Former property tycoon Srettha Thavisin won the parliamentary vote to become Thailand’s new prime minister, raising hope for a further rally in the country’s assets after being battered for months due to political stalemate.
(Bloomberg) — Former property tycoon Srettha Thavisin won the parliamentary vote to become Thailand’s new prime minister, raising hope for a further rally in the country’s assets after being battered for months due to political stalemate.
Srettha, a representative of Pheu Thai party, won the endorsement from the joint chamber of House of Representatives and senators. The baht gained as much as 0.8% against the dollar, its biggest advance in a month, while the benchmark SET Index jumped 1.3% at the close before the voting results.
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Here is what analysts have to say:
Nuttachart Mekmasin, analyst at Trinity Securities
“The election of prime minister is quite important in terms of sentiment. The Thai economy is in a state of serious condition right now. The formation of a new government will likely lead to some sort of market expectations that stimulus measures could be launched soon, especially on the consumption side. Winning sectors in the short-term should be commerce and finance, which will benefit from higher purchasing power of Thai people from policies focusing on income enhancement, debt relief, and higher crop prices.”
Tim Leelahaphan, economist at Standard Chartered Bank
“’It will be a short-term relief. But political noises will continue for at least a month. While we expect political noise to subside late September, we do not rule out the tail risk of a lengthier government formation process and ongoing political noise.
The impact of the government policies on the economy remains unclear as this is a coalition government, so we will need to wait a while before their policies become clear.
Most of the stimulus measures such as digital payment will be a one-time event and unlikely to have a long term impact on the economy and inflation.
The budget for FY24 (starting on 1 October 2023) may be delayed by four to five months, potentially resulting in delayed capital disbursement for new public projects.
We still see inflation picking up later from a recovering economy and tourism. Even if we expect BOT to be on hold for the next meeting, we can’t rule out the risk of 25 bp raise.”
Padon Vannarat, analyst at Yuanta Securities
“The SET Index is expected to gain by 1% to 2% on clarity of the new government. Investors will also have higher optimism about Pheu Thai party’s economic stimulus. The coalition parties have agreed to adopt Pheu Thai’s campaign such as digital money payout, wage increase and price support of farm products. This will directly benefit stocks with domestic plays such as retail, commerce and home improvement sector. We also recommend property, telecommunication and construction sectors.”
Ratasak Piriyanont, analyst at Kasikorn Securities
“Government spending could recover on the formation of a new government,” boosting expectations of a more pronounced recovery in the second half. “Political uncertainty and prolonged formation of a new government disrupted public spending and investment.” It also derailed strong private consumption and tourism recovery, causing economic recovery to fall short of expectations.
Therdsak Thaveeteeratham, analyst at Asia Plus Securities
“Investors have to watch for the stability of the new government and how it pushes forward its policies as well as the situation outside the parliament. A smooth government formation should relieve concern over political vacuum and 2024 budget, providing positive sentiment for equities. Pheu Thai coalition is expected to push through with promised policies including 10,000 baht digital wallet, 600 baht minimum daily wage, 25,000 baht salary for university graduates and higher crop price. These policies should boost speculation on commerce, leasing, property, and tourism stocks.”
–With assistance from Suttinee Yuvejwattana.
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