After the military coup in 2006, which stopped Thailand’s surging markets in their tracks and created fear in the eyes of investors, the last thing Thailand needs now--after rebuilding that confidence somewhat--is another coup.
After Samak Sundaravej was elected prime minister, many people feared that another coup may be imminent. After all, Samak is a close ally of the former prime minister Thaksin Shinawatra, who was the one ousted by the coup, so the precedent for such action has been established. Already protests have begun in opposition of Samak, just as they were going on in protest of Thaksin. Many Thais believe that Samak is just a proxy for Thaksin according to the BBC.
The bottom line here for Thailand is that if they want to restore investor confidence they need to quell this problem, and fast. The bigger these protests grow, the more speculation of a coup there will be and the lower investor confidence will shrink. Already Thailand’s stock market has fallen for five straight days, and the rumors of a coup are mounting, according to the BBC. If Thailand can put an end to the uprisings (in an acceptable manner) and cool down the rumors, it would go a long way towards proving that this administration is here to last.
Investors don’t like uncertainty, and when you are investing in a foreign country in particular, the last thing you want to see is problems with the country’s leadership. Thailand is a beautiful country with loads of potential, but in order to maximize this potential the country is going to have to establish some level of stability within their government.