Although the Thai bourse has continued to rise after the selection of a new prime minister, analysts are warning the rally will be short-lived as investors await a policy statement from the new government, while populist projects could hurt Thailand's fiscal stability.
Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organizations (Fetco), said investor confidence improved after Srettha Thavisin was selected as the new prime minister because he is a businessman who understands economic development.
But he said the stock market rally will likely be short-term, after which investors will want to hear a policy statement from the new government comprised of 11 parties.
"The urgent issue for the government is effective budget management and speeding up the fiscal 2024 budget bill, which was delayed for three months," Mr Kobsak told the three-day Thailand Focus 2023 conference hosted by the Stock Exchange of Thailand (SET).
Short-term economic stimulus measures may be necessary, but they must take into consideration fiscal stability, he said.
Concerns about populist policies may affect confidence in Thailand's fiscal and financial stability, said Mr Kobsak.
Fetco plans to make proposals to the new government in four key areas to enhance regional competitiveness, in an effort to attract more foreign capital and production relocation in the next 4-5 years.
"Thailand may be at a disadvantage if there are too many internal problems that interrupt our economic development," he said.
A panel session on "Thai capital market towards the new horizon" at "Thailand Focus 2023" held on Wednesday.
First, the government and the private sector should continue to develop various new technology platforms such as ChatGPT and increase investments in R&D, said Mr Kobsak.
Second, the government should continue to support new S-curve industries, promoting startups in electric vehicles, medical tourism, logistics, and digital and animation sectors.
Third, the public sector should enhance the capability of Thai companies to go abroad and become international entities, he said.
Finally, investments in large infrastructure projects that benefit the long-term economic and commercial development of Thailand need to continue, including those in the Eastern Economic Corridor.
SET chairman Prasarn Trairatvorakul said the establishment of the new government is positive, not only for the stock market, but also the economy.
"Politicians must learn a lesson about what happened in the past and abide by the law. Working with transparency and encouraging public participation to implement policies is vital," said Mr Prasarn.
"I would like to see the line-up of the new cabinet. Hopefully they have knowledge, are honest and have the capacity to solve the country's problems.
"The government has to be aware that the international and domestic situations remain uncertain. The administration needs to restore confidence and maintain fiscal and economic stability."
SET senior executive vice-president Manpong Senanarong said the bourse is promoting "growth engine" industries by adjusting its listing criteria to facilitate large companies that have not posted a profit to go public on the stock exchange.
He said the Thai economy faces three main challenges: inflation, interest rates and geopolitics.
How the country addresses these issues depends on the new government's policies and support for the capital market, said Mr Manpong.