Stock market analysts are now expecting Thailand’s 30th prime minister to take office this week, giving a boost to stocks that are set to benefit from the Pheu Thai Party’s policies and stimulus measures to be introduced by the new government.
Asia Plus Securities (ASPS) anticipates that the 11-party coalition with 314 MP seats announced by Pheu Thai on Monday would win enough support from senators to form the new government and install the premier at Tuesday’s parliamentary meeting. Then a new cabinet would be formed by late August.
“If the government formation runs smoothly, it should relieve concerns over the political vacuum and 2024 budget, having a positive sentiment on the Stock Exchange of Thailand [SET] index,” ASPS said in a research note issued on Monday.
Investors may speculate on stocks benefitting from policies under a Pheu Thai-led coalition, which include a 10,000-baht digital wallet, 600-baht minimum daily wage, 25,000-baht salary for university graduates, a flat fare of 20 baht on the BTS, debt suspension of three years for principal and interest, the Pracharat welfare card, and the next phase of Kon La Krueng co-payment scheme.
“We favour stocks that previously fell due to concerns over the political transition since they may rally from now on,” noted the brokerage.
The first group comprises stocks with income from state projects including Sino-Thai Engineering and Construction (STEC), CH Karnchang (CK), Bangkok Expressway and Metro (BEM).
The second group include stocks benefitting from the stimulus, namely Srisawad Corporation (SAWAD), CBG, JMT Network Services (JMT).
The third group is monopoly stocks such as TRUE, Central Retail Corporation (CRC), Central Pattana (CPN), CP ALL, Berli Jucker (BJC), while stocks affected by the electricity tariff adjustment are likely to get a boost, including Gulf Energy Development (Gulf), B.Grimm Power (BGRIM), Global Power Synergy (GPSC), and PTT Global Chemical (PTTGC).
Finally, stocks related to political parties are expected to see price increases, namely Sansiri (SIRI), SC Asset (SC), Advanced Info Service (ADVANC), Praram 9 Hospital (PR9), and Siam Commercial Bank (SCB).
“While global factors are negative, Thailand is facing a political transition now,” ASPS said. “The political situation is improving and a new prime minister should be elected today. After the government is formed and the cabinet is appointed, the new government is expected to launch stimulus measures.
KGI Securities (Thailand) agreed, saying that “most investors still take the view that Thailand would have its new prime minister on Aug 22”, when members of parliament gather to vote for the new prime minister.
Krungsri Capital Securities (KCS) said the political situation is becoming clearer with Pheu Thai receiving more votes to form the new government. The brokerage favours stocks in the telecommunication and retail sectors which are likely to benefit from the coalition’s digital policies and a plan to immediately lower the electricity tariff.