9 replies to this topic

[Expattaya]

The Thai stock market made a good recovery today after yesterday's debacle over the new currency regulations.
Putting aside the billions that were lost by panicked sellers in the stock market yesterday, some of which may have been made up already today, the biggest casaulty of this incident seems to be the interim goverment's credibility on the international financial scene.

The BKK Post had a summary today, linked below, with some of the editorial and other comments made around the world today, most of which expressed concern as to whether the junta-installed government is competent to handle the Thai economy. There were some very unkind remarks made in those comments about Thailand's policy makers.

Ironically, it's possible that the Baht may now start to weaken, not because of smart policies by the Thais, but on the theory that the generals and their interim government have demonstrated by this ill-considered move that they are not up to the task of running Thailand's economy.

Currencies do not get generally get stronger when investors around the globe start to think that the Thai guys now printing the money don't know what they are doing. Do you suppose that's what they intended all along ? TIT.

http://www.bangkokpost.net/topstories.php?id=115283

[Hedda]

It's amazing to see the difference between the treatment given this matter by the Thai papers, versus the international press.

The Thai papers are full of quotes from Thai officials suggesting that it was a "herd mentality" and "foreign investors" who spooked the Thai stock markets. They say the problem is not The Bank of Thailand's "precipitous" rules without consulting the financial markets first, but the weak dollar that is the root of Thailand's problem.

The Herald Tribune suggests that the Thai interim government had better get their house in order quickly and decide if the Bank of Thailand is an independent central bank, as it claims to be, or an appendage of the Treasury Ministry.

The Herald suggests that the head of the BOT was actually on holiday in Chiang Mai when somebody sprung the new currency rules that roiled the stock market. Then, when stock chaos ensued, the quick retraction of the rules as applied to stocks appears to have come from Treasury, not the BOT.

The foreign press asks the pointed question: who's in charge of currency matter in Thailand ?

It also appears that these new regs still do apply to the bond market, thus requiring foreign purchasers to freeze 30% of funds invested in interest free accounts for one year. That will obviously make Thai bonds uncompetitive on the int'l bond markets. I wonder how long that rule will last when foreign money flees the bond market too.

I'm still trying to figure out if these rules impact foreign money coming into Thailand to buy a house or condo.

Are they not considered "direct investments" and thus not affected by these new rules ?

Does anyone know if the BOT has addressed this issue ?

It could bring many real estate sales to a grinding halt.
.
.

[Haloi]

Do you mean that if I buy a condo for 10 million, I have to deposit an extra 30% (3 million baht) in an account for a year with no interest ?

[wpcoe]

Do you mean that if I buy a condo for 10 million, I have to deposit an extra 30% (3 million baht) in an account for a year with no interest ?

Until/unless they straighten out this mess: YES! (Actually, you need to transfer over B14million to "net" the desired B10million.)

If you transfer in B10million right now, B3million will be withheld for one year.

The workaround, apparently, is to transfer multiple chunks of money each of which is less than US$20,000. Nice little money maker for the banks when it comes to transfer fees (SWIFT, etc.).

I suspect they will eventually make it possible to transfer money without the 30% withholding for purpose of acquiring a condo, but right now, the only exception is for stock market purchases.

Take a look at ThaiVisa.com forums ... several discussions going on about this, try: Thailand News clippings forum.

[edited to correct my usage of the $ sign when it should have been THB...]

[wpcoe]

A glimmer of hope? In the "Curbs Lifted As Market Crashes" thread there is now discussion that "There is an addendum to the main policy paper, in which there is apparently some clarification on its application to property investments."

For those of you fluent in Thai, take a look at: Property_mk_on_reserve_requiremnt__2_.pdf.

Apparently it is not clear from a statement in the first paragraph of that .pdf file whether the amendment applies to individual real estate purchases, just real estate purchases through an investment company, or even whether it applies to individual purchase of freehold vs leasehold property.

The whole thing seems unclear at the moment, but I wanted to post a glimmer of hope in light of the pessimistic post I wrote above.

[Sexpat]

This is the latest on the possible impact of the new rules on real estate:

BoT's move affects property sector: 21 Dec 06 15:55

"The Bank of Thailand's 30 per cent capital reserve requirement has negatively impacted the property sector in terms of investment sentiment and confidence, according to an industry executive.

Dan Tantisunthorn, Chief of Jones Lang LaSalle (Thailand) Research Division, said he was uncertain whether the mandatory reserve would be imposed on foreign investment in condominiums deemed as investment for speculation.

In the present circumstance, he said, foreign investors planning to buy condominiums for investment, are lacking confidence and are hesitant to close the purchase.

In actuality, he explained, property investment will be on a longer term than investing in the stock market. So, it should not be affected by central bank measures to stem the baht speculation.

But realistically, the property and capital markets are interrelated in one way or another.

Dan said he believed the central bank's move to impose the reserve requirement abruptly would cause questions among investors and developers of property projects as to whether the BoT will come up with more surprise measures."

http://www.bangkokpost.net/breaking_news/b...s.php?id=115329

[UncleSam]

Aren't you glad all these generals, retired generals, and would- be generals are in charge of protecting the Baht.

Lock and load and fire at will !

Hehehe.....

[Jingthing(X)]

Posting error

[Up2u]

Looks like concerns of some to the press reports above are ill-founded. Everyting seems to be returning to normal except we have the desired result......a weaker baht!

http://www.property-report.com/aprarchives...amp;date=201206

and from The Nation:

"Meanwhile, the Bank of Thailand also issued an announcement on their website on December 21 stating that property including land and condominiums is exempt from the reserve requirement on short-term capital inflows.

Foreign purchasers of condominiums can bring funds into Thailand to purchase condominium property. According to a major local bank, foreign condominium purchasers should clearly state the project name and unit number when remitting funds. "

http://nationmultimedia.com/2006/12/22/bus...ss_30022204.php

[Jingthing(X)]

The reason there is a weaker baht is because the Thai government lost even more credibility with their wacky moves. They are unpredictable and investors don't like that. In the long run, that isn't good for Thailand's economy. As far as the future of the baht (versus the US dollar), it will be much stronger over time, because the US dollar is set to continue to decline for many years, especially as the Chinese Yuan strengthens. The big question is whether the dollar decline (caused by historic current account deficits, the decline of the dollar as the world reserve currency, and a slowing economy) is going to gradual and orderly, or a total crash. A total crash would be devastating to both the US and the entire world. Stay tuned! Expats and tourists worried about the high cost of Thai nightlife are mere pawns in this grand drama.