By Ankur Banerjee
SINGAPORE, July 27 (Reuters) – The worst performing Asian stock market just can’t catch a break, with foreign investment outflows totaling $3.58 billion since the start of the year, in the biggest retreat since 2020.
More than two months after Thailand’s election, the country is yet to swear in a prime minister and with China’s anemic economic recovery casting a shadow on Southeast Asia’s second-largest economy, investors have been taking their money elsewhere.
Thailand’s SET index has underperformed the broader market, sliding 9% so far this year, making it the worst performing stock market in Asia.
The index has slipped 2.4% since the election results came out in mid-May, while the MSCI’s broadest index of Asia-Pacific shares outside Japan is up 4.5% in the same period.
The political impasse took a new turn when the parliament postponed on Tuesday a vote for the next prime minister after election-winning Move Forward Party stepped aside last week to let runner-up Pheu Thai try to form the next government.
Pheu Thai is backed by the former telecoms tycoon and ex-prime minister Thaksin Shinawatra, who plans to return to the country next month from his self-exile.
Kasem Prunratanamala, head of Thailand research at CGS-CIMB in Bangkok, expects the market to move sideways until the next prime minister is elected. “I think it’s quite likely that Pheu Thai may get enough support, although it may not be at their first attempt.”
Prunratanamala said market sentiment should improve once political uncertainty is resolved as “the market believes that Pheu Thai is more pro-business, and it could come up with some stimulus measures.”
Shares of firms linked to the Pheu Thai party fell sharply immediately after the election results in May but have since rebounded.
Pheu Thai is widely expected to nominate Srettha Thavisin, a former CEO of property developer Sansiri Pcl, for the post of prime minister. And shares in Sansiri have rebounded by over 20% from lows struck after the election.
Shares in SC Asset Pcl, another property developer that counts Thaksin’s daughter Paetongtarn Shinawatra as its largest shareholder, are up 10%.
Darunrat Piyayodilokchai, head of Thailand equities at abrdn, said consumer and domestic plays will benefit the most as Pheu Thai is likely to roll out policies that will boost domestic consumption.
Pre-election pledges such as the minimum wage hike and the lowering of electricity tariffs, if implemented, should increase the purchasing power of Thai consumers and would be positive for sectors such as retail and F&B, Piyayodilokchai said.