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Business as usual in Thailand

'Coup with a condom' won't disrupt economy like last time, rich Thais say

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 last 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 from individual investors and family offices.

“They are continuing to re-invest in their businesses within Thailand, whether that is in real estate, the food business, semiconductors, or tier 1 or tier 2 auto parts supplies,” he added.

“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 Friday, when Thailand’s stock market fell less than 1 percent — more a mild selloff than a scramble for the exits.

The chief of Thailand’s army, Gen. Prayuth Chan-ocha, said he was taking over to restore order and push through reforms to end a six-month struggle for power between supporters of ousted former Prime Minister 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 watchmaker Patek Philippe.

“Sentiment in the market is not affected at all,” she said. A Patek Philippe watch can cost between $25,000 and $500,000 in Thailand.

And while not everyone is quite so sanguine as Blocker and his clients, partly because of memories of policy missteps by the lackluster junta that ran the country after the 2006 coup, the view of most onshore investors seems to be that this time will be different. Many are optimistic that the military will help break the logjam that had seen much of the business of government grind to a 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.”