(Aug 15): Thailand’s markets are likely to remain under pressure following the ouster of the nation’s prime minister, with analysts citing worries over the potential delay of policies that would have boosted investor confidence.

Market watchers say concerns about elevated household debt and investment attractiveness remain a high priority, which may not be addressed by the government until a new leadership is established. There’s also growing doubts over whether a US$14 billion cash handout programme will proceed.

The benchmark SET Index, already one of the world’s worst-performers this year, closed 0.4% lower on Wednesday after the Constitutional Court found Srettha Thavisin guilty of an ethics violation and removed him from office. The baht fell in early Asia trading, underperforming regional peers.

Here’s what market watchers are saying:

Kaseedit Choonnawat, analyst at Citigroup Inc:

• Expects overall SET Index to face short-term pressure with domestic sectors, including consumer finance, banks and property, facing more downside compared to internationally exposed and utility sectors.
• “While it is still too early to tell, a new cabinet that is able to provide a good balance between coalition parties may stand to last the remainder of the four-year term and provide some medium-term political stability.”

Kitpon Praipaisarnkit, analyst at UOB Kay Hian:

• “The court’s verdict raises concerns for the equities market and sector regarding policy continuity and economic stimulus, especially commerce.”
• There are opportunities to buy on dips with CP All as top pick; utilities are a good way to hedge against economic uncertainties.

Krystal Tan, economist at Australia & New Zealand Banking Group Ltd:

• “The decision won’t be taken well by markets, given the rise in political uncertainty and the associated downside risks to growth stemming from potential unrest and delays to economic policy implementation. We need to see whether we end up with a prolonged political vacuum.”

Wei Liang Chang, macro strategist at DBS Bank Ltd:

• Prolonged uncertainty over Srettha’s replacement “could hinder policy formation and implementation, which pose downside risks to growth.”
• Baht could ease, with foreign equity investors turning more cautious and the rates markets could also anticipate a more dovish Bank of Thailand outlook.

Nirgunan Tiruchelvam, an analyst at Aletheia Capital:

• Events raise uncertainty in the market, though history shows that stock market has been able to flourish despite political upheaval.
• “This is an opportunity for investors to see through the uncertainty and take a medium term position in Thailand.”
• There’s opportunity to buy stocks exposed to tourism, including Airports of Thailand and Minor International.

Uploaded by Liza Shireen Koshy