Stocks rally following Prayut win
Investors confident of policy continuity
Thai stocks rallied on Thursday after Prime Minister Prayut Chan-o-cha won a parliamentary vote to reclaim the premiership on Wednesday night, an event seen as reducing anxiety surrounding policy changes when the new government takes office.
The bourse closed at 1,653.41 points, up 4.95 or 0.3% from Wednesday's finish, in turnover worth 49.9 billion baht.
The local stock market has garnered a boost of confidence with the new coalition government set to form and the same leader in charge, while economic policies are expected to continue, said Kavee Chukitkasem, deputy managing director of Kasikorn Securities.
The combined members of the House of Representatives and the Senate cast 500 votes for Gen Prayut, well ahead of Future Forward Party leader Thanathorn Juangroongruangkit's 244, in a meeting at the TOT auditorium.
Major economic policies, such as the Eastern Economic Corridor project and tourism initiatives, are poised to continue under the new government, resulting in lower anxiety over drastic policy changes, Mr Kavee said.
Sectors related to construction, consumer goods and tourism are expected to reap benefits from continuous investment projects, he said.
Mr Kavee said the new government is expected to enjoy a honeymoon period for at least 3-6 months and could pass the annual fiscal budget in September.
The opposition is expected to call for a no-confidence vote in a year's time, therefore government stability is expected to be intact in the meantime, he said.
Although domestic equities are likely to rally in the medium to long terms, due to upcoming economic stimulus measures, the Stock Exchange of Thailand (SET) index has a limited upside gain because the Sino-US trade disputes have yet to show any positive developments, said an analyst at Finansia Syrus Securities who requested anonymity.
Thailand's political risk is higher than in the past five years, as votes from members of the House of Representatives edged out those voting for Mr Thanathorn by just seven votes, said Pornthep Jubhandhu, senior vice-president of SCB Asset Management.
Heightened political risk could be an obstacle for the new government in passing new laws and approving the next fiscal budget, Mr Pornthep said.
The SET is investigating factors responsible for a transaction error, causing an all-time-high trading value on May 28.
Daily trading value skyrocketed to more than 200 billion baht on May 28. Average daily trading value on the SET between January and April hovered at 42-49 billion baht.
President Pakorn Peetathawatchai said there were errors related to securities clearing and settlement from some transactions of certain brokerage firms that are SET members.
Heavy transactions were logged between 4.50pm and 5pm, considered the over-the-counter period when investors want to close their options contracts in a limited time.