November 19 2012 Categories: Understanding Thailand No comments yet
You cannot read Thai news and not know about the issue of the two brokers that have been recently arrested for spreading rumors about His Majesty the King health that affected the Stock Exchange of Thailand (SET). The Authorities are visibly at a loss on what to do. They seem to believe that they have to do something about it but limit for the time being their answer to punishing the allegedly guilty parties involved and if possible to prevent such a thing of ever happening again.
Now the problem I see with this is that “rumors” are an entire part of Stock Exchanges “life” all over the world. Just Google “Stock Exchange and Rumors” and you will got more than 500,000 hits. The SET is not the first to be affected by a rumor and not the last and it is not the first or last time for that matter that the SET is itself victim of rumors.
As to prevent such thing from happening again; the problem is that the world of stock exchange functions like a herd of goats.
On the one hand you have the market makers on the other hands you have the followers. Faced with a rumor the market makers will react immediately to protect the funds they are managing against the possible effects of the rumor or to benefit from it. The followers will do what they do best and “follow” and that is how a rumor may cause a stock exchange to take a dive.
Protecting the SET or any other stock market against rumors and their effects is a task for a Don Quixote. The only effective measure I can see would be to suspend trading any time a rumor stick but if we had to suspend trading anytime that there is a rumor it would not be manageable. Also they are not only negative rumors but also positive one, then they are so called rumors which happen to be true.
There is however a type of rumors that may be managed. Indeed, there are according to Robert Knapp (“A Psychology of Rumor”) three types of rumors:
1. Pipe dream rumors: reflect public desires and wished-for outcomes
2. Bogie or fear rumors reflect feared outcomes.
3. Wedge-driving rumors intend to undermine group loyalty or interpersonal relations
Now, Thai authorities actions shows that they see this rumor as a Wedge Driving kind of rumor, one that was spread intentionally to hurt the SET and Thai society. This type of rumor is not controllable. The first type of rumors is not manageable either. You cannot prevent people to be spiteful or hateful or to hope and dream, this is human nature.
But I believe that”Bogie Fears” type of rumors are manageable. And I also believe that the rumor that was spread about his Majesty the King health is of the “Bogie or Fear Rumor” category that is to say one that relies exclusively on people fears of an outcome.
While this type of rumours may resurface anytime it may also be manageable. Indeed the best way to deal with fear based rumors is to address them.
Now the fact is that during the month that preceded those rumors about His Majesty the King health the English Thai press (the only one I can read unfortunately) only published once or twice a week a “communiqué” about His Majesty health which content always seems to be the same all over again.
A better press coverage and more communication would have in my opinion killed the rumor before it ever started to spread.
I think that Thai Authorities should not only investigate those events but should also learn from them and act on them.
What I mean is that “Bogie” rumors feed on our irrational fears and irrational fears are more about what a person think about a situation than what the situation really is. Therefore the best way to fight a “Bogie Fear” is not to look for one or more Scapegoat but to address the fear central issue by better communicating on it.
About the Author:
The author Rene-Philippe DUBOUT is a lawyer since 1990 when he was admitted to Geneva bar (Switzerland). He practiced as a litigator there for 10 years until he moved to Thailand in 1999. In 2002 he founded with a group of Thai lawyers Rene Philippe & Partners Ltd a local law firm that specialized in Cross Borders Investments and Real Estate. He has been lecturing in several Thai Universities and a speaker to numerous conferences and seminars. He is the author of a must read book:”How to Purchase Real Estate Offshore Safely: The Case of Thailand”.
© Copyrights 2009 – Rene Philippe Dubout – This article may be reprinted if information about the author, the websites, and the URLs remain intact
Originally posted 2009-11-04 03:36:50.