Zero Hedge....

Thai Stocks Tumble As Army Censors Media To "Avoid Provoking Unrest"

Submitted by Tyler Durden on 05/19/2014 22:57 -0400

Despite proclamations that markets would open 'normally', Thai SET50 (stock market) futures are indicated to open -4.2% - its biggest drop since January's collapse. Thai CDS are modestly wider (+5 to 130bps) but early Bhat weakness has been rescued back by a mysterious bidder(rumored to be the central bank by several traders). The last 2 times martial law was invoked - in an entirely non-coupy-coup-like manner - general market weakness was less than we have seen so far. Of course, the army has decided that in the interests of avoiding the "provocation of unrest and triggering fear" it will "ban the broadcast and distribution of news." Nothing like a military-coup, that is not a coup, with total media censorship to encourage capital flows and maintain peace in the nation.

*THAI SET50 INDEX FUTURES INDICATED 4.2% LOWER AT OPEN
Baht Drops Most in Two Months as Thai Army Declares Martial Law

But was rescued... by the central bank selling USD - USD/THB selling today in 32.650-660 area led by agents for Thailand central bank, according to an FX trader based in Asia.

These reactions are worse than the last 2 times martial law was invoked...

Thailand’s military imposed national martial law today for first time in 4 yrs. Here’s how assets responded on Asian trading day immediately after martial law was declared in the past:

April 8, 2010:
* 5yr CDS on Thai sovereign debt rose 5 bps, hitting 2 week high, according to CMA prices
* 5yr sovereign bond fell 5 bps
* USD/THB swung between +0.3% and -0.3%
* 1-yr IRS fell 5 bps
* Thai stocks fell 3.5%, most in more than 5 months, with Thai Airways, Airports of Thailand and Minor Intl among worst hit

Sept. 20, 2006
* USD/THB rose most in 4 yrs, swung between -0.2% and +1.9%
* 5yr CDS rose 11bps, according to CMA prices
* S&P, Fitch said they may cut Thailand’s credit rating
* Thai stock mkt, bond trading were suspended Sept. 20; stocks fell 1.4% when they reopened a day later, 5-yr sovereign yield was little changed

But wait:

*THAI ARMY ASKS PROTESTERS NOT TO HOLD STREET RALLIES

And so the Army has decided that it will censor the media to avoid any panic and unrest...

*THAI ARMY PLANS TO SUSPEND 11 RADIO, SATELLITE TV STATIONS

Army says in statement that it will “ban the broadcast and distribution of news and information that may provoke unrest and trigger fear among the public via radio, television and online media.”

A number of Thai television and radio stations openly support either anti-govt groups or supporters of the govt; the army imposed martial law earlier today on concern that protest violence may escalate

“The distribution of this information will make it more difficult to maintain order,” the army says

Seems like a great time to BTFATH in US equities - oh wait... what could possibly go wrong?

But don't worry - Fitch has insane reassuring words for bond holders...

*FITCH SAYS THAI MARTIAL LAW NOT IN ITSELF NEGATIVE FOR RATINGS
*FITCH: RETURN TO FUNCTIONING GOVT MAY HELP RESTORE CONFIDENCE
*FITCH: AVERTING `BLOODY POLITCAL DISORDER' KEY TO THAI RATINGS

No Shit!!!

Asian Correspondent ....

Thailand under martial law: What’s next?

By Saksith Saiyasombut & Siam Voices May 20, 2014 6:13PM UTC

Prayuth Chan-ocha, Narong Pipatthanasant

Thai Army Chief Gen. Prayuth Chan-Ocha, right, speaks as navy Chief Adm. Narong Pipatthanasant, left, looks on during a meeting with high ranking officials at the Army Club in Bangkok after declaring martial law Tuesday. Pic: AP.

By Isriya Paireepairit

Suthep Thaugsuban, the leader of the People’s Democratic Reform Committee (PDRC), recently announced that last weekend would be the ‘final showdown’ of his six-month protest. As Thais wondered if there could be any solution in sight, last night at 3am the military made its move with the declaration of martial law.

The story so far

Martial law prohibits any political gathering in the country and allows the military to ‘cease and investigate’ anything they consider important.

By 12pm Tuesday, local time, Thai Royal Army led by Commander-in-Chief General Prayuth Chan-oha had announced several significant changes:

Thailand is now under martial law, nationwide.
The foundation of the Peace Keeping Command Center (PKCC), the new internal security command center under the martial law. Gen. Prayuth will command the PKCC.
The dissolution of Centre for the Administration of Peace and Order (CAPO), the internal security command center of the Pheu Thai government under the Internal Security Act. All the forces under CAPO will transfer to PKCC.
TV and radio stations need to live broadcast PKCC announcements on army request. They are also prohibited from disseminating ‘controversial news’.
Political satellite TV and radio stations from both political sides are suspended. Ten satellite TV stations are suspended.
Heads of government agencies and independent agencies need to report to the military command throughout the country.
Seizure of Government House in Bangkok from the PDRC.

The PDRC announced that they will stay in place (Ratchadamnoen Avenue in central Bangkok) to ‘wait and see’ what the PKCC will do today. The Red Shirt protesters will stay on at Utthayan Avenue outside Bangkok as well. Both groups were ordered not to leave their respective rally sites.

Analysis

In theory, the declaration of martial law is lawful. The army insisted that it is not the coup d’etat and the current acting government remains in place.

In practice, while it is not an ‘official coup’, it is clearly a ‘military intervention’. The acting Pheu Thai government is still in force but their power on security matters is now transferred to the army. Some might say it is ‘phantom coup’ or ‘disguised coup’.

The impact of martial law can be analyzed in the short-, middle-, and long-term:

Short-term (this week): Martial law will suppress rallies from both protester sites. We should see a temporary peace in Bangkok (with soldiers everywhere) for a few days.
Middle-term (this month and next month): The ‘vacuum of power’ problem remains. Thailand has no official government and the lower house was dissolved last December. We will have the acting Prime Minister Niwatthamrong Boonsongpaisan for normal day-to-day duty but he needs to consult Gen. Prayuth on anything related to politics and security.
Long-term: The big problem remains. Thailand has been in a big transition toward modernity. The country needs to define the new political architecture in the next era.

We believe Gen. Prayuth himself acted independently of the PDRC, but his move is definitely in keeping with what the PDRC has been asking for – a ‘military intervention’. The army has been closely tied to the conservative forces for long time. Gen. Prayuth is considered as a hardliner and served in the ‘queen bodyguard’ infantry. He was also a high-level commander in 2006 coup against the Thaksin government.

It is very likely that the PDRC will cease its activities in the next few days and announce ‘victory’. Suthep’s movement has lost a lot of the backing it enjoyed earlier in the protests and the declaration of martial law is a good opportunity for a face-saving exit.

Martial law causes a big negative impact to the red shirts, which was against the army and any military intervention from the start. A clash between the red shirts and the army is possible but depends on the PKCC’s movement in the next few days.

Possible Scenarios

As stated above, martial law is just a short-term intervention. Thailand needs to find the solution for the political vacuum.

The law states that martial law can be declared by the army but can only be revoked through royal command. This means Prayuth needs to find the way to solve Thailand’s political crisis and then submit a request to King Bhumibol to lift the martial law condition.

We believe there are two main possible scenarios:

The better one: Prayuth will consult the acting government, political leaders, the Senate, the Election Commission of Thailand (ETC) to set a date for a new general election. Political protests will be prohibited. The Shinawatra family might skip the election to avoid further conflict and let other Pheu Thai leaders compete instead. The opposing Democrat Party returns to the election process. The new government (very likely led by Pheu Thai) will lead the reformation process and constitution amendment.

In this scenario, an election will appease the red shirts. PDRC supporters might feel better if the election too kplace under martial law. Prayuth will be considered as ‘an external judge’ to bring peace back to the country (though not in the full democratic way).

The worse one: Prayuth lets the Senate act as the full parliament. The Senate would appoint a new Prime Minister and Cabinet, which might be unconstitutional. Such a Cabinet would face major opposition from the red shirts. Since martial law prohibits any political activities, the red shirts will go underground. Thailand might face the insurgency nationwide.

Thailand’s political future now hangs in the balance

Thai military declares martial law; government still in place (for now) UPDATE Additional updates in the post

By Bangkok Pundit May 20, 2014 12:02PM UTC

17:10:

BP: Editor of ThaiRath TV tweets a personal view that that the negotiations look like that they will soon come to an end. He says to look at the reactions of the parties. PDRC have returned back to Govt House. Reds and Puea Thai have not resisted.

BP: Everyone is taking a wait-and-see approach…. Chaturon (a caretaker Minister) has stated that using martial law is not the way out for the country.

More later.

16:50: As blogged last week:

The military has sought to play peacemaker up until now, but the circumstances are changing. Staging a coup will be difficult as there are divisions in the military. The folly of the 2006 coup is more fresh in their minds as well. Prayuth will know that he will assume a lot of the blame if it goes wrong, but that others would just piggy-back on a coup and gain much of the power. For him personally, it would be a high risk and low reward option.

You also have the incapacity of a certain person in a family and what influence that person had in 2006 over the military and then comparing that with another person in the same family and their new role.That complicates the situation of trying to remove the government by a coup.

Also, a coup would certainly face opposition from the red shirts.

It is hard to state definitively a coup will not happen under any circumstances but will say that it makes little rational sense for Prayuth to stage a coup. Things would need to change dramatically for that to change.

Nevertheless, if there is bloodshed, BP does expect the military to do something, but what they are most likely to do is some kind of intervention to restore law and order. BP doesn’t expect this would involved a seizure of sovereign power by the military (so no appointment of a government or ripping up of the constitution) although any actions by the military may then result in the Court or the Senate to somehow removing the government. The exact nature of the intervention is something that BP is unsure about, but it would likely involved declaring of martial law (which legally a commander has the power to do so anyway in the region they command over so it is not illegal for the military to do so). Again, then the military may force both sides to sit down at the table. Playing hero as peacemaker makes more rational sense for Prayuth than the responsibility and blame he will assume as coup leader.

BP: BP is a little surprised at the timing. Prayuth is essentially using the deaths of 3 last week to stage the intervention to restore law-and-order. Yes, there has been sporadic violence for months, but fewer people have died in the last 6 months than your average month of violence in Thailand’s Deep South. It is more of a pre-emptive intervention. A clash didn’t happen, but the rest of what is going on is not really surprising as noted above.

AFP has more of the government response:

Caretaker Prime Minister Niwattumrong Boonsongpaisan on Tuesday urged the nation’s army to act within the “constitution”, in an official statement giving his first reaction to the military’s declaration of martial law.

Any actions need to follow a peaceful path, without violence, discrimination and with equality based on the rule of law,” the statement, attributed to the premier, said. It added that the military “must proceed under the constitution

BP: We will see how much power he has now. The Senate is not showing any signs of stopping in appointing a PM….

Thailand Army Declares Martial Law

Submitted by Tyler Durden on 05/19/2014 19:11 -0400

Update: THAI MILITARY CHANNEL 5 SAYS MARTIAL LAW `NOT A COUP'. Ah, gotta love the New Normal: full of non-coupy martial laws.

This is how in Thailand people are told to keep calm and keep BTFD:

URGENT: Thai troops seize TV broadcaster after declaring martial law; ticker message on screen reads "no need to worry"

7:18 PM - 19 May 2014

In other news, don't call this man, General Prayuth Chan-ocha, Commander-in-Chief of the Royal Thai Army. and Chairman of Army United Football Club, the new "president" just yet.

* * *

With Russia amassing troops on the border with Ukraine, China doing the same with Vietnam, the already volatile situation in Libya and Syria imploding with every passing day, the only geopolitical variable that was missing was a martial law and/or sovereign coup. Moments ago Thailand just declares the former and while the latter is still absent it too is likely just a moment of time.AP reports that "Thailand's army has declared martial law after six months of anti-government protests and political crisis, Associated Press said on Tuesday, citing an army statement issued in Bangkok." In other words, after not sternly not taking sides in the near civil war situation in Thailand for the longest time, the army finally picked a side: its own.

Thai PM meets with senators to discuss crisis

By AP News May 19, 2014 5:39PM UTC

Thailand's interim Prime Minister Niwatthamrong Boonsongpaisan. Pic: AP.

BANGKOK (AP) — Thailand’s acting prime minister has met with a group of senators to seek a solution to the country’s ongoing political crisis, as anti-government protesters continue to pressure the Cabinet to resign.

A participant said Niwattumrong Boonsongpaisan’s government indicated Monday it is willing to cooperate with the Senate but refused to step down because that might violate the constitution.

The senators sought the meeting after saying Friday that a government with full authority should conduct political reforms, but stopping short of directly calling the Cabinet to resign.

The Cabinet has operated in a caretaker capacity with limited power since the lower house was dissolved in December.

Anti-government protesters say they are making their final push to oust the government after six months of street demonstrations in which 28 people have died.

Catharsis Ours

Monday, May 19, 2014