Goldman: State Of Emergency Likely To Weigh On Portfolio Inflows

Goldman Sachs note that "following protests on 14th Oct Thailand declared a state of emergency, which banned gatherings of more than five people. Nevertheless, protests have continued. Market reaction so far has been very muted. Going forward, prolonged protests and political uncertainty around the state of emergency is likely to weigh on the investment climate as corporates wait for further clarity. Looking back at the most recent major political crisis, protests lasted for six months from November 2013 to May 2014, and ended with a military coup. The BoT cut policy rates in January 2014 to pre-empt a downturn in economic growth. So if protests are prolonged, we think that would increase the likelihood of another BoT policy rate cut. Overall, we remain bearish on THB. Tourism is worth 12% of GDP, and tourist arrivals have slumped to less than 7mn visitors from 40mn in 2019. As a consequence we expect the current account surplus to ease to around 3% surplus from 7% in 2019, and foreign investors have been selling Thai equities and bonds. The added political uncertainty is likely to continue to weigh on investment and portfolio flows in the months ahead."