Political change, Thai PM appointment poised to boost stocks

The anticipated appointment of Thailand‘s 30th prime minister this week is predicted to bolster stocks likely to benefit from political change and the policies and stimulus measures proposed by the Pheu Thai Party, reported Bangkok Post.

Brokerage firm Asia Plus Securities (ASPS) projects the 11-party coalition, which declared on Monday its possession of 314 MP seats, will secure enough senatorial support to form a new government and appoint the premier in Tuesday’s parliamentary meeting. Consequently, a new Cabinet could be established by the end of the month.

The execution of this government formation would alleviate concerns surrounding the political vacuum and the 2024 budget that has weighed heavily on the Stock Exchange of Thailand (SET) index, according to a research note issued by ASPS.

Investors are expected to speculate on stocks benefitting from a Pheu Thai-led coalition’s policies.

These include a digital wallet of 10,000 baht, a minimum daily wage of 600 baht, a salary of 25,000 baht for university graduates, a flat fare of 20 baht on the BTS, a three-year suspension of principal and interest debt, the Pracharat welfare card, and the Kon La Krueng co-payment scheme’s next phase.

The brokerage favours stocks that experienced a slump due to political transition concerns, predicting a rally in several categories from this point. Stocks with income from state projects such as Sino-Thai Engineering and Construction (STEC), CH Karnchang (CK), and Bangkok Expressway and Metro (BEM) form the first group. The second group consists of stocks benefitting from the stimulus, including Srisawad Corporation (SAWAD), CBG, and JMT Network Services (JMT).

Monopoly stocks such as TRUE, Central Retail Corporation (CRC), Central Pattana (CPN), CP ALL, and Berli Jucker (BJC) make up the third group. Stocks likely to be positively impacted by the electricity tariff adjustment, such as Gulf Energy Development (Gulf), B.Grimm Power (BGRIM), Global Power Synergy (GPSC), and PTT Global Chemical (PTTGC), are also mentioned.

Finally, stocks related to political parties, including Sansiri (SIRI), SC Asset (SC), Advanced Info Service (ADVANC), Praram 9 Hospital (PR9), and Siam Commercial Bank (SCB), are expected to see price increases.

ASPS notes that while global factors remain adverse, Thailand is in a state of political transition. The political climate is improving, and with the new prime minister anticipated to be elected today, the formation of the government and appointment of the cabinet should lead to the launch of stimulus measures.

KGI Securities (Thailand) concurs, stating that most investors hold the view that Thailand will have its new prime minister on August 22, coinciding with the parliamentary vote. Krungsri Capital Securities (KCS) asserts that the political situation is becoming clearer, with Pheu Thai garnering more votes to form the new government. KCS favours stocks in the telecommunication and retail sectors, which are likely to benefit from the coalition’s digital policies and an immediate plan to reduce the electricity tariff.