BANGKOK — The current high uncertainty in Thai politics has prompted foreign investors to sell Thai shares worth a total of 24.4 billion baht for 13 consecutive trading days from May 21 to June 10, 2024, according to figures from the Stock Exchange of Thailand.
The Thai stock market index plunged on June 10, reaching its lowest level in almost four years. Investors and analysts cited political concerns as the main cause.
Three major political cases are ongoing this June: former Prime Minister Thaksin Shinawatra is facing charges of lèse-majesté under Section 112, the Move Forward Party is set to be dissolved for lobbying for an amendment to Section 112, and the case against Prime Minister Srettha Thavisin, in which 40 senators have petitioned the Constitutional Court to decide whether his term should be terminated due to the appointment of Pichit Chuenban, who has potentially disqualifying qualities as a minister.
Prime Minister Srettha acknowledged that the political situation is one of the market’s concerns, but he believes that each case is individual. In the case of Thaksin Shinawatra, it is a personal matter. The case of the Move Forward Party will be decided by parliamentary mechanisms. As for his own case, he has already made his statement and will respect the decision of the Constitutional Court.
When asked whether the situation would improve if all three cases were solved, the Prime Minister said it was inappropriate to speculate about the future.
Chaiporn Nompitakcharoen, Managing Director of Securities Trading at Bualuang Securities Public Company Limited, explained that foreign investors sold more than 89 billion baht in Thai stocks in the first five months of 2024, the baht depreciated by 5.47 percent since the beginning of the year and the Thai stock market index fell by 6.2 percent.
Meanwhile, investors are waiting for additional stimulus measures from the government, particularly the delayed approval of the 2024 state budget and lower than expected export growth, although listed company (SET) earnings rose 1.7 percent year-on-year in the first quarter.
He believes the Thai stock market remains unpromising in the second half of this year due to a lack of investor confidence caused by various risk factors. These include the slow recovery of the Thai economy in the second half of the year, delays in the implementation of new government measures and potential economic downturns.
Domestic consumption is also weakening, as evidenced by declining sales of durable goods such as cars, motorcycles, real estate and electrical appliances for several consecutive months. This increases the risk that this year’s GDP target will be revised downwards.
As for the Ministry of Finance’s idea to reintroduce the LTF (Long-Term Equity Fund), it is assumed that the tax deduction amount will not be that high because the government will have to use the funds mainly for the digital wallet project. Therefore, the reintroduction of LTF is estimated to be around 10-15 billion baht compared to the previous 20-30 billion baht.
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- Move Forward Party Braces for Court Case that Might Dissolve It
