SET falls on domestic political fear
text size

SET falls on domestic political fear

According to research by Asia Plus Securities, the SET index fluctuated greatly over the past month, dropping by 5.5% based on local political uncertainty.
According to research by Asia Plus Securities, the SET index fluctuated greatly over the past month, dropping by 5.5% based on local political uncertainty.

The Thai stock market plunged below 1,300 points in the morning session Monday, pressured by domestic political concerns as investors await the outcomes of three major legal cases set to be considered on Tuesday.

The decline in the Thai market mirrored the regional trend, as other bourses also fell because of a lack of positive catalysts.

The Stock Exchange of Thailand (SET) index closed the Monday morning session at 1,291.92 points, down 14.64 points or -1.12%, with total trading valued at 22.8 billion baht.

Large stocks on the SET registered significant sell-offs, including Bangkok Dusit Medical Services down 3.67%, Bangkok Bank falling 1.85%, Advanced Info Service dipping 0.95%, PTT down 0.79%, and Kasikornbank plunging 2.31%.

Veeravat Virochpoka, an analyst at Finansia Syrus Securities (FSS), said the dip below 1,300 points was driven by domestic political uncertainties, particularly concerning Prime Minister Srettha Thavisin's case at the Constitutional Court.

Mr Srettha, who took office last August, was accused by a group of conservative senators of breaching the constitution when he appointed a former lawyer with a felony conviction to his cabinet.

He denies any wrongdoing, but could face dismissal if the Constitutional Court rules against him.

If Mr Srettha is removed from office, a new government would be formed and his ruling Pheu Thai Party would need to put forward a new candidate for premier to be voted on by parliament.

According to FSS, the best-case scenario would be for Mr Srettha to remain in his position, which would allow the economy to continue moving forward. However, if he is removed, the successor will be crucial, said the brokerage.

If Paetongtarn Shinawatra, leader of the Pheu Thai Party, takes over, the impact might be minimal. Conversely, failure to reach an agreement within the coalition government could lead to the dissolution of parliament, noted FSS.

The stock market is expected to be significantly affected by the anticipated delay in the disbursement of the 2025 budget, similar to the delay in the 2024 budget, which hamstrung the economy, said the brokerage.

In addition, the Constitutional Court is set to consider the Election Commission's petition to dissolve the Move Forward Party, as well as former Prime Minister Thaksin Shinawatra's royal defamation charges under Section 112 of the Criminal Code and computer crimes stemming from a 2015 interview with a South Korean newspaper.

Elsewhere in Asia, stock markets were generally in negative territory on Monday as they lacked supporting factors.

FSS advises investors to adopt a wait-and-see approach or to consider stocks less affected by domestic political issues, such as export-oriented stocks or those benefiting from international factors.

According to research by Asia Plus Securities, the SET index fluctuated greatly over the past month, dropping by 5.5% based on local political uncertainty.

Foreign funds have been streaming out of the market for 17 consecutive days, totalling more than 32 billion baht. For the first five months this year, foreign investors recorded a total net outflow of 81.6 billion baht from the SET.

In a separate development, Kiatnakin Phatra Asset Management (KKPAM) on Monday introduced the KKP India Hedged and Unhedged funds, targeting investments in the subcontinent, which is expected to achieve the highest economic growth in the world this year.

These funds will invest in the Robeco Indian Equities master fund, managed by Robeco Institutional Asset Management B.V., a firm with extensive experience and expertise in managing Indian funds.

The fund's IPO is slated for June 17-26, with a minimum investment of 1,000 baht.

"Given the volatility in the Thai stock market because of economic and political uncertainties, diversifying assets into high-growth economies such as India can provide investors with opportunities for higher returns and reduced portfolio risk," KKPAM stated.

Deputy Finance Minister Julapun Amornvivat said on Monday he believes the current volatility in the stock market is based on political factors, but he expects the situation to resolve in a few days.

Once the political situation stabilises, the stock market is expected to recover, he said.

Regarding the recent appointment of the new SET president, Asadej Kongsiri, an executive at accounting firm Deloitte Thailand succeeding Pakorn Peetathawatchai, whose term ends in September, Mr Julapun said the government maintained transparency in the selection process.

He also stressed government efforts are not only addressing short-term economic issues, but also attempting to restructure the economy for both the short and long term.

Mr Julapun said these efforts cover investment, attracting foreign direct investment, developing infrastructure, and upskilling and reskilling the workforce to enhance competitiveness.

Do you like the content of this article?