When the going gets tough, billions get going

BANGKOK: More than a week after Thailand’s first election in eight years, there’s still little clarity about the nation’s political future. The more frustrating that stalemate becomes, the bigger the incentive for Bangkok businesses to venture overseas.

The March 24 polls, it seems, have solved nothing. If holding elections under a new constitution was supposed to lift politics from the streets and bring it into parliament, then any resumption of violence would spark a search for fresh solutions. All over again.

As long as the village vote supports deposed former Prime Minister Thaksin Shinawatra – and the Bangkok elite continues to find his populism intolerable – future attempts to steady democracy will also fail.

The unambiguous message to entrepreneurs is that they should keep investing abroad. Since 2001, Thai firms have led or taken part in US$78bil (RM318bil) of overseas M&A, including 17 large deals of US$1bil (RM4bil) or more. The big push got underway as democracy started flickering in the country, before getting snuffed out by the 2014 coup. Private investment in the domestic economy waned with slowing global demand.

In December 2012, when Thai billionaire Dhanin Chearavanont made a US$9.4bil (RM38bil) play for a large stake in Ping An Insurance (Group) Co, Thaksin’s sister Yingluck Shinawatra had just survived a no-confidence vote over a costly subsidy to rice growers.

After her ouster, Dhanin’s Charoen Pokphand Group Co, together with Japanese trading house Itochu Corp, picked up a stake in Beijing-controlled investment corporation Citic Ltd for US$10.4bil (RM42bil).

When political institutions fail to act as pressure valves, capital wants to escape before it gets trapped.

In Thailand’s case, an added attraction is what Nirgunan Tiruchelvam, head of consumer-sector equity research at Exotix Partners LLP in Dubai, describes as “first-world cost of capital in a third-world country.”

Thai Beverage, rated one level above junk by Moody’s Investors Service Inc, recently raised the baht equivalent of US$317mil (RM1.2bil) for 10 years at a yield of 4%. American issuers of similar creditworthiness have on average paid 4.6% this year for borrowing in dollars, according to Bloomberg’s data.

With capital so cheap, the longer the political confusion lingers, the more ardently Thai tycoons will venture abroad.

Assets in the neighbourhood hold the most appeal. It’s Asia’s chance to bathe in baht.