Pita Limjaroenrat, head of the Forward Movement party, is searching for to change into Thailand’s next prime minister, contacting five parties for support.
If he succeeds, he’ll replace the military-backed government of Prime Minister Prayuth Chan-ocha, which took power in a coup in 2014. Pita’s party desires to end business monopolies and promote development outside the capital Bangkok.
“There is negative sentiment towards large stocks in industries with limited competition due to the winning party’s policies,” said Koraphat Vorachet, an analyst at Krungsri Securities.
“The pledge to raise daily wages will also hurt labour-intensive industries such as hotels, restaurants and construction.”
Gulf Energy Development, Advanced Info Service and Intouch Holdings, corporations backed by billionaire Sarath Ratanavadi, suffered losses on the stock index.
CP All, True Corp and Siam Makro, most of which belong to Dhanin Chearavanont’s Charoen Pokphand group, also fell.
Still, political analysts say any parties searching for to form a government can have to contend with the influence of the military-backed Senate.
These senators also get a vote for prime minister, and other parties could also be reluctant to affix Move Forward due to its stance on the monarchy.
Move Forward is the one major party calling for changes to permit for greater freedom to debate the royal family. Over the past few many years, perceived opposition to the family has been a pretext for disbanding political parties.
“There are some political risks if the Move Forward party does not lead the new coalition government,” said Varorith Chirachon, executive director of SCB Asset Management.
“If he is forced out of the new government, protests can be expected. This may cause some political instability. Therefore, investors are closely watching political developments over the next few weeks.”
Coalition talks
Shares linked to the Pheu Thai party, linked to exiled former Prime Minister Thaksin Shinawatra, also fell after it finished second within the election.
“The expected election results are inconclusive and uncertainty will remain high in the near term,” a team of Morgan Stanley economists and strategists, including Min Dai, wrote in a note.
“Investors will focus on the results of the coalition talks, as well as how specific policy proposals will be implemented once the talks begin.”
Investors had pinned their hopes on the final election to revive the Thai stock market, which has been the worst performer in Asia this 12 months.
The SET Index is down greater than 7 percent year-to-date, compared with a 3.7 percent gain within the MSCI Asia-Pacific Index.
Still, the economy expanded greater than expected in the primary quarter because the country benefited from a resurgence in tourism.
Bank of Thailand Governor Sethaput Suthiwartnarueput signaled the central bank would proceed a gradual and measured tightening of monetary policy to curb inflation, although price increases were back on track.
Another risk for the market is that a delay in forming a brand new government could delay the disbursement of the 2024 budget and “damage investor confidence resulting from the emerging political vacuum,” said Sunthorn Thongthip, a strategist at Kasikorn Securities.
Analysts also say any gains within the local currency from the election results are premature. The baht rose 0.6 percent to 33.788 against the dollar.
