Thai bonds suffer record outflows as king’s death sparks concern

KUALA LUMPUR: Global funds sold a record US$1bil of Thai bonds last week as the passing of King Bhumibol Adulyadej marked the loss of a stabilising influence in the nation’s political landscape.

Overseas investors cut debt holdings for five straight days through Friday, trimming purchases for the year to US$10.7bil, data compiled by Bloomberg show.

The baht slumped to the lowest since January last week as the death of the 88 year-old monarch whose seven-decade reign helped to unite the country rocked by 10 coups.

“The selling is overdone because I just think that it’s not going to be a consequential economic development for Thailand,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. “It’s obviously a special time for Thai people and this is a very delicate transition, but I expect it to be a smooth one for financial markets.”

National development efforts will continue while Thais mourn the passing of their king, and the cabinet will meet as scheduled tomorrow, government spokesman Sansern Kaewkamnerd told reporters in Bangkok on Sunday.

The baht fell 0.1% to 35.361 per US dollar as of 11:12am in Bangkok yesterday after sliding to 35.902 on Oct 12, the weakest level since Jan 26. The currency dropped 1.3% last week, the most since the period ended Sept 25, 2015.

The yield on Thailand’s 10-year bonds ended last week little changed at 2.21% after climbing to 2.32% on Wednesday, the highest level in eight months, according to data compiled by Bloomberg. The benchmark SET Index of shares retreated 0.2% yesterday after dropping 1.8% last week.

Tens of thousands of Thais flooded the streets of the capital on the weekend to pay respects to the king as his body was transported from the hospital to the palace.

Prime Minister Prayuth Chan-Ocha said the monarch’s death and a delay in his son taking the throne would not derail plans for a return to elections which had been scheduled from late 2017. — Bloomberg

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