Political unrest impacts Thailand’s stock market performance

Political turbulence, both on the domestic and international fronts, is tempering the growth prospects of the Stock Exchange of Thailand (SET), despite the Thai index briefly surpassing the 1,500-point mark. Analysts note that the Election Commission’s (EC) recent decision to investigate Thaksin Shinawatra for potentially exerting undue influence over the ruling Pheu Thai Party is a significant factor.

The political landscape within Thailand has become increasingly fraught since the EC accepted the petition calling for Pheu Thai’s dissolution.

Independent lawyer Thirayut Suwankesorn filed a complaint requesting the Constitutional Court to order Thaksin, the former prime minister, and the ruling party to cease actions that allegedly undermine the constitutional monarchy and violate Article 49 of the Constitution.

The EC determined the complaints were credible and, on October 18, appointed a committee to probe the matter, which could potentially lead to the party’s dissolution.

Rakpong Chaisuparakul, Senior Vice-President of KGI Securities (Thailand), highlighted the primary legal concerns against Pheu Thai, which include Thaksin’s possible domination of internal party affairs and the potential threat to Thailand’s constitutional monarchy.

“We believe that there will be a few weeks before more developments on the political complaints against the Pheu Thai party come out.”

Political unrest

On the global stage, Chinese President Xi Jinping unexpectedly instructed his military to prepare for a conflict on October 20, though he did not specify further. According to Rakpong, many investors assume this directive relates to increasing tensions between China and Taiwan.

Additionally, a recent survey indicated that Republican candidate Donald Trump is gaining traction against Kamala Harris.

“China needs to be vigilant on the possible consequences if Trump wins the [US presidential] election next month,” Rakpong noted.

Geopolitical tensions in the Middle East also pose a threat, particularly if conflicts between Israel and Iran and its proxies intensify, potentially disrupting oil supplies.

“In the near term, Thai and global politics have become the key issues to cap the stock market’s upside,” Rakpong added.

Asia Plus Securities (ASPS) forecasts that the EC’s investigation into Thaksin and Pheu Thai will conclude within 30 days, though this period could be extended by another 30 days.

Should the EC decide that Pheu Thai must be dissolved, the case will be forwarded to the Constitutional Court for further deliberation, the brokerage noted.

The SET index experienced a downturn on October 18, dropping from a high of 1,506.82 points to close at 1,489.82 points, amidst the fresh political uncertainty, reported Bangkok Post.

“While waiting for the court’s ruling, the SET may fluctuate as foreign fund outflows continue,” ASPS mentioned in a research note.