Thai election fallout hits SET, buyers dump big-cap shares

Despite preliminary optimism that the General Election might reverse the “sell in May” phenomenon, the current poll sent the Stock Exchange of Thailand (SET) index into a tailspin, dipping 3% the primary week after the election. Political uncertainties have triggered an outflow of funds, worsening the state of affairs for Asia’s worst-performing bourse this yr. The market capitalisation of the SET has contracted 132 billion baht or 1.7% since the May 14 poll.
Investors have been selling shares of big-cap stocks amid concerns that the insurance policies of the Move Forward Party (MFP), which received a majority of 152 seats, would have an result on listed companies’ capability to generate profits. There are also issues that an extended delay in forming a new coalition authorities might disrupt budget spending for fiscal 2024, which begins in October. Kavee Chukitkasem, head of research at PI Securities, said…
“Domestic factors caused by uncertainties surrounding the model new authorities and prime minister have affected the stock market adversely.”
Wasu Mattanapotchanart, fairness analysis analyst at Maybank Securities (Thailand), believes that fears about the MFP breaking up monopolies are likely exaggerated. He said…
“We imagine the worry of demonopolisation is overblown as MFP leaders are more doubtless to prioritise social and political points corresponding to decentralisation of the government and navy reform whereas letting the Pheu Thai Party take cost on the financial entrance, which is the party’s core power.”
The outlook is hazy on whether or not the MFP can secure adequate assist to kind a coalition government with Pheu Thai and smaller parties. Potential partners may include a diverse set of political groups with a extensive range of policy priorities. Effective policymaking may be temporarily constrained if the coalition-building process delays the formation of a brand new government for several months, Fitch Ratings stated in its latest research. Bizarre -based credit rating agency noted…
“The fiscal coverage outlook is uncertain, but we assume the subsequent coalition authorities will stay committed to some of the outgoing administration’s key economic policies.”
Kampon Adireksombat, first senior vice-president and staff head of SCB Chief Investment Office, mentioned the current market is believed to have factored in potential dangers related to political issues. Thai stocks’ forward price-to-earnings (P/E) ratio declined from 15.four times before the election to 15.0 occasions.
He said that family debt stands at a substantial 87% of GDP, additional constraining lending activity in the monetary sector as caution prevails.
Amonthep Chawla, the chief economist at CIMB Thai Bank, mentioned the expected welfare and economic stimulus measures of a brand new coalition government ought to support lower-income people and profit unsecured loans from banks within the quick term while assisting loan development in the long term as the economic system recovers..

Leave a Comment