The Thai stock market switched from gains in the morning session to losses in afternoon trade on Wednesday after the Election Commission (EC) decided to send Move Forward Party (MFP) leader Pita Limjaroenrat’s iTV shareholding case to the Constitutional Court for final judgement.
The EC on Wednesday morning also asked the court to order Mr Pita to stop performing his duty as an MP immediately, until there is a decision by the court in the next three days as to whether to accept the case for consideration. The resolution came one day ahead of the joint sitting of the House and Senate to select a new prime minister.
The Stock Exchange of Thailand (SET) index wavered on Wednesday, rising by 10 points to 1,507.91 early after the EC resolved to refer the case to the Constitutional Court to adjust Mr Pita’s status.
An analyst from KTB Securities (Thailand) who requested anonymity said the stock market reacts positively whenever there is negative news about the MFP, whose policies are not friendly to the capital market. These policies include the demonopolisation of large business groups, which will affect blue chip stocks, and the collection of capital gains tax.
Political stocks, equities related to the Pheu Thai Party and monopoly- related stocks rose in morning trade on Wednesday amid hopes that Pheu Thai will lead the new government if Mr Pita is not selected, said the brokerage. These include Intouch Holdings, Advanced Info Service, SC Asset, True
‘‘ Once we know the composition of the new cabinet, the market will react positively because it favours clarity.
The index crossed into negative territory later in the day, plunging to a low of 1,488.27 points. Analysts said the stock market is sensitive to protest rallies, causing selling in the afternoon to reduce risk.
Arnon Nampa, a human rights lawyer and activist who supports the MFP, posted on Facebook an invitation to party supporters to gather at an art gallery in central Bangkok and other places in the northern and northeastern provinces to show their support for Mr Pita and democracy.
Adisak Phupiphathirungul, first vice-president of Thanachart Securities, said the market reaction on Wednesday was short-lived and investors were waiting for the parliamentary vote for prime minister on Thursday.
The GULF share price rose by more than 3% on Wednesday because the power plant business is unlikely to face much of an impact if there is a demonstration, though shares in the retail and hotel sectors will be adversely affected by protests, he said.
If Mr Pita is voted the new premier on Thursday, Mr Adisak said the market is likely to wait and see the names of the ministers. “Once we know the composition of the new cabinet, the market will react positively because it favours clarity,” he said.
Asia Plus Securities said the SET index would be “determined by the political situation”.
The political situation is highly uncertain, with the SET index projected to fluctuate and fund inflows unlikely until a conclusion is reached, the brokerage said in a research note on Wednesday.