Thailand: Sad Thai - FT.com Thailand's finance ministry may be occupied by protesters but its central bank is still active. Investors have been relatively sanguine over the political tensions in Bangkok. So the Bank of Thailand's interest rate cut on Wednesday should be a sign that the economy is in a precarious position. The political situation only compounds this risk. Thailand's benchmark SET index is off 4 per cent over the past week, making it one of the region's worst performers. Over the past month, Bangkok's losses of 6 per cent are less than the 7 per cent given up in Jakarta, its southeast Asian peer. Investors do not seem to be focusing on the rising tensions that produced the latest protests. That fits with past reactions. In 2010, foreign investors poured money in to the Thai stock market until violence really escalated that May, according to Bank of New York Mellon custodial data. The inflows resumed in June as the dramatic headlines abated. But that pattern mistakes the drivers of this year's market: those inflows, and the ones this year until May, were more likely linked to ultra-easy US money than politics. Support from US monetary policy is fading, as the outflows over most of the past six months show. That leaves the SET's future more exposed to the local economy. As the BoT's pre-emptive move and its statement dwelling on greater downside risks show, the Thai economy is weak. Consumers, whose growing spending power had been cited as a key reason behind Bangkok's boom, are wilting. Any hopes of a rebound are capped by high and rising household debt. At 75 per cent of gross domestic product, Thais" debt is on a par with richer economies such as Malaysia's or South Korea's. Since its May peak, the SET has fallen a sixth; relative to expected earnings, its valuation has slipped just 7 per cent. This looks mild. About half the blue-chip SET 50 is made up of consumer-related and financial stocks. Even if political tensions ease, it is hard to see a pick-up in this market.