Thai markets surge as Anutin’s historic win sparks reform bets
The win boosts prospects for political stability after the country has had three prime ministers in as many years
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[BANGKOK] Some of Thailand’s biggest money managers say the election win for Prime Minister Anutin Charnvirakul will bolster markets given his plans to attract foreign investment and support consumers.
Both local and foreign capital should return to the nation’s stocks, according to Kasikorn Asset Management, which manages about US$58 billion. The outcome also paved the way for the Thai baht to strengthen, said SCB Asset Management, the country’s biggest private money manager. Citigroup recommends investors buy consumer stocks.
The convincing win for Anutin’s Bhumjaithai Party (BJT) may put an end to Thailand’s years of weak coalition governments, which undermined economic growth and led to its markets underperforming peers. In a sign of optimism, global funds bought the most Thai stocks in four years on Monday (Feb 9), and the baht has strengthened the most among emerging Asian countries this week.
BJT leadership may “bring trust and confidence to the Thai market”, encouraging foreign and domestic investors to return, said Win Phromphaet, the executive chairman of Kasikorn AM.
The benchmark SET Index jumped 3.5 per cent on Monday after the BJT’s win in Sunday’s election and is now up more than 14 per cent year to date, a promising start after three straight years of declines.
The BJT had pledged to cut red tape for foreign investment and maintain selected consumption subsidies, while adhering to fiscal discipline and shrinking the budget deficit. The win boosts prospects for political stability after the country has had three prime ministers in as many years.
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Thailand must take steps to attract more investment in higher-value and green manufacturing, while rebuilding fiscal space to counter a downturn in exports and tourism, the World Bank said after the election.
Expansion of manufacturing and tourism is also needed to keep momentum going, according to Principal Asset Management. Citigroup turned more positive on Thai consumption stocks after asset inflows, analyst Preenapa Detchsri wrote.
The baht has beaten its regional peers in the three days since the election, after already being bolstered by gold’s surge this year. The yellow metal’s price has risen 14 per cent year-to-date, and it plays a significant role around Thai assets because the country’s population holds large amounts of it.
“The currency’s outlook is still very strong in the future,” said Varorith Chirachon, an executive director at SCB Asset, which oversees about US$64 billion in assets. The election’s outcome should help the baht strengthen, he added.
Thai bonds have handed negative returns to investors in the year so far, lagging most peers in the region.
“Beyond the knee-jerk rally on political clarity, the durability of the recovery depends on execution,” said Nattanont Arunyakananda, an investment manager at Aberdeen in Bangkok. “The medium-term growth outlook remains challenging due to limited fiscal headroom, which makes broad-based consumption handouts harder to sustain and pushes policy towards more targeted support.”
The incoming government also faces challenges, including geopolitical risks and US tariff pressures, Kasikorn’s Win said.
Still, global funds have bought almost US$1.2 billion of the nation’s stocks on a net basis and more than US$1.9 billion of Thai bonds so far this year, according to data compiled by Bloomberg. For bonds, that’s the best start to the year since 2022. BLOOMBERG
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