A story hit the wires around midday that Thailand's Prime Minister Thaksin Shinawatra has declared a state of emergency in response to a military coup. Stock indexes dipped on the news. Images of tanks rolling into Bangkok at midnight are indeed disconcerting, but from the perspective of equity markets probably isn't an issue to worry about.
Though Thailand has a fair size population at around 65 million people, its representation in world equity markets is much less than half a percent by market capitalization. Even if the entire Thai stock exchange went offline the impact would be minimal. Thus, the more important issue from an investor perspective is: Will this destabilize the region and cause further disruptions? We think it's unlikely. The political turmoil appears to be isolated to Thailand, and not a component of a larger regional conflict. Lacking a major regional economic impact, this headline represents more political turmoil than risk for stocks.
Here is some background to the situation:
1. Thailand's Military Launches Late-Night Coup Against Thaksin
2. Thaksin Faces Coup as Army Seizes Bangkok
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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.