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Cablegate: Thai Stock Market Moves On Rumors of King's Health

VZCZCXRO1757
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHBK #2656 2891010
ZNR UUUUU ZZH
O 161010Z OCT 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8641
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RUEHCHI/AMCONSUL CHIANG MAI IMMEDIATE 7160
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY

UNCLAS BANGKOK 002656

STATE FOR EAP/MLS, EEB
STATE PASS TO USTR FOR BWEISEL, BKLEIN
COMMERCE FOR EAP/MAC/OKSA FOR JKELLY
TREASURY FOR OASIA
SINGAPORE FOR FINATT BLEIWEIS

SENSITIVE
SIPDIS

E.O. 12958:N/A
TAGS: ECON EFIN EINV ETRD PREL TH
SUBJECT: THAI STOCK MARKET MOVES ON RUMORS OF KING'S HEALTH

REF: A. BANGKOK 2606
B. BANGKOK 2408
C. BANGKOK 2150

1. (SBU) SUMMARY: As widely reported in the local and international
press, rumors of the King Bhumibol's ill health drove the Thai stock
market into a frenzy for two straight days this week. Combined
losses over the two days amounted nearly $13 billion, but the market
was able to recover some of the losses in bargain-priced trading on
October 16. The Stock Exchange of Thailand (SET) is still up
approximately 60 percent from its start this year -- higher than the
sterling performances of other bourses in the region. END SUMMARY.

2. (SBU) COMMENT: The market jitters and selling frenzy on the
trading floor demonstrates just how sensitive investor confidence in
Thailand is to news about the King's health. This volatility creates
a wealth of opportunities for mischief in the market, particularly
for profit-seekers and bargain-hunters. The veracity of rumors is
very difficult to track down, but their impact on the market, true
or not, is clear.

Market Jitters
--------------

3. (U) On October 14 and 15, the Stock of Exchange of Thailand
posted its first major losses in more than a year, after unverified
rumors of the King's worsening health spread on the trader floor and
to investment banks in Singapore, Hong Kong, and New York.
High-volume selloffs drove the market downwards, leading to a 2.04
percent loss on October 14 and another 5.3 percent on October 15.
The market dipped by more than eight percent at one point during the
October 15 trading but recovered in a rally before the closing bell.
(NOTE: According to the Stock Exchange rules, trading will halt
temporarily if the index moves more than 10 percent (in either
direction) from the previous day's closing value. END NOTE.) The SET
regained some of these losses in October 16 trading, closing 3.5
percent higher than the previous day.

4. (U) The two-day frenzy saw high-volume trading, but in contrast
to recent trends, foreign investors were the ones selling their
shares while local Thais were net buyers. Local finance figures,
including the President of the Stock Exchange and the Secretary
General of the Securities and Exchange Commission, urged investors,
foreign and domestic, to disregard the rumors since there had been
no fundamental changes in the Thai economy. Even with the two days
of losses, the SET Index remains approximately 60 percent higher
than its 2008 year-end level.

Rumor-Mongering or Just Gossip?
-------------------------------

5. (SBU) It was widely rumored that a group of high net worth Thai
investors initiated the latest round of gossip themselves in a
profit-seeking scheme, temporarily selling off large volumes of
their own stocks at high prices before buying back their shares when
the market fell. Editorials in October 16 local newspapers
circulated this gossip, too: the Thai language daily Naew Na and the
English language daily The Nation blamed the market's losses on "bad
people" intent on hurting the nation and the monarchy for the sake
of politics and/or money.

6. (SBU) In hopes of dispelling the rumors, the Royal Household
Bureau continues to issue daily pronouncements on the King's health,
stating that he is eating regularly now and recuperating. The Thai
language Matichon splashed "King Is Eating More" across its October
16 headlines on its front page, rather than placing the Royal
Household's press release in a small box on the front page as it and
all other papers have been doing since the hospitalization began. As
if to separate the issue of the stock market decline with that of
the King's health, Matichon placed the stock market story in the
business section, rather than the front pages.

JOHN

© Scoop Media

 
 
 
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