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(Reuters) – Many of the wealthy Thais who come to investment manager Charles Blocker have a question for the generals who seized control of the country in a military coup this week: What took you so long?
After months of turmoil and government paralysis, the rich individuals and companies that Blocker works with welcome anything that might get the machinery of state turning again.
“It’s business as usual”, said Blocker, head of boutique investment firm Invision Capital Partners in Thailand, where the company manages some $140 million of cash in from individual investors and family offices.
“This coup was inevitable and a lot of people are saying I wish they could have done it in February. Why drag it on for four more months?”
That sense of relief was fairly widespread on Friday, when Thailand’s stock market fell less than 1 percent – more a mild sell-off than a scramble for the exits.
Thailand’s army chief, General Prayuth Chan-ocha, said he was taking over to restore order and push through reforms to end a six-month a struggle for power between supporters of ousted former premier Thaksin Shinawatra and opponents backed by the royalist establishment.
“Thailand is now approaching the end game of the political crisis…”, analysts at ANZ wrote in a note to clients.
Thai investors have been here before. The country has seen 18 previous successful or attempted coups since it became a constitutional monarchy in 1932, most recently when the populist Thaksin was deposed in 2006.
“Military rule could paradoxically offer a limited stability, allowing civilian leaders time to find peaceful reconciliation and reducing the threat of violent disruptions to economic activity,” wrote Citi strategist Siddharth Mathur.
Rich Thais appeared to share that confidence. “It’s business as usual. We were selling yesterday and we are selling today,” said Deepa Chatrath, general manager for Southeast Asia at Swiss luxury brand watch maker Patek Philippe.
“Sentiment in the market is not affected at all,” she said. A Patek Philippe watch can cost between $25,000 and half a million dollars in Thailand.
THE SAFE COUP
Not everyone is quite so sanguine as Blocker and his clients, partly because of memories of policy mis-steps by the lackluster junta that ran the country after the 2006 coup.
Boon Vanasin, a doctor and founder of the mid-size Thonburi private hospital in Bangkok, isn’t betting on a quick resolution of a crisis that has festered off and on since Thaksin’s ouster.
Yet, Vanasin says he is making no changes to his investments. “I’m not a risk taker and so my investment portfolio is defensive, mostly in the healthcare sector, and so I will make no change to the holding,” he said.
“But in the crisis time and in panic selling, prices will fall and that’s an opportunity to buy for me.”
Data from the stock and bond markets shows both local and foreign investors are drawn to the bond market in the expectation that the stagnating economy will drive down policy rates, thereby pushing up prices.
Foreign investment money tends to be more flighty in times of political upheaval.
But much of the heavy foreign portfolio flows that went into Thai stocks as a result of aggressive monetary easing in developed markets since the global financial crisis have already left the country, leaving less scope for market turmoil.
So far since November, nearly $3 billion of foreign money has left the Thai stock market, according to BNP Paribas. The index is up 6 percent this year.
After the September 2006 coup, it took the military government more than a year to conclude constitutional reforms, conduct a referendum on them and then hold elections.
Investors were spooked when the authorities began to more strictly enforce a bar on foreign firms using proxy Thai shareholders to set up companies, and tightened disclosure rules after Thaksin’s family was probed for avoiding capital gains tax on its sale of a stake in communications firm Shin Corporation.
The central bank imposed draconian capital controls in December 2006 to rein in an appreciating currency, only to backtrack after the stock market collapsed.
This time will be different, seems to be the view of most onshore investors, based on optimism that the military will help break the logjam that had seen much of the business of government grind to halt since protests against a pro-Thaksin administration began in November.
“It’s a soft coup, a coup with a condom,” said Blocker. “It’s a coup that’s trying to help the young adults to install a prime minister.”
(Editing by Alex Richardson)
On 22 May 2014, the Royal Thai Armed Forces, led by General Prayuth Chan-ocha, Commander of the Royal Thai Army (RTA), launched a coup d’état against the caretaker government of Thailand, following six months of political crisis. The military established a junta called National Peace and Order Maintaining Council (NPOMC) to govern the nation.
The NPOMC partially repealed the 2007 constitution, arrested politicians, declared martial law and curfew nationwide, banned political gatherings, imposed Internet censorship and took control of the media.
The Opinion Pages | Op-Ed Contributor
BANGKOK — The Thai military removed all doubt about its intentions in declaring martial law earlier this week, and on Thursday officially announced that it was taking control of the government, the 12th time it has done so since 1932.
The newly created Peace and Order Maintaining Command, composed of the commander in chief of the army and the commanders of the Royal Thai Navy, air force and police, announced that it had suspended the Constitution — except for articles related to the monarchy, the activity of the courts, and some “independent” administrative agencies. The military said that it was acting to protect the peace and resolve the long political impasse that had brought mostly peaceful protests and counterprotests to Bangkok. It arrested the leaders of different political factions even as they were engaged in negotiations.
But unless the P.O.M.C. can quickly establish a road map for return to civilian rule, it risks setting off a cycle of violence and human rights violations. The sooner the military revokes martial law, the better for Thailand. The army chief, Gen. Prayuth Chan-ocha, imposed martial law on Tuesday and declared himself the “supreme commander” but strenuously denied that he had, in fact, carried out a coup.
The P.O.M.C.’s authority is based on Thailand’s martial law statute, which has been severely criticized for the unfettered powers it grants the military. Using it, the military asserts superiority over all civilian authority in matters of security and public order, including the power to arrest and detain people without charge for up to seven days and carry out warrantless searches.
Martial law enables the military authorities to rule by fiat, in effect suspending the human rights guaranteed under the Constitution and the International Covenant on Civil and Political Rights, to which Thailand is a party. The law also provides the military with immunity from any claims for compensation arising from its actions.
The military has imposed a curfew and set strict controls on the media. This follows its actions in the first hours of martial law, when the P.O.M.C. moved to shut down TV and radio stations, and issued orders forbidding the media to issue reports “that might distort the facts, cause confusion among the public, or lead to further violence.” In addition, social media sites and users were prohibited from publishing content that “misleads the public” or “escalates the conflict” or “opposes the operation of the P.O.M.C.”
Initially, the P.O.M.C. had been careful to invoke only a few of its powers under the law, in order to bolster its assertion that its actions did not constitute a coup. But now it risks an internal backlash and possibly international sanctions — including from the United States, the Thai military’s main backer.
The acting prime minister, Niwatthamrong Boonsongpaisan, was the only political leader who escaped arrest. Mr. Niwatthamrong was already in a weak position as a caretaker leader who only recently replaced Yingluck Shinawatra, ousted earlier this month by the Constitutional Court on contested grounds.
Ms. Yingluck herself was standing in for her brother, Thaksin Shinawatra, the leader of the so-called Red Shirt movement. His period in office as prime minister proved deeply divisive and was characterized by serious human rights violations; he was ousted in the last coup in 2006 and fled the country to avoid prosecution for corruption.
The Red Shirts, who keep winning national elections based on a constituency drawn largely from the provinces, have been at a political impasse with their rivals, the Yellow Shirts, who represent Bangkok’s more affluent population. The Yellow Shirts have been able to overthrow various Shinawatra-linked governments through a combination of military intervention and judicial and administrative maneuvers.
It is this conflict, largely played out in protests in Bangkok, that allowed the P.O.M.C. to justify its intervention. In the nation’s capital, troops and police officers appear to be exercising restraint. Let us hope this continues, for there is a long history of rights violations under martial law in Thailand.
In some 30 of Thailand’s 76 provinces, martial law was already in place before Tuesday, in some cases for years. Extrajudicial executions, deaths in custody, enforced disappearances and torture have been documented under military jurisdiction. There has been almost no accountability for these violations.
General Prayuth has provided little explanation for his actions this week, given that the political friction of past months was confined to Bangkok. Moreover, it’s hard to justify shutting down media outlets: There is an escalating risk of violence if the media is unable to report on the situation.
After a decade of misrule, the Thai people deserve greater respect for human rights, stronger institutions and more accountability. Rule by martial law is the opposite of the rule of law; it fosters an environment conducive to rights violations and should be revoked.
Updated May 22, 2014: This Op-Ed article has been updated to reflect news developments.
Sam Zarifi is the Bangkok-based regional director for Asia and the Pacific of the International Commission of Jurists.
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