The removal of former Thai PM Yingluck Shinawatra from office is another development in the political stalemate that plagues Thailand.


  • Thailand?s constitutional court dismissed former Thai PM Yingluck Shinawatra on 7 May 2014
  • The implication for Thailand is a prolonged political stalemate where the lack of government poses downside risks to GDP and corporate earnings
  • With valuations around one standard deviation above historical averages, and the political stalemate in play, we view Thailand with caution and anticipation
  • Historically Thai political crises have presented great investment opportunities and we are ready should an attractive entry point present itself

When Thailand?s constitutional court removed former Thai PM Yingluck Shinawatra from office, it did not spark a fresh crisis, but perpetuated an existing political stalemate.

In other words, the Thai market, to some degree had already priced in the event.

Thailand now operates with 25 remaining cabinet members as a caretaker government, and as investigations by the National Anti-Corruption Commission continue, political uncertainty is going to be the norm until a new PM is elected.

We expect the Pheu Thai Party-controlled caretaker government to push for another general election in July 2014. We also expect the Democrat Party to boycott the election and for the People?s Democratic Reform Committee (PDRC) to attempt to disrupt the election like they did in February 2014.

The implications of this are continued downside risks to GDP growth and corporate earnings. At P/E ratios of +1?standard deviation?above historical mean, we are cautious on the near-term performance of the broad market.

However, as before, Thai political crises often present very attractive investment opportunities and Thai corporates have survived such situations before. We are on the lookout for attractive entry points, and remain positive on Thai corporates in the Indochina region for the long-term.

Milltrust Commentary by James Cotton, Senior Investment Advisor at Milltrust International Group in Bangkok.?

Thailand is in a political quagmire and it is incredibly difficult to see a way forward while the opposition Democrat party refuses even to engage in the basic process of standing in any election.

What it really means for the economy is that no one is authorised to make any spending initiatives. There is a rudderless ship and l would expect project delays on new infrastructure plans (e.g. the Dawei JV port initiative with Burma) and probable paralysis in areas important to the economy such as property etc. I don’t yet expect violent confrontation but things can change quickly of course.

While the Constitutional Court judges are appointed institutionally, they are in effect appointees of the Democrat Party, the party of the institutional elite from the royal institution downards. The fact is the court’s judgement is final if not potentially unbiased by nature of the political sympathies of those making the judgements, The same court ousted Thaksin’s elected first puppet Prime Minister after his deposal via military coup (he was also a TV celebrity chef), because he accepted ?30 appearance money to do some TV cooking while Prime Minister.

There is no logic here. It seems the institutional lobby have truly decided that economic recession is an acceptable price to pay to keep Thaksin & co out of power.

My impression is that The Shinawatra family are increasingly unpopular at grass roots mainly over the rice pledging scheme fiasco and corruption/non payment for pledged rice, a scheme that may have cost Thailand at least $10-20 billion in losses on their incredibly enormous stockpiles of overvalued and rapidly deteriorating/increasingly unsaleable rice.

We should bear in mind the market price of rice, driven down by the huge stockpiles that they can’t unload, is barely half the price that they are still paying to farmers in Thailand and probably to half the farmers in neighbouring countries for their rice which is getting smuggled, passed off, authenticated and sold off as Thai rice.

They have essentially blocked payments by delaying funding the government Agricultural Bank which doles out the money and has well and truly exhausted itself.

The government intervention in the price mechanism of rice has merely become a quasi vote buying operation for non-elections and the irony cannot be lost!