OVERVIEW

● Thailand’s first election since the 2014 military coup saw promilitary party Palang Pracharat garnered the highest number of votes nationwide, pushing up the number of party-list seats it is entitled to. According to preliminary figures released by the Election Commission, with 94% of votes tallied, the military-backed Palang Pracharat emerged as the front runner with 7.7 million votes, followed by the Thaksin-aligned Pheu Thai, with 7.2 million votes. Coming in as a surprise, the new pro-Thaksin Future Forward party garnered the third-largest support from the Thais, with 5.3 million votes, outpacing those of the Democrat, the oldest political party in Thailand. It appears that the strategy taken by the Future Forward party to appeal to the 7 million young, first-time voters has borne fruits. Following the defeat of the Democrat, former Prime Minister Abhisit Vejjajiva resigned from his position as the president of the party.

● Meanwhile, in terms of number of constituency seats, Pheu Thai led the race, capturing 138 seats. In line with expectation and historical trends, Pheu Thai won majority of the seats in the rural north and northeast regions, where most of the relatively-poor communities, whom have benefited much from Thaksin’s policies pertaining to rural poverty and healthcare, reside. Palang Pracharat and Bhumjaithai party followed behind with 96 and 39 seats in hand, respectively.

● Voters turnout reported thus far was lower than prediction, registering at around 65%, compared to the 87% observed at the advance voting session and 75% at the 2011 election.

● Looking at the preliminary results at the constituency-level, it is fair to say that no single-party would be able to gain a majority at the parliament, hence reaffirming our stance that a coalition government would be formed. At this juncture, we pencil in a higher probability that a coalition, led by Prayut Chan-o-cha will remain in power, assuming that the military-appointed senators (250 seats) will vote for Prayut and that pro-military coalition will only need a balance of 126 seats from the lower house, in which 96 seats has been secured. However, it is important to note that if the pro-military parties form a fragile coalition with only a small majority or no majority in the lower house (251/500 seats), risk of political uncertainty in the near term may be elevated, with many policy hurdles envisaged and hence, clouding confidence amongst foreign investors.

● As the Election Commission will only announce full unofficial result by this coming Friday and the official result much later on May 9, the political landscape will remain highly uncertain in the interim period, with both key pro-military and pro-Thaksin parties seen scampering around to establish alliance with other medium and smaller-sized parties. We foresee the financial market to remain volatile, with the movement dependent upon greater clarity on the election results, whilst in part influenced by the ongoing global growth concerns. On Monday, the SET main index fell 1.24% to 1,625.91.

Source: Kenanga Research - 26 Mar 2019