Several Thai economic indexes have now past their levels of the pre 1997 crisis, and the Thai Baht is also at record high level compared to the dollar. Does this mean that we are heading toward another busting bubble cycle ?

Thai equities are a juggernaut. The MSCI Thai Index has been on an inexorable multi-year rise. Four of the top five performing equities funds sold in Hong Kong are invested in Thai stocks, according to the information company Lipper.

New project Asoke
There is a sense of déjà vu about the strong capital inflows, rising financial leverage, and red-hot property markets that Thailand is witnessing.

The strong rally in Thai equity markets over the past year has left many battle-scarred investment veterans scratching their heads.

 

In 1997, it was precisely these trends that precipitated the massive devaluation of the baht, which then triggered the Asian financial crisis and left Thailand virtually bankrupt. So the question investors might ask is, is Thailand’s rally sustainable, or it is just undergoing another bubble that will eventually burst?

I would argue the former. To get to that view, you need to appreciate the strength of investment trends under way in Thailand, and the powerfully positive effect of the recent stabilisation of the country’s political situation. Thailand is at the start of a new investment cycle that is expected to last at least until 2020.

The most important driver is a government infrastructure spending programme to the tune of 1.9 trillion baht HK$498 billion, with the peak of the spending outlays occurring in 2016-17.

via Thailand’s boom is sustainable, unlike the one in 1997 | South China Morning Post.

About the author

Leave a Reply

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

Thai economy began to edge up in September

In September 2021, the Thai economy began to edge up from the previous month thanks to the relaxation of the COVID-19 containment measures according to the latest Press Release of the Bank of Thailand. 

Stable outlook for APAC sovereigns as growth rebounds and debt stabilizes

Economic growth rates in Asia-Pacific are broadly rebounding and debt burdens stabilizing, giving rise to a stable outlook for sovereign creditworthiness in 2022. Still, the pace of recovery differs vastly, and some economies will experience deep economic scarring, according to a new report by Moody’s Investors Service.