Yesterday Asian stocks had their biggest fall in a month, led by Thailand's now flip-flopped decision on implementation of capital controls, which today, resulted in broad market rally. Thai stocks rebounded 11%, after the SET Index plunged 15% yesterday for its worst one-day drop in 16 years. Malaysia, said it has no intention to intervene in currency trading, which helped the Kuala Lumpur Composite gain back 1.5% after yesterday's 2% fall. Sustained weakness in the yen attracted more buyers to Japan's blue-chip exporters, sending the Nikkei 225 to its highest close in more than 7 months. Analysts meanwhile, have mixed opinions on investing in Thailand, with some saying "beware," while others suggest it is a buying opportunity. An ABN Amro executive in Singapore is in the latter camp, commenting, "The Thai central bank may now resort to an interest rate cut to rein in the baht, which could benefit banking stocks." Templeton's emerging market guru Mark Mobius' comments were mostly positive, noting the Thai government is showing flexibility, and the market's reaction is a warning signal to other countries. Also, Mobius says the drop "definitely" presented a buying opportunity, adding that "our guys are out there looking for opportunities constantly."
• Sources: Bloomberg [I, II, III]
• Related commentary: We're Buyers of Emerging Markets Stocks on Thai Related Weakness, Thai Fiasco: The Downside of Emerging Markets, Investing in Thailand Amid Political Crisis, Emerging Markets ETF: A Volatile SPY?, Global Markets: Currency Imbalances and Trade Are Driving Forces
• Potentially impacted stocks and ETFs: ETFs: iShares: Pacific ex-Japan Index (NYSEARCA:EPP), Hong Kong (NYSEARCA:EWH), Japan (NYSEARCA:EWJ), Malaysia (NYSEARCA:EWM), Singapore (NYSEARCA:EWS), S. Korea (NYSEARCA:EWY), Australia (NYSEARCA:EWA). CEFs: Thai Capital Fund (NYSEMKT:TF), The Thai Fund (NYSE:TTF)
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