The 2006 Thailand coup d'état took place on Tuesday 19 September 2006, when the Royal Thai Army staged a coup against the government of Prime Minister Thaksin Shinawatra. The short-term economic consequences were relatively minor, resulting in stock fluctuations and possible credit rating changes. However, long-term economic consequences of the military government included several radical policy changes, including a drive to a self-sufficiency economy and economic protectionism.
Day 1 (Wednesday)
Stock Exchange
The nation's stock exchange, government departments, banks and schools were ordered to close on Sept. 20 in the wake of a coup, according to a statement broadcast on Thai television. The Thai stock exchange will be closed, and it is "following the situation," said Ladawan Kantawong, a spokeswoman. She earlier said it would open today. Trading of Thai bonds in Bangkok was also suspended, according to the Thai Bond Market Association. Military leaders later said all would reopen tomorrow. It was the first time the exchange shuttered operations for a day other than a holiday since the terror attacks in the U.S. on Sept. 12, 2001.
Shares of mutual funds that invest in Thailand led declines in the region's U.S.-traded stocks after the military seized control of Bangkok and Prime Minister Thaksin Shinawatra declared a state of emergency. Both Thai Fund Inc., Inc. and Thai Capital Fund Inc. had their biggest losses in more than two months. The Bank of New York Co.'s Asia ADR Index, which tracks the region's American depositary receipts, dropped 1.1 percent to 139.15 in New York.
Thai Fund Inc., a closed-end fund managed by Morgan Stanley, fell 3.8 percent to $8.65 after tumbling as much as 7.1 percent earlier, the steepest drop since July 17. Thai Capital Fund, another closed-end fund run by SCB Asset Management Co., slumped 4.4 percent to $9.70 for its largest decline since May 17. It's a provoking speculation on how Thailand's stock market would react. Shin Corporation's ADRs, each of which represents four ordinary shares, was unchanged at $3.15 as 4,000 shares changed hands. The ADRs of Advanced Info Service Pcl, a unit of Shin, fell 2 cents to $2.45 with 300 shares changing hands. Each Advanced Info ADR represents one ordinary share.
"We will see some selling pressure in the next few days," Marc Faber, founder and managing director of Marc Faber Ltd., said from Chiang Mai, Thailand. "The implications are obviously not overtly favorable because it creates a lot of uncertainty."
World Stock Exchange
Dow Jones Industrial Average and Nasdaq composite trimmed losses by the close Tuesday after a tough session hurt by discouraging comments from Yahoo! and revived worries about the economy following a big drop in housing starts. Also pressuring markets: An apparent coup attempt in Thailand that led that country's prime minister to declare a state of emergency and prepare to abruptly leave a United Nations summit in New York. Thailand is an economic cornerstone of Southeast Asia.
Asian stocks fell by the most in more than a week after the military seized power in Thailand. Honda Motor Co. and SingTel paced declines among companies with investments in the country. The Morgan Stanley Capital International Asia Pacific Index dropped 1.2 percent to 126.49 at 7:03 p.m. in Tokyo, its biggest slide since Sept. 11. All 10 industry groups declined.
Tokyo's Nikkei 225 average fell 1.12 percent by midday on Wednesday, after hitting a one-month low, The market took news of a military coup in Thailand in its stride and also as a profit warning from Yahoo hit Internet stocks. The Nikkei was down 177.78 points at 15,696.50 after falling as low as 15,666.04, its lowest intraday since Aug. 14. "The political uncertainty affects the sentiment for the region as a whole," said Teo Chon Kiat, who helps oversee $1.4 billion at DBS Asset Management in Singapore. Asian economies are so "inter-related" and the political instability "may affect liquidity flow to the region. "