Politics now likely to induce market volatility.
February 28 "06
Next month and perhaps beyond, will be a politically charged time for Thailand. Take some profits.
Who knows what will now happen to Mr. Taksin as the pressure is mounting for him to walk away. But will he? Will there be any "damage" or other "commotion"? For sure there will be increased uncertainty...stock markets including the SET don"t like that. Regardless of yesterday’s impressive showing on the SET, I am today turning more cautious. Our model portfolio (the favorites) has done extremely well and so I would take some profits now. I will update this model within 24 hours.
Yes, I have taken a far more prudent stand just now; thinking there may well be some panic sell off days, as the political scenario plays itself out. It is difficult to know what affect this will have on the SET? Yet, more uncertainty is not good for any market. Surely many mega infrastructure projects will be delayed...and the era of Thai political stability is finished, for now anyway. Take some profits now is my view.
My investment objective has always been prudent capital gains, never a speculative "hit and run" approach. So if I am wrong, and the SET just creeps higher, I rather err on the conservative side. But I for one think there will be short "panics" over the next many weeks, which should be used to nibble back.
Only due these sudden and seemingly broad changes in the coming, I am more cautious in the short term and so advocate select profit taking across the board. Long term investors can chose to just ride it out, but my take is there will be days to buy back cheaper.
My comments are more directed towards members whom been with me for at least a few months and so should show substantial gains in the various select stocks I outlined. Newer members should take this time to peruse the various reports here, familiarize yourself with the various articles, get ready and await some sort of a mkt. panic, --then be ready to buy. Yes, I could be wrong but I always promised you to post here what I believe.
Below is how one broker/dealer just describes it all and I agree.
Best Regards,
Paul A. Renaud.
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Thai Politics: Thailand: Politics Takes a Turn for the Worse
Highlights:
Friday"s dissolution of the parliament was seen as a victory for PM
Thaksin until two of three main opposition parties turned the tables
on Thai Rak Thai (TRT) with an agreement to boycott the elections.
Plausibly, Thailand may end up without a functioning government for
many months. Public support for the elections boycott appears
significant, as is the number of protestors (150,000) who have stayed
put since Sunday evening. There are also threats of a utilities
strike.
Three main opposition party leaders are demanding that PM Thaksin
sign a joint declaration today committing to amend the constitution
in return for competing in the 2 April elections. This would involve
appointing a neutral person (approved by HM the King) to amend the
constitution. Once completed, PM Thaksin would then dissolve
parliament for new elections. Even this relatively benign scenario
implies two elections in Thailand this year. The crowds at Sanam
Luang are demanding that PM Thaksin quit politics altogether.
An agreement between TRT and the opposition can be market-positive.
However, agreement must be reached by 8 March at the latest, a major
challenge. That is last day in which the opposition can submit
candidates to compete in the elections. Although such agreement
appears unpalatable for PM Thaksin, other scenarios could be more
confrontational.
When the dust settles, PM Thaksin"s sound economic policies could be
discredited amid the attacks on him personally. We see a backlash
against policies that enhance market forces and welcome foreign
participation in the Thai economy. It would seem that a free trade
agreement (FTA) with the US will not be realized, at least for the
time being. The next government (TRT or otherwise) could be cautious
toward pro-market policies which have unfortunately been identified
with greed and conflict of interest.
