Thailand’s Prime Minister wins election, but loses job

April 8, 2006

Responding to pressure from protesters, Prime Minister Thaksin Shinawatra held a confirmatory election on Sunday, which he won by 57%. However, he will still step down, under pressure from the protesters who want him out, regardless of the results, citing Thaksin’s corruption.

What It Means:
What happens to the democratic process in Thailand is significant, since it is a bellweather for the rest of SE Asia. Thailand is an economic success story, with 4 - 5% GDP growth. It is the only Asian nation that has never been ruled by a Western power. Mr. Thaksin is also very popular with the poor, rural areas, and has been trying to spread the economic success of Thailand to all.

The protests began when Mr. Thaksin’s family sold their share in Shin Corp, a major Thai telecommunications company, to Temasek, which is owned by the Singapore government. Temasek is managed by Ho Ching, the wife of Singapore Prime Minister Lee Hsien Loong, and has been on a major buying spree throughout Asia. The primary concern is that the sale was done in such a way to avoid any capital gains tax for the Prime Minister and his family.

Action Steps:
If you have no SE Asian holdings in your portfolio, by all means get some...there is still strength there. If you have at least 30% foreign markets in your portfolio, hold off adding until it becomes clearer how the winds for democracy will blow in Thailand...and the rest of SE Asia.