Thailand's Yellow Shirted elite is back with a vengeance. Perhaps the single most significant indicator of the extent to which it feels it has won the war as well as the battle with the Red Shirts has been the behavior of the stock market, particularly over the two weeks since it opened following the violence in central Bangkok.
The market absorbed huge waves of foreign selling in the immediate aftermath of the troubles without losing a lot of ground and has since regained those losses. The buoyancy is entirely due to individual investors who have been massive net buyers, providing most of the offset to the foreign selling. Local institutions have also been net buyers, but on a relatively small scale.
Despite a year of political uncertainty culminating in the May violence, the Stock Exchange of Thailand index has outperformed not only most of the world over the past 12 months but even in the troubled past three months. The SET index is now up 6.8 percent over three months and 12 percent over six. Meanwhile the baht has been tending to appreciate against the US dollar and in line with the general Asian currency trend, reflecting overall trade and capital flows rather than the political situation.
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