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Weakening Thai economy suggests trouble for Asia’s top assets

Thailand’s markets have been boosted by almost US$4bn of foreign inflows this month as the central bank held off from interest-rate cuts, helping support bonds and the currency. But even the Bank of Thailand has voiced concern over the baht’s strength and said it has intervened in the market, while economic growth prospects are worsening.

“Foreign funds are using equities and bonds as tools to speculate on the baht’s strength,” said Pornthep Jubandhu, head of the investment research group at SCB Asset Management Co., the nation’s biggest private money manager with $45bn of assets. “This rally could be short-lived as fundamentals are very weak with the poor economic outlook, trade dispute and domestic politics.”

The Bank of Thailand this week lowered its growth forecast as the US-China trade war hurt exports. Domestic political risk is also rising with the ruling coalition holding just a tenuous majority in the House of Representatives, and the opposition alliance set to fight what it sees as continued military control.

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