Thai stocks sink after coup, currency stabilizes

AP News
Posted: May 23, 2014 12:21 AM
Thai stocks sink after coup, currency stabilizes

BANGKOK (AP) — Thailand's stock market sank Friday, a day after the country's military seized power in a bloodless coup. Other Asian stock markets were mostly higher, with Japan boosted by weakness in the yen.

Bangkok's SET index fell more than 2 percent in the opening minutes of trading before moderating its losses to be down 1.4 percent at 1,385.80. Thailand's currency stabilized after falling about 0.4 percent against the dollar after the coup was announced early Thursday evening.

The relatively muted market reaction to the military takeover reflects that foreign investors had substantially reduced their holdings of Thai stocks during the past six months of protests aimed at unseating the elected government. Net selling of stocks by foreigners is about $640 million so far this year, according to stock exchange data.

Bombings and lawlessness have bruised Thailand's capital and the military says the coup, which is the second in Thailand in eight years, is needed to restore stability. The army is vowing political reforms but also risks worsening the crisis if its seizure of power inflames the opposing political camps.

The coup is regarded as an "extremely negative development" by almost all observers, said Michael Every, head of financial markets research in Asia for Rabobank. It is possible an insurgency will begin in the country's north and northeast where support for the ousted government is strongest, he said.

The backdrop of potential instability and violence will weigh on the already struggling Thai economy and put pressure on its baht currency, Every said.

Elsewhere in Asia, Japan's Nikkei 225 was up 0.9 percent at 14,473.19 after the dollar climbed to near 102 yen overnight. A weaker yen is a plus for Japan's powerhouse export manufacturers.

Hong Kong's Hang Seng was down 0.1 percent at 22,931.95 and Australia's S&P/ASX 200 added 0.3 percent to 5,493.90. South Korea's Kospi was little changed.

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Wall Street carved out a modest increase Thursday for the second day in a row. During a relatively slow week, stock investors drew encouragement from some positive news on the economy and housing.

The Standard & Poor's 500 index rose 4.46 points, or 0.2 percent, to close at 1,892.49. The index is up 2.4 percent for the year.

The Dow Jones industrial average rose 10.02 points, or 0.1 percent, to end at 16,543.08. The Nasdaq composite index added 22.80 points, or 0.6 percent, to finish at 4,154.34.

In energy trading, benchmark U.S. crude for July delivery was unchanged at $103.74 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 33 cents on Thursday.

In currencies, the euro fell to $1.3650 from $1.3656 late Thursday. The dollar eased to 101.75 yen from 101.79 yen.