Sept. 20, 2006
* USD/THB rose most in 4 yrs, swung between -0.2% and +1.9%
* 5yr CDS rose 11bps, according to CMA prices
* S&P, Fitch said they may cut Thailand’s credit rating
* Thai stock mkt, bond trading were suspended Sept. 20; stocks fell 1.4% when they reopened a day later, 5-yr sovereign yield was little changed
And so the Army has decided that it will censor the media to avoid any panic and unrest…
*THAI ARMY PLANS TO SUSPEND 11 RADIO, SATELLITE TV STATIONS
Army says in statement that it will “ban the broadcast and distribution of news and information that may provoke unrest and trigger fear among the public via radio, television and online media.”
A number of Thai television and radio stations openly support either anti-govt groups or supporters of the govt; the army imposed martial law earlier today on concern that protest violence may escalate
“The distribution of this information will make it more difficult to maintain order,” the army says
Seems like a great time to BTFATH in US equities – oh wait… what could possibly go wrong?
But don’t worry – Fitch has insane reassuring words for bond holders…
This article was posted: Tuesday, May 20, 2014 at 5:40 am