EXCLUSIVE: Just how worried should Thailand property buyers and investors be about the current weakness in the Thai baht, and is this an opportunity for buying or selling Thai assets?
Paul Gambles, Managing Director of MBMG Investment Advisory exclusively shared his views.
He told Thailand-Property: “It’s been our base case for a while that all ASEAN currencies are vulnerable in any kind of global economic, liquidity or capital market crisis.
“We’re certainly seeing economic dramas in Europe following the ‘neverendum’ result in Greece although the fact that the sides appear to still be talking mean that the on-again off-again Greek Tragedy continues to play out. A full-blown Euro exit, which is now more widely recognised as being imminently possible, would exert further downward pressure Southeast Asian currencies as the flight to safety motif would favour US$.
“We’re also seeing capita market dramas a-plenty in China, and the question here is whether the contagion from this can be contained by the time the Chinese authorities increase their ongoing interference in (aka support of) the various Chinese stock markets.
“The word is that they will keep throwing ever more kitchen sinks at the problem until the markets behave more the way that central government wants them to.
“A positive resolution to either or both issues would benefit all ‘risk-on’ currencies like the Thai Baht, Indonesian Rupiah, Philippine Peso or Malaysian Ringgit.”
Gambles added: “The Thai Baht has suffered disproportionately to most neighbours over varying terms – falling almost 15 percent against the Malaysian currency from this time last year to April of this year, although it bounced strongly off those lows before giving back most – but not all – of that bounce. It’s also had a rough few weeks against the likes of the Peso.”
He noted that in Malaysia, local factors such as the recent financial scandal are more likely to generate relative direction versus the Baht, but with Peso and Rupiah it seems that markets are paying greater heed to Thailand’s weaker growth outlook.
“This is a very short term perspective – greater current account challenges remain for both the archipelago nations than for Thailand, and while we’re quite negative on Thai growth, we see much better fundamentals here and believe that ultimately these will have a medium- to long-term effect that is more significant than the short term growth forecast differentials.
“We believe that all three countries may miss their revised official growth targets to the downside, a problem that would have a greater impact on countries where growth is a key determinant in currency valuation.
“To that end, this may be an opportunity to exploit the foreign exchange opportunity to buy reasonably priced Thai assets at an effective discount, although it’s always been our case that that Thai Baht could fall below 36 (versus the US$) in a major global crisis and below 39 in an extreme one, and therefore whether this is an opportunity really depends far more on events in Athens and Shanghai than in Bangkok.
This story was written by Andrew Batt, Group Editor of Dot Property Group. Send your news, views, press releases and comments to him at [email protected].
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