Logo of Phnom Penh Post newspaper Phnom Penh Post - Thai stock market hinges on formation of new government

Thai stock market hinges on formation of new government

Content image - Phnom Penh Post
People cast their ballots during voting in Bangkok. JEWEL SAMAD/AFP

Thai stock market hinges on formation of new government

The Thai stock market is expected to respond positively after the general election, if a new government can be formed instantly without conflict, analysts in the Krungthep Turakij News Room daily TV programme said last week.

However, long-term pressure will still be weighing down the bourse with global economic slowdown and a likely decline in the growth of Thai listed companies’ earnings, they added.

DBS Vickers Securities (Thailand) CEO Pattera Dilokrungthirapop said the poll results will influence decisions on Thai stock investment, particularly for foreign investors, adding that several global funds have a policy to only invest in countries with an elected government.

On Friday, the Stock Exchange of Thailand (SET) Index rose 0.75 per cent or 12.29 points to 1,646.29, ending the past week with a daily turnover of 46.486 billion baht ($1.47 billion), with external factors replacing the general election as the main consideration of stock investors.

The SET Index is expected to advance after the election on two issues – market price to earnings ratio (P/E ratio) and Thai listed companies’ earnings.

The Thai stock market’s P/E ratio has remained at 14.8 times, thanks to listed companies’ sound fundamentals and financial stability, though it has not risen due to companies’ low profit growth, Pattera said.

DBS Vickers Securities (Thailand) has forecast its profit growth at eight per cent this year and six per cent for next year.

“Growth is expected in companies’ profits this year, but will still be lagging behind their peers in other countries. Risks and negative factors have driven out foreign capital as the Thai stock market awaits the new administration’s policies,” Pattera said.

Maybank Kim Eng Securities (Thailand) CEO Montree Sornpaisarn said regardless of which party leads the new government, its economic policies should not go against the principles of economics as Thailand has learned a lesson from price mechanisms, such as price guarantees for agricultural products.

The wage policy will also have an impact on the Thai bourse, he said, pointing to the financial difficulties small businesses will face from an increase in labour cost.

However, he said, he does not see much impact from populist policies, though warned that the proposal to impose tax on capital gains from stock trading calls for prudence. He also said that he agrees with the government’s promotion of long-term equity funds as a means to generate savings for retirement through investment.

“Investors expect the stock market to warm up with the election results. In previous elections, the index rose, no matter which side won. It does not follow an ideal, but requires certainty,” he added.

Pornthep Jubandhu, senior vice president of SCB Securities, predicted a market rise in the week after the elections, since the majority will have voted in the winning party. However, the index may fall over policy issues.

There is not much difference in the policies of competing parties and the private sector seems to have accepted the proposal to increase the daily minimum wage from 300 baht to about 400 baht.

However, this may force some business to shut down, he said.

Kavee Chukitkasem, deputy managing director of Kasikorn Securities, said if a government is formed immediately after the elections, the stock market could rise for a month with expected returns of four per cent as foreign investors have been waiting for a clear outcome and a smooth government transition.

He believes foreign investors will become more interested in Thai stocks, especially in banking, financing, property, retail, medical institutions and advertising.

However, the SET Index may fall by four per cent and go on a downward slope for up to six months if a new government is not formed immediately and if there is unrest. In this case, investors may opt for safe options with recurring income such as power plants, communication and property funds, he said.

The global economic slowdown and low earnings of listed companies have dampened investment sentiment this year, he said. THE NATION (THAILAND)/ANN


  • Hong Kong firm done buying Coke Cambodia

    Swire Coca-Cola Ltd, a wholly-owned subsidiary of Hong Kong-listed Swire Pacific Ltd, on November 25 announced that it had completed the acquisition of The Coca-Cola Co’s bottling business in Cambodia, as part of its ambitions to expand into the Southeast Asian market. Swire Coca-Cola affirmed

  • Cambodia's Bokator now officially in World Heritage List

    UNESCO has officially inscribed Cambodia’s “Kun Lbokator”, commonly known as Bokator, on the World Heritage List, according to Minister of Culture and Fine Arts Phoeurng Sackona in her brief report to Prime Minister Hun Sen on the night of November 29. Her report, which was

  • NagaWorld union leader arrested at airport after Australia trip

    Chhim Sithar, head of the Labour Rights Supported Union of Khmer Employees at NagaWorld integrated casino resort, was arrested on November 26 at Phnom Penh International Airport and placed in pre-trial detention after returning from a 12-day trip to Australia. Phnom Penh Municipal Court Investigating Judge

  • Sub-Decree approves $30M for mine clearance

    The Cambodian government established the ‘Mine-Free Cambodia 2025 Foundation’, and released an initial budget of $30 million. Based on the progress of the foundation in 2023, 2024 and 2025, more funds will be added from the national budget and other sources. In a sub-decree signed by Prime Minister Hun Sen

  • Two senior GDP officials defect to CPP

    Two senior officials of the Grassroots Democratic Party (GDP) have asked to join the Cambodian People’s Party (CPP), after apparently failing to forge a political alliance in the run-up to the 2023 general election. Yang Saing Koma, chairman of the GDP board, and Lek Sothear,

  • Cambodia's poverty cut in half from 2009 to 2019: World Bank report

    A report published by the World Bank on November 28 states that Cambodia’s national poverty rate fell by almost half between 2009 and 2019, but the Covid-19 pandemic recently reversed some of the poverty reduction progress. Cambodia’s poverty rate dropped from 33.8 to 17.8 per cent over the 10