Investors bail out of Thai market
By ASSOCIATED PRESS
Published December 20, 2006
BANGKOK, Thailand - Foreign investors bailed out of the Thai stock market in droves Tuesday, forcing Thailand's military government to abandon just-announced measures aimed at stemming the country's surging currency.
The Thai government said it would lift controls - announced a day earlier - on foreign investment in stocks after the market plunged nearly 15 percent, rattling regional bourses amid worries about a repeat of the 1997 Asian financial crisis. Jittery investors dumped stocks in Hong Kong, India, Indonesia, Malaysia, South Korea and the Philippines.
By late Tuesday, Thai authorities capitulated on controls on stock investments. Analysts said the government's reversal was expected to bring some relief to the markets today.
The tumultuous day evoked memories of the financial crisis that started in Thailand in July 1997 with the baht's plunge.
This time, however, Thailand has the opposite problem: The baht is too strong, thanks to foreign speculators pumping billions of dollars into the country.
The Bank of Thailand said the drastic measures were necessary because the pace of net investment inflows had increased to $950-million in the first week of December from $300-million per week in November and a total of $13-billion in the first 10 months of the year, as hot money flowed in for a one-way bet on the direction of the baht against a fading dollar.