The Stock Exchange of Thailand (SET) index could dip below 1,300 points after plunging to a four-year low on Thursday, as political uncertainties loom and news emerged that the Srettha Thavisin coalition government is seeking ways to exert more power at the Bank of Thailand.
The index moved narrowly on Friday around 1,330 points after slipping to 1,328.41 on Thursday after Bloomberg reported the government is discussing the possibility of naming an ally as central bank board chairman when the post becomes available in September.
Kittiratt Na-Ranong, a former finance minister and current advisor to Mr Srettha, and Supavud Saicheua, an outspoken critic of the regulator and former advisor to the ruling Pheu Thai Party, are among those being considered for chairman of the Bank of Thailand, media agencies reported on Wednesday, quoting people familiar with the matter who requested anonymity.
Porametee Vimolsiri, who completes his term as board chairman of the central bank in September, was appointed by the previous military administration, which also picked the current central bank governor, Sethaput Suthiwartnarueput. Mr Sethaput's term ends in September 2025.
Discussions about gaining more influence at the central bank follow growing differences between the premier and Mr Sethaput about the role of the regulator. Mr Srettha desperately wants to revive the economy, which expanded by only 1.5% in the first quarter.
Kittiratt: Former finance minister
Jitipol Puksamatanan, head of global investment strategies at Finansia Syrus Securities, said news of government attempts to gain more influence at the central bank by appointing an ally to the chairman post could slightly affect investor confidence.
"The impact might be limited as the board chairman doesn't have a role in determining monetary policy, but he or she can evaluate the performance of the governor and other high-ranking officials at the bank," he told the Bangkok Post.
The government's attempt to exert greater control over the central bank could imply it is unable to find ways to stimulate growth, relying on an interest rate reduction, said Mr Jitipol.
Apaporn Sawangpak, head of research at DBS Vickers Securities Thailand, said the SET index could sink below 1,300 points as investors remain hesitant ahead of the court ruling on the status of Mr Srettha and his cabinet a few months from now.
Foreign fund outflows might continue as the economy clearly lacks any impetus, she said.
The Thai economy is much smaller than the US's, which grew by 2%, and China, where growth is estimated at 5%.
Countries with economies similar in size to Thailand's grew around 5%, while the Thai economy expanded by only 1.5% in the first quarter, Ms Apaporn said.
The Thai index could rebound if the much-touted digital wallet scheme is launched and effectively increases domestic consumption, or if long-term equity funds are revived, she said.
Supavud: Critic of the central bank
