Although prolonged political uncertainty has been weighing on the stock market, brokers share a positive view of Pheu Thai Party's leadership role in forming the new government as the party has policies to drive the economy and investment through capital markets, benefitting large-cap stocks.
The Stock Exchange of Thailand (SET) index fell by 1.37% on Thursday after the Constitutional Court postponed its ruling on prime minister nominations to Aug 16. As a result, House Speaker Wan Muhamad Noor Matha indefinitely postponed the third round of voting initially scheduled on Aug 4.
The Pheu Thai Party, now leading the formation of the next government, also postponed its announcement regarding its new coalition partners, causing the formation of the government to be delayed by at least two weeks, said Asia Plus Securities (ASPS).
A new government is expected to be formed in September, close to the end of fiscal 2023. Foreign fund inflows are unlikely to return and the SET index may fluctuate over the next two weeks, the brokerage said in a research note yesterday.
Citing several sources, ASPS said Pheu Thai's new coalition probably includes Bhumjaithai, Democrat, Chartthaipattana and Prachachat parties, which together have 263 MP seats and would need 112 more votes from other MPs and senators to successfully form a government.
Pi Securities said a new government led by the Pheu Thai Party, which has policies that support the capital market, will boost market sentiment.
Measures proposed by the Pheu Thai Party include a 10,000-baht digital wallet, a 600-baht minimum daily wage, a 25,000-baht salary for university graduates, debt suspension of three years for principal and interest, 2 million baht worth of funding for each village fund and a subsidy of 30,000 baht per farming household.
After the new government is established, the top priority is to stimulate domestic consumption.
"There are several policies the Pheu Thai Party can implement immediately to boost domestic consumption and tourism," Pi said.
Sectors that are expected to benefit from Pheu Thai policies include retail, tourism, hospitals, banks and alternative energy. Retail loans and power plants, on the other hand, are are expected to be negatively affected.
Pi has recommended 11 stocks to benefit from Pheu Thai policies including Bangkok Bank, Krung Thai Bank, Tisco Financial Group, Airports of Thailand, Central Plaza Hotel, Central Pattana, CP ALL, Berli Jucker, Home Product Center, Siam Global House and BCPG.
Thanachart Securities views that the Pheu Thai-led government should drive the SET index to recover, mainly benefitting big-cap stocks. The brokerage recommends CP ALL, Gulf Energy Development, B Grimm Power, Central Retail Corporation, COM 7, Central Pattana, PTT and Advanced Info Service.
"If the government is successfully formed by the new coalition, concerns over a political vacuum will subside and the SET index may rebound, driven by speculation on stocks benefitting from stimulus measures under the new Pheu Thai coalition," ASPS said.