Thai election fallout hits SET, investors dump big-cap stocks

Despite Special 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 first week after the election. Political uncertainties have triggered an outflow of funds, worsening the situation for Asia’s worst-performing bourse this year. The market capitalisation of the SET has contracted 132 billion baht or 1.7% for the rationale that May 14 poll.
Investors have been selling shares of big-cap shares amid concerns that the policies of the Move Forward Party (MFP), which won a majority of 152 seats, would affect listed companies’ capacity to generate income. There are additionally concerns that an extended delay in forming a model new coalition authorities could disrupt finances spending for fiscal 2024, which begins in October. Kavee Chukitkasem, head of analysis at PI Securities, said…
“Domestic elements attributable to uncertainties surrounding the new authorities and prime minister have affected the inventory market adversely.”
Wasu Mattanapotchanart, fairness analysis analyst at Maybank Securities (Thailand), believes that fears in regards to the MFP breaking up monopolies are likely exaggerated. He said…
“We believe the worry of demonopolisation is overblown as MFP leaders are prone to prioritise social and political points corresponding to decentralisation of the federal government and military reform while letting the Pheu Thai Party take charge on the economic front, which is the party’s core energy.”
The outlook is hazy on whether the MFP can secure sufficient support to kind a coalition government with Pheu Thai and smaller events. Potential partners could embody a various set of political teams with a broad range of policy priorities. Effective policymaking could additionally be quickly constrained if the coalition-building course of delays the formation of a new authorities for several months, Fitch Ratings said in its recent research. The New York-based credit standing agency noted…
“The fiscal policy outlook is uncertain, but we assume the next coalition government will stay dedicated to a few of the outgoing administration’s key economic insurance policies.”
Kampon Adireksombat, first senior vice-president and staff head of SCB Chief Investment Office, said the current market is believed to have factored in potential risks related to political issues. Thai stocks’ forward price-to-earnings (P/E) ratio declined from 15.four occasions earlier than the election to fifteen.0 times.
He said that household debt stands at a considerable 87% of GDP, further constraining lending exercise within the financial sector as caution prevails.
Amonthep Chawla, the chief economist at CIMB Thai Bank, mentioned the anticipated welfare and financial stimulus measures of a brand new coalition authorities ought to assist lower-income individuals and benefit unsecured loans from banks within the short time period while helping mortgage development in the lengthy run as the financial system recovers..

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