Thai shares reverse gains as opposition parties win strong majority in election


A man reads a Thai newspaper with front page coverage of Thailand’s general election at a newsstand in Bangkok on May 15, 2023.

Lillian Suwanrumpha | AFP | Getty Images

Thai shares rose slightly, while the Thai baht gave up early gains on Monday after touching a three-month high. Investors are awaiting more concrete results from Sunday’s general election, after preliminary results showed the country’s pro-democracy parties won a strong majority.

It remains to be seen which parties will eventually form the new Thai government as a coalition is needed as the two opposition parties do not have enough votes to form a new government.

calculated by Reuters Based on the country’s data, the Election Commission suggests that the anti-military Move Forward party, led by Thai businessman Pita Limjaroenrat, will win the most seats, followed by the Phieu Thai party.

If ratified, it would represent a resounding rejection of the pro-military parties led by former Prime Minister Prayut Chan-o-cha, ending nine years of pro-military rule.

The official certification of results is expected to be finalized within 60 days after the election is over.

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The SET Composite Index was trading 0.3% higher at Monday’s open and was last trading 0.2% lower before paring gains.

currency of thailand It strengthened 0.6% to 33.73 against the US dollar on Monday, its strongest level since February earlier this year.

“We have to keep in mind that there has been a lot of tricky business in Thai politics over the years,” Thitinan Pongsudhirak, a professor of politics and international relations at Chulalongkorn University, told CNBC’s Sri Jegaraja in Bangkok.

Thai elections: People have voted for change and reform, professor says

“The party with the largest number of victories should be able to form the government, but it is not. There are three steps: winning the election is one thing, forming the government is another proposition and getting you to the prime minister is the biggest challenge.” ,” He added.

The Phieu Thai party has named Patongtorn Shinawatra, daughter of former Thai prime minister Thaksin Shinawatra, as its candidate for prime minister, while Reuters informed of that Limjaronrat has also “set his sights on becoming prime minister.”

first quarter gdp

Separately, Thailand’s GDP for the first quarter rose 2.7% year-on-year, beating expectations for a 2.3% increase.

before the election results, Citi economist Nalin Chuchotitham wrote in a Sunday note that Thailand’s economic outlook is likely to change little in the coming months.

“We expect Q1 GDP growth to remain slow, but strong enough to signal that the economy bottoms out in Q4 2022, which will support BOTs.” [Bank of Thailand]rate hike,” she said.

The central bank of Thailand’s policy is currently at 1.75%, and the next meeting will be on May 31. Citi expects the Bank of Thailand to raise its benchmark interest rate by another 25 basis points.

Chuchotitham also expects the new government to be confirmed in August and the full 2023 fiscal budget for the economy to be announced in the last quarter of the year.

“In the medium term, the economic outlook may see rising risks to populist economic policies which could call into question future fiscal discipline,” she wrote.

what next?

According to Pongsudhirak, “if there is a systematic subversion, distortion or manipulation of the results we saw yesterday” there could be unrest as Sunday’s elections were “a profound, earth-shaking result for Thai politics over the past two decades”.

“We are stuck with this Thaksin, anti-Thaksin cycle,” said the Chulalongkorn University professor. “Now, with yesterday’s victory for the Move Forward party, the Thai people have raised their voices for change and reform.”

He pointed out that the Move Forward Party is “the opposite of the Thaksin Party”.

“First of all, it is not aligned with Thaksin – it has a very different agenda, it is not a populist party. It seeks institutional reform of Thailand’s traditional institutions, the military, monarchy and judiciary – the root cause of the collapse of the past two decades. Thailand’s crisis.

Pongsudjirak said he expected a more market-based, progressive economic policy management from any government going forward, one that was pro-foreign investment, anti-monopoly, enforcing more competition and encouraging small- to medium-sized companies. “Getting better” part of the deal. ,

— CNBC’s Jihye Lee contributed to this report.

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