SET fall due to govt
Re: "PM blames court case for SET", (BP, June 11).
PM Srettha Thavisin placing the blame for the decline in the stock market on recent court proceedings seems a feeble attempt on his part to create political capital out of what is a very serious situation of the government's own making. It would be surprising if international investors had full knowledge of, or really care about, the current political discourse in the country. After all, such crude political posturing is part and parcel of investing in emerging markets.
What is critical is government policies and their impact on the Thai economy. It is a healthy economy that allows companies to grow their earnings, which in turn lifts stock prices and drives the stock market higher. The blame for the poor performance of the Thai stock exchange rests not with recent political maneuvering but rather poor policy choices adopted by the government.
Of most concern is the government's disregard for inflation. Rather than introducing fiscal policies that reduce inflation, the government seems to want to add stimulus programmes, such as the digital wallet and poorly timed wage hikes. To make matters worse, the government has embarked on a perilous course, challenging the Bank of Thailand's independence in an attempt to force interest rates lower. To investors, this signals the government's preparedness to engage in meaningless populist actions even when they come at a very high price to the economy.
The government's record on the economic growth side of the equation is equally poor. Its recent obsession with aggressive taxation seems inept, poorly targeted, and more concerned with raising revenues for its reckless stimulus programmes than it is with long-term economic growth. Investors are not fooled by the narrative that such measures are needed for OECD membership or an EU trade deal, etc. It is clear to investors that policies such as worldwide taxation are likely to deliver a crushing blow to Thailand's long-term economic growth, which is already being borne out by faltering capital inflows.
Far from the court proceedings causing market volatility, investors have passed judgment on the government's own policies. The government's inability or unwillingness to appreciate what the market is telling it and gradually change direction is indeed most concerning and will merely confirm investors' negative perceptions.
