Thai stocks plunged to a four-year low on Monday as investors fretted over political uncertainties, with the market awaiting the Constitutional Court's decision on the status of Prime Minister Srettha Thavisin and his cabinet.
The Stock Exchange of Thailand (SET) index fell to a low of 1,313.26 points around the close of the morning session at midday, the lowest level since March 23, 2020, as internal politics weighed heavily on investor confidence.
InnovestX Securities said the SET index is expected to be volatile this month after the Constitutional Court accepted a petition by 40 outgoing senators seeking the removal of Mr Srettha for a violation of ethics over the appointment of Pichit Chuenban as PM's Office Minister.
A ruling on the case is expected as soon as June 28 or early next month. The same court is scheduled to consider the Move Forward Party dissolution case on June 12.
On June 18, former premier Thaksin Shinawatra is scheduled to meet the attorney-general regarding a Section 112 case.
Amid political tension, foreigners were net sellers for a 12th consecutive day, shedding 22.8 billion baht.
Foreign net sales tallied 49 million baht on June 7, according to Asia Plus Securities.
Asian risk assets could be weighed down by a sharp rebound in key indicators such as the dollar index and US treasury yields, after May non-farm payrolls rose well above expectations, said the brokerage. US wage growth rose 4.1% year-on-year, which also outperformed expectations.
After the robust US jobs report, CME Fed Fund Futures predicted the Federal Reserve would cut interest rates only once by 0.25 percentage points this year, said KGI Securities (Thailand).
SCB Wealth, a unit of Siam Commercial Bank, said there are five risk factors affecting investment portfolios in the second half this year. The first two are slower global economic growth than expected and uncertainty regarding the Fed's monetary policies.
Other factors include the US-China trade conflict, an uncertain US presidential election in November and ongoing geopolitical tensions, according to SCB Wealth.
The unit predicts the volume of global trade will decrease because of geopolitical risks, especially if Donald Trump wins the US election, leading to increased tariffs on all goods imported from China by at least 60%, and a 10% hike in tariffs on all imported goods.
These tariff increases would pressure global economic momentum, causing supply chains to deteriorate, said SCB Wealth.
CGS International (Thailand) said stocks related to property and direct investments, including Amata Corporation and WHA Corporation, are likely to benefit from an anticipated doubling of foreign direct investment (FDI) this year.
FDI inflows are projected to rise to 640 billion baht in 2024, up 127% over 2023, said the brokerage.