KS: Investor spirits climb on election hopes
Historical data show probable stock surge
Thailand’s general election, anticipated to take place during the first half of next year, is poised to boost investor confidence and attract fund inflows worth 50-100 billion baht over the next six months, says Kasikorn Securities (KS).
Historical data demonstrate that the Stock Exchange of Thailand (SET) index normally advances six months prior to a general election because polls are a key positive factor, said KS vice-president Prakit Siriwattanaket.
In four of the past six elections, excluding two elections that were annulled for violating the constitution, the SET index rose by an average of 1.8% in the six months prior to voting day and by 5.1% one month after, KS said.
As for the post-coup election in 2007, the bourse surged by 5.4% in the preceding six months and 5.5% in the week after the poll.
Thailand’s bourse has recorded fund outflows of 550 billion baht since 2013, with year-to-date outflows logging at around 240 billion, according to KS.
But clearer developments indicating a general election in 2019 have attracted foreign capital to return to the SET index for two consecutive weeks in September, Mr Prakit said.
Foreign inflows are expected to continue moving into the Thai stock market in the range of 50-100 billion baht over the next six months due to momentum surrounding the upcoming general election, he said.
“We believe a clearer path towards the election should draw foreign investors back to the Thai bourse, as the country’s political instability has been a key factor behind the cumulative foreign net sales of more than 550 billion since 2013,” Mr Prakit said.
Two key organic laws on the election of MPs and selection of senators have received royal approval and were published in the Royal Gazette, paving the way for an election to take place by May next year.
The publication of the two laws was announced on Sept 12 after receiving royal endorsement, and will take effect 90 days from publication.
Once the laws take effect in December, the constitution requires an election to be held within 150 days. This means the general election could occur in late February at the soonest or early May at the latest. Mr Prakit said the next government looks likely to be a coalition as the new constitution makes it difficult for any political party to win 250 seats in the lower house.
The 2017 constitution introduces a mixed-member apportionment system, which makes it difficult for any political party to secure an outright majority in parliament.
With a strong likelihood for a coalition government, there is a higher possibility that the next prime minister will come from the party list of the pro-military Palang Pracharat Party, he said.
Large parties, including the Pheu Thai Party and the Democrat Party, are at risk of losing seats as their members have joined new parties, he said.
“We believe political parties who campaign for the next election will fall into three major groups,” Mr Prakit said. “First, an anti-Pheu Thai Party group, which includes the Palang Pracharat, Democrat, Bhumjaithai and Ruam Palang Chart Thai parties. Second, an anti-Palang Pracharat group, which includes the Pheu Thai and Future Forward parties. Third, a neutral group, which includes Chartthaipattana and Chart Pattana parties.”
Key infrastructure megaprojects, meanwhile, are likely to keep going since the new constitution stipulates that the next government’s projects shall be consistent and integrated with the national strategy goals, he said.
We believe a clearer path towards the election should draw foreign investors back to the Thai bourse. PRAKIT SIRIWATTANAKET Vice-president, Kasikorn Securities