By Jake Maxwell Watts and Nopparat Chaichalearmmongkol
Thai companies targeted by antigovernment protesters for their
perceived links to Prime Minister Yingluck Shinawatra and her
family have lost more than $2 billion in market value in less than
a week.
The call from protest leaders for a boycott to pressure the
embattled administration has caused share prices to plummet and
even swept up Advanced Info Service, Thailand's largest telecoms
provider, in a subscriber exodus despite the company having severed
ties with the Shinawatras in 2006.
Shares of SC Asset PCL, a property developer where the prime
minister previously served as chairwoman that is still majority
owned by Shinawatra family members, has fallen more than 9% on the
Thai stock exchange since the boycott was called last Wednesday.
Family-run handset distributor M-Link Asia Corp.'s shares are down
nearly 11%.
The benchmark SET index lost 1.7% in the same period,
underperforming its regional peers as investor confidence has
eroded from the political standoff.
Ms. Yingluck has vowed not to resign despite being targeted in a
campaign that has roiled the capital since November and left 21
people dead. She now heads a caretaker government pending a
resolution to elections held Feb. 2 that she had hoped would renew
her mandate but were sufficiently disrupted by the opposition that
a new parliament cannot be seated.
Brokers say most sales of the stocks are coming from local
retail investors. "There is a feeling that the protests will have
some impact on future earnings," said Itphong Saengtubtim, head of
research at KGI Securities. Many of the protesters come from the
"middle-income class and up so these types of people invest in the
stock market."
The boycott battle has been fought on both sides of the
political divide. People in northern Thailand, a mostly rural
region that has benefited strongly from the populist policies of
Ms. Yingluck and her brother, former Prime Minister Thaksin
Shinawatra, began boycotting the iconic Singha beer brand after the
heiress to brewer Boon Rawd began appearing at the front of
antigovernment rallies. The company, which is privately owned,
didn't respond to requests for comment.
Uncertainty has already prompted several companies to delay
investment plans, including Chinese auto maker Great Wall Motor
Co., which postponed its plans to build a sport-utility vehicle
plant Tuesday, citing political unrest as a reason.
Among Thai companies affected by the boycott is
telecommunications provider Advanced Info Service, which was
founded by Mr. Thaksin and sold to Singapore's state-owned
investment company Temasek Holdings Ltd. before he was ousted as
premier in a coup in 2006. Mr. Thaksin lives mostly in Dubai to
avoid serving jail time for a corruption conviction that he says
was politically motivated.
AIS's share price has fallen 5.5% since the protesters called
for the boycott.
In an emailed response to inquiries, Temasek said it doesn't
comment on share price movements of any of its portfolio
companies.
Rival telecoms operators True Corp. and Total Access
Communication PCL. have offered discounts to entice subscribers
thinking about switching. Several thousand have switched from AIS,
Thailand's telecom regulator has said, including 2,000 on Monday
alone--almost three times the company's usual rate. This marks a
rare net loss for AIS, which usually has around 1,200 customers
join and 700 leave on a typical day.
Chuleekorn Jarunchaisong, a 44-year-old state enterprise
employee, switched service from AIS after a decade as a subscriber.
"Switching providers is like taking an action to let (Mr. Thaksin)
know my stance toward him," he said. "I think it is fair not to
support his businesses."
AIS has texted subscribers that it was no longer associated with
its founders. A spokesperson told The Wall Street Journal that the
company is worried about being caught up in the political battles
but is confident in the quality of its service.
Thailand's other telecoms providers aren't the only ones seeing
opportunity in the AIS selloff. "I notice that foreign investors
have bought the stock in the past two days," Maybank Kim Eng's head
of research Sukit Udomsirikul said.
Aberdeen Asset Management, which manages around $1.1 billion of
assets in Thailand and owns AIS stock, is content to sit on the
sidelines for now absent a significant impact to earnings.
"Obviously, there is going to be negative short-term sentiment
toward those stocks but being in a very dominant position in its
business we think long-term [AIS] is still going to be quite good,"
said Adithep Vanabriksha, chief investment officer at Aberdeen's
Thailand office.
Companies linked to Mr. Thaksin have been targeted before. When
he sold his stake in Shin Corp., the parent of AIS, tax-free to
Temasek in 2006 for $1.9 billion, a boycott was threatened.
Shin Corp. lost 38% of its value and AIS shed 28% in 2006, the
year Mr. Thaksin was toppled. Both stocks more than recovered those
losses.
Write to Nopparat Chaichalearmmongkol at
nopparat.chaichalearmmongkol@wsj.com
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