Despite months of political turmoil in Thailand, investors generally haven't wavered from the view that the business of Thailand isn't its politics, but the declaration of martial law may change their minds.
"Foreign investors may be reducing their investments in Thailand," said Mayuree Chowvikran, a strategist at Maybank-Kim Eng in Bangkok. "Some of the foreign funds have to reduce their positions in Thailand because of the limitations of their funds."
She noted that Thailand's currency reacted negatively to the news of martial law. The baht fell, with the U.S. dollar fetching as much as 32.64, compared with around 32.44 Monday, before the baht strengthened to around 32.50. Many analysts expect the central bank may intervene on the currency if its moves become too large.
But Mayuree doesn't expect a huge reaction from the stock market, projecting a fall of around 1 percent.
That may be because funds have already pulled their stakes from Thailand. So far this year, foreign and domestic investors in Thailand mutual fund and exchange traded funds (ETF) have pulled out around $907 million, according to data from Jefferies. Foreign investors pulled around 194 billion baht, or $6 billion, from Thai shares in 2013, reversing the inflows from the previous four years.
The stock market has generally shaken off much of the turmoil so far, with the SET index clocking an around 8.6 percent year-to-date rise. Still, Thai shares are down around 14 percent over the last 12 months and are trailing regional peers the Philippines and Indonesia, which have seen their markets tack on over 15 percent each so far in 2014.