The Stock Exchange of Thailand (SET) posted a significant gain yesterday, with investors seemingly convinced that the political impasse is coming to an end after the country's 30th prime minister was elected, with economic stimulus measures expected for the rest of this year.
Asia Plus Securities (ASPS) expects a new government will be formed and start working in early September in the best-case scenario. If the coalition successfully forms a new government, it should relieve concerns over a political vacuum and the 2024 budget, creating positive market sentiment, the brokerage said in a research note yesterday.
"Government formation should be smooth. After Thailand has a new government and cabinet, economic stimulus policies are expected to be pushed forward," said ASPS.
The brokerage said investors have to "watch the stability of the new government and how it pushes forward its policies", along with the political situation outside parliament.
The political transition is expected to revive Thailand's bourse. In 2019, the SET index rallied by 5-6% in one month after the prime minister was re-elected. The SET index should enjoy positive momentum after the new premier takes office, ASPS noted.
CGS-CIMB Securities (Thailand) maintained its SET index target at 1,720 points this year as the Pheu Thai Party has several policies that can boost the Thai economy. Stocks in the banking, hotel, retail, property and construction sectors are likely to benefit the most, said the brokerage.
"Although the vote for prime minister was delayed, we believe the new government led by Pheu Thai will start working by the end of September. That would help relieve concerns in the Thai stock market, with economic stimulus boosting sentiment," said head of Thailand research Kasem Prunratanamala.
Koraphat Vorachet, head of the research department at Krungsri Capital Securities, said as domestic political uncertainties eased, the SET index should enjoy upside gains with foreign investors returning to buy Thai equities.
"Thai politics is a positive factor boosting the stock market, and we foresee the index gradually recovering," said Mr Koraphat, recommending investors focus on domestic equities in the retail, power plant and industrial estate sectors. "However, the market is set to remain in a wait-and-see mode over the new cabinet, particularly the economic ministers, as those names are critical to restore investor confidence."
The coalition is expected to push forward include a 10,000-baht digital wallet giveaway, a 600-baht daily minimum wage by 2027, a 25,000-baht salary for university graduates, voluntary military conscription, higher crop prices, promotion of sustainable peace in the South, legalising cannabis for medical use, and some constitutional amendments.
He said these policies should increase speculation on commerce, leasing, property and tourism stocks, such as Central Retail Corporation, CP ALL, Berli Jucker, Ngern Tid Lor, Muang Thai Capital, Sri Sawad Corporation, Land and Houses, SC Asset Corporation, Sansiri, Praram 9 Hospital, Central Plaza Hotel, Erawan Group, and Minor International.
The SET index closed yesterday at 1,545.60 points, up 1.29%, in trade worth 71.9 billion baht.