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Thailand Abandons Lockup on Foreign Stock Investme
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pikachu
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19-Dec-2006 22:30
Yells: "Holy Cow!" |
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Damage already done... confidence in Thai financial market is already shaken. The ruling party is a laughing stock for letting this happen. |
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maxsyn
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19-Dec-2006 22:28
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Dec. 19 (Bloomberg) -- Thailand's government scrapped currency controls imposed on international investors one day after the central bank imposed them and sent the stock market plunging by the most in 16 years. The government is removing a requirement that banks lock up 30 percent of new foreign-currency deposits for a year, Finance Minister Pridiyathorn Devakula said in Bangkok. ``The stock market has fallen too much today,'' Pridiyathorn told reporters at a press conference. ``This is the side effect of the central bank's measure, but we have fixed it already.'' Thai stocks erased $23 billion of their market value today after the central bank said international investors must pay a 10 percent penalty unless they keep funds in the country for a year. The currency controls triggered declines in other emerging stock markets by highlighting the risks of investing in developing economies. The new rules would have limited international investors to using 70 percent of their funds to buy Thai stocks. Pridiyathorn said the rules would remain in effect on other investments, including bonds and property. ``It's very untimely, it's unwarranted and it's badly thought-through,'' said Teng Ngiek Lian, who oversees $1.6 billion in Asian stocks at Singapore-based Target Asset Management in Singapore, before the measures were rolled back. ``If they don't quickly restore confidence, the damage can be quite bad.'' Thailand's SET Index tumbled 15 percent to its lowest since Oct. 29, 2004. The index sank 108.41 to 622.14. Morgan Stanley Capital International's Emerging Markets Index fell 12.14, or 1.4 percent, to 883.18 as of 8:25 p.m. in Bangkok. International investors sold 25.1 billion baht ($699 million) more of Thai stocks than they bought today, the largest net sales since at least Jan. 4, 1999, according to data compiled by Bloomberg. |
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