Maybank Securities and CGS-CIMB expect positive market reactions should the Pheu Thai party win the Thai general election on May 14. Based on previous general election responses, the May election will provide an uplift to the stock market.
CGS-CIMB bases this optimism on the assumption that the Pheu Thai Party would win the general election, which it says is highly likely based on polls.
It also assumes that Pheu Thai and the Palang Pracharat Party, led by Deputy PM Prawit Wongsuwan, will work together to secure at least 376 of 750 Senate votes.
In the month after Yingluck Shinawatra and the Pheu Thai’s 2011 landslide victory, the market rose over 10%. According to a CGS-CIMB analyst on Friday, the sectors that performed well on Thailand’s SET index at that time were commerce, ICT, property, media, transport, and banks.
Based on a 12-month future price-to-earnings ratio of 17.5 times, CGS-CIMB maintains its SET index target of 1,830 by end-2023.
Maybank Securities said that investor sentiment in Thailand’s stock market has generally improved during election cycles due to expectations of economic stimulus measures.
According to Maybank, the SET index has grown by 3.4% in the three months before an election and 5.4% in the month after each of the last five elections since 2001.
Maybank forecasts GDP growth of 4% in the second largest economy in Southeast Asia in 2023, based on the assumption that there will be “little disruption” to the tourism-led recovery in Thailand, such as a delay in budget approvals and government expenditure.
Also, according to Maybank’s analysis, whoever wins the May election would face medium- and long-term challenges like increasing household debt and an aging population.
