Investors are urged to hold some cash amid the political uncertainty and demonstrations, while any outcome from the parliamentary vote for prime minister will be positive for the stock market because it would provide clarity about Thai politics, say analysts.
Asia Plus Securities (ASPS) recommends investors hold some cash at this time as the Thai stock market pauses, awaiting clearer signals.
As the risks from political factors in the country are elevated, investors are advised to hold some cash, ASPS said in its research released yesterday.
“The rallies outside parliament and in many provinces make the political situation riskier, especially with the Pheu Thai Party, with Pita if the vote for prime minister on July Limjaroenrat becoming prime min13 is inconclusive. Investors should ister. The second scenario is the MFP wait and see, holding some cash as and Pheu Thai form a government, this plays out,” the brokerage said. with the premier from Pheu Thai,
As political issues can be unprewhile the last is other parties form dictable, the Thai bourse will cona government, with Pheu Thai and tinue to be volatile with thin trade MFP the opposition parties, he said. until there is clarity, said ASPS. “The second scenario would be the
Kitpon Praipaisarnkit, vice- most positive for the stock market,” president of UOB Kay Hian, said said Mr Kitpon, adding the third the brokerage sees three possible option would be the worst because scenarios regarding the outcome of there would be protests that would the parliamentary vote on the new generate negative investor sentiment. prime minister. Ekpawin Suntarapichard, director
“Any of these outcomes is posiof the investment strategy departtive for the stock market because it ment at InnovestX, said if Mr Pita provides clarity about politics,” said does not receive enough votes to Mr Kitpon. become prime minister, the stock
The first scenario is the Move Formarket would react positively. ward Party (MFP) forms a government “That could boost the Stock
Exchange of Thailand [SET] because power plant stocks and those with a monopoly position in their sector have significant weight on the bourse,” he said.
The MFP’s policies are not friendly for i nvestor sentiment, particularly in sectors that are sensitive to changes in government policies, said Mr Ekpawin.
If the Constitutional Court orders Mr Pita to suspend his duties as a member of parliament immediately, stocks related to the Pheu Thai Party and firms that might be affected by the MFP’s proposed energy price structure, namely CP All, Gulf Energy Development, GPSC and BDMS, would see an increase in their share prices, he said.
As the Thai bourse has contracted by 10.6% year-to-date, some analysts suggested investors switch their investments to other markets, notably Vietnam.
Jessada Sookdhis, chief executive and founder of Finnomena, said international stock markets are attractive at the moment. For example, the Vietnamese stock market looks cheap, said Mr Jessada.
“Vietnam has structural factors that support strong long-term growth, even though it was somewhat affected by the cyclical global economic slowdown,” he said.
In terms of cheap but good fundamental assets, the Vietnamese stock market presents very interesting investment opportunities, said Mr Jessada.
Any outcome is positive for the stock market because it provides clarity about politics. KITPON PRAIPAISARNKIT Vice-president, UOB Kay Hian
