Didn’t survive! On August 14, 2024, the Thai Constitutional Court judges presided over the bench and read the decision. With a resolution of 5 to 4, Prime Minister Srettha Thavisin was disqualified and removed from the position of Prime Minister for appointing an ex-convict ‘Pichit Chuenban’ to the post of Minister attached to the Prime Minister’s Office, an unconstitutional act. As a result, the entire Cabinet was also dismissed, and the Thai stock market dropped more than 15 points before rebounding and closed 5.10 points down (0.39%) at 1,292.69 points) Analysts said that if a new government is formed later than the Q4 of 2024, it might lead to not only a political vaccume, but also a economic one.
Natchat Mekmasin from Trinity Securities Company Limited provided information that the Constitutional Court’s ruling that the Prime Minister was to be removed from the position of Prime Minister was definitely a “negative surprise”.
After this, we still have to wait and see the vote on choosing a new prime minister, as well as the establishment of the new Cabinet. How long will it take? If it happens quickly in Q2 of 2024, it is widely believed that investors can still go along with it; however, if there are more negotiations among forming a coalition, this will be a worrying sign of things to come. If the formation of the new Cabinet drags on until Q4 of 2024, it will create a political vacuum, and the Thai economy will stagnate as well. As a result, the business sector may slow down.
SET INDEX estimated If the process of setting up a new Cabinet is completed quickly within Q3 of 2024, the important support level of 1270 points should still be attainable. If it is dragged on until Q4 of 2024, though, it is possible that the estimate may need to be adjusted. The market’s EPS has fallen once again. This means that 1270 points will be automatically pressed down, which is initially estimated to adjust down to 1240 points.
Paradorn Tieranapramote from Asia Plus Securities, provided additional information. The stock market has received a political response for a while; particularly since 40 senators filed for Srettha’s removal since May 23, 2024, a total of 85 days. This resulted in an uncertain vacuum, dropping the Thai stock index by 5.3%. “However, if we look back at every past When there is political uncertainty, foreign investors will not like it much. Foreigners will sell out, and the market will see a lot of response at some level.” They might be selling their stocks to invest in something better, such as placing a bet on this year’s Premier League champions on 12bet!
In this regard, the political game will drag on in the long term, because it has been seen that the Thai stock index has been in decline for a very long time from the previous decline of 5%. Therefore, we only see short-term fluctuations. But the market may recover quite slowly.
Kornpat Worachet from Krungsri Securities provided additional information. Before the verdict in the Prime Minister Settha Thavisin case was announced, the Thai stock market was fluctuating quite narrowly. Until the decision of the Constitutional Court came to an end. However, he also views that this uncertain period is a key moment to buy. Stocks will rest for a short while due to such uncertainty; but, the political game will need further negotiation in order to move forward to economy and the country.
In this regard, we have surveyed 7 stocks in the Pheu Thai government group over the past 1 year, with movements as follows (Information from the Stock Exchange of Thailand as of 14 Aug. 2024)
1. Sansiri Public Company Limited or SIRI
1 year price return -12.64%
YTD Price Return -10.17%
2.PTG Energy Public Company Limited or PTG
1 year price return -21.08%
YTD Price Return -8.00%
3.Phraram 9 Hospital Public Company Limited or PR9
1 year price return -4.49%
YTD Price Return +6.25%
4. Sino-Thai Engineering and Construction Public Company Limited or STEC
1 year price return -24.60%
YTD Price Return -3.57%
5.SC Asset Corporation Public Company Limited or SC
1 year price return -46.30%
YTD Price Return -29.27%
6.Xspring Capital Public Company Limited or XPG
1 year price return -30.16%
YTD Price Return -33.83%
7.STP&I Public Company Limited or STPI
1 year price return -15.90%
YTD Price Return +1.86%
Industrial Sector Chair hopes new cabinet will be established within 1 month, vacuum might be costly, policy should be clear to gain confidence
Kriangkrai Thiannukul, Chairman of the Federation of Thai Industries said that the private sector wants to see a Cabinet set up as soon as possible after Ms. Paethongthan Shinawatra is appointed as Prime Minister. Investors still want to see how new policies develop moving forward.
Set up a new government in no more than 1 month.
After getting the Prime Minister The new government should not take more than 1 month to form a government. Because if there is a vacuum For a long time, it may repeat the story of the 2024 budget that was delayed for up to 8 months, causing money in the system to disappear. which will aggravate the economy and GDP of the country.
Continue to look forward to policy
For the new government’s policy, If the digital wallet does not proceed, then there must be another plan or, at least, a better alternative or other measures to stimulate the economy instead, especially if the policy continues and is clear in that area. Investors should be more at ease in this case.
