Investment sentiment in Thailand's capital market may turn negative if the general election is delayed until the end of the second quarter or the second half, says the Investment Analysts Association (IAA).
In addition to domestic economic growth and capital inflows, the general election is among the positive factors shoring up investor confidence this quarter, said IAA secretary-general Sombat Narawutthichai.
The government is expected to officially announce the election date in the next few days, Mr Sombat said.
The election date will likely be delayed from Feb 24 to avoid overlap with the coronation ceremony, said Deputy Prime Minister Wissanu Krea-ngam.
Constitutionally, the general election must be held within 150 days, or by May 9, after related organic laws took effect on Dec 11 last year.
Thailand's general election has become the most pertinent factor affecting domestic market sentiment in the first quarter, Mr Sombat said.
Local investment sentiment could be derailed if the election date is delayed further, he said.
"If the election is delayed to the end of the second quarter or the second half, market sentiment and the revenue projection of some stocks that benefit from the [upcoming] election will be affected," Mr Sombat said. "Analysts will revise down the SET index target and the [expected] revenue and net profit of certain stocks."
The latest survey of Thailand's stock market found 55.6% expecting the SET index will gain, averaging 1,682 points in the first quarter.
The survey is based on projections from 29 securities firms, fund managers from four asset management companies, one financial advisory company and two gold futures companies.
The majority of analysts also forecast the benchmark interest rate to rise once this year from 1.75% to 2%, while the SET index's earnings per share growth is projected to increase by 7.35%.
GDP IMPACT UNLIKELY
Charl Kengchon, managing director of Kasikorn Research Center (K-Research), said a delay in the general election could rattle short-term investment sentiment in the capital market.
Foreign investors would prefer holding off on investments and would adopt a wait-and-see stance for greater clarity on the election date, Mr Charl said.
A deferral of the poll would not have an adverse impact on the country's economic growth in 2019, as the government's ongoing public investment remains on track despite the election postponement delaying the drafting process of the 2020 fiscal budget, he said.
K-Research is maintaining its forecast for Thailand's GDP growth at 4% this year.
"Exports, tourism and the global economy are key factors affecting this year's economic growth, as opposed to the election delay," Mr Charl said.
Kalin Sarasin, chairman of the Thai Chamber of Commerce, said the election postponement is unlikely to affect the overall Thai economy.
He said His Majesty the King's coronation is the most important event for the country.
After the coronation, a delay of 1-2 months until the election will be better for the country, Mr Kalin said.
He urged the government to accelerate its work in progress, particularly an amendment of the Eastern Economic Corridor-related laws and other financial laws being vetted by the National Legislative Assembly.
"Most foreign investors remain confident in investing in Thailand. Thailand also has a clear roadmap for this year's election," he said.
Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), said any postponement of the general election should be within 150 days, or no longer than May 9, because this time frame will not affect overall sentiment in 2019.
"My opinion is each political party will have more time to prepare their [election] campaigns and will take this opportunity [to do so] during the extended period," Mr Supant said.
"For business and industrial confidence, this will not suffer much," he said. "On the contrary, if the election is put off or extended for longer than 150 days, there will definitely be pressure on the overall business and investment sentiment."