The Stock Exchange of Thailand (SET) rebounded modestly on Tuesday as investors hailed the selection of a House speaker as a breakthrough in the political impasse, ahead of the parliamentary vote for a new prime minister later this month.
The SET index opened lower on Tuesday, but moved up to positive territory after Wan Muhamad Noor Matha of the Prachachat Party was named as speaker of the newly elected House of Representatives.
"The pressure period for the SET lasted more than a month and a half, related to uncertainties after the election," said Paradorn Tiaranapramote, first vice-president of Asia Plus Securities' (ASPS) research division.
Foreign investors were net buyers on the SET over the past couple of days, compared with net selling on other regional bourses, as investment sentiment improved. The baht appreciated to above 35 to the dollar yesterday, indicating fund flow into the Thai bourse, he said.
Nattapol Khamthakrua, director of the securities analysis department at Yuanta Securities, expects the Thai bourse to have limited upside and downside movement as concerns remain about legal challenges to the qualifications of Move Forward Party (MFP) leader Pita Limjaroenrat, the names of economic ministers, and changes in the coalition parties.
"There has been nearly two months of a political vacuum and the market is still awaiting the vote for the next prime minister between July 13-15," said Mr Nattapol. "The stock market favours political clarity so if the coalition parties hold to form a new government, the market will react positively."
KGI Securities said investors would continue to monitor the political situation until a prime minister is selected.
"Our baseline view remains the Thai Senate will not support the Move Forward Party leader to be PM," KGI said in a research note.
ASPS said despite the political uncertainty, the SET rose to 1,506.84 last week, increasing by 40 points or 2.7% in three days, showing a small sign of positive sentiment.
Foreigners were net buyers in three out of four recent days worth 1.4 billion baht, the largest amount in the region, while North Asian markets reverted to selling after days of buying.
The baht rose by 1.08% from June 28 to July 3 to 35.23 to the greenback, making it the strongest currency in the region over that period. The currency rose beyond 35 baht to the dollar yesterday morning.
"The SET index should fluctuate less thanks to these factors. We see a resistance range at 1,540 points and a support range of 1,480," said ASPS.
The SET closed yesterday at 1,515.31 points, up 0.56%, in trade worth 44.3 billion baht.
