The stock market will be gripped by panic if the new government is "addicted to budget deficits", raising doubts about fiscal sustainability, says Kiatnakin Phatra Securities (KKP).
KKP chief economist Pipat Luengnaruemitchai expressed concerns about the country's fiscal outlook if politicians and the government allocate excessive expenditure. Without a clear financing plan, this could cause fiscal sustainability problems in the long run.
"Thailand is about to have a new government. Political parties have proposed policies that use quite a lot of money," Mr Pipat wrote on his Facebook page.
"But we cannot talk about spending money without mentioning the source of the funding."
The Move Forward Party (MFP), which plans to lead a coalition government, focuses its aid policies on education, children, disabled people and retirees.
The policies are estimated to require 650 billion baht in additional spending.
"The problem is where will this money come from?" asked Mr Pipat.
The MFP plan aims to cut military spending and other budgets it deems unnecessarily high. The party also wants increase revenue via wealth and land taxes, as well as hike the corporate tax for large companies.
The combined effect of these cuts should reduce government expenses by 650 billion baht per year, according to the MFP.
"If the plan works and the budget deficit does not increase, it will benefit the economy more than other economic stimulus," Mr Pipat said.
Thailand's demography is changing and the number of elderly people is increasing, resulting in more money needed for the country's welfare system, while the number of people paying taxes is declining.
"Many people are interested in one important indicator: the public debt-to-GDP ratio," he said.
"If the ratio is expected to increase uncontrollably, the market and investors will be concerned about the status of the government."
Based on KKP's pre-interest average fiscal deficit of about 2% to GDP, Thailand's public debt-to-GDP ratio will slowly increase from about 61% on Wednesday to 68% in a decade.
"But if Thailand has a higher budget deficit as interest rates rise, there is a chance public debt will spike more sharply and become increasingly difficult to reduce," Mr Pipat said.
"Although the current state of public debt is not much of a concern in the short term, we are in a state of distrust, and with the increasing fiscal burden from the demographic structure, slower economic growth and the need for other expenses, we could be at a critical point where the country's fiscal position could become a constraint."