Once the royal decree officially announcing the dissolution of parliament is issued, Thailand's path enters a "new election" mode, with voting expected to take place in early February 2026.
This significant political change affects not only the parliamentary arena but also directly impacts economic stability, most importantly the Thai stock market, which now faces a new wave of uncertainty due to the decision to dissolve parliament.
Securities analysts from various firms have differing views and strategies to cope with the "political vacuum" before a new government forms. Some brokers clearly point to risks of economic stagnation and warn of foreign capital outflows, while others see this as a golden opportunity to buy stocks in anticipation of the "Election Rally" that typically follows.
Research department of Asia Plus Securities Company Limited. Their analysis states that the last possible date to hold the election is no later than Tuesday, 10 February 2026. Traditionally, general elections are held on Sundays, so the new election is expected on either 1 or 8 February 2026.
The impact on Thailand's economy involves increased uncertainty over several issues, such as the Khon La Khrueng Plus Phase 2 program, the TISA project, the 40-baht flat fare for the electric train, new mega projects, the Thai-Cambodia border problem, and retaliatory tax negotiations with the U.S.
This raises risks in Q4 2025 from a "policy paralysis" situation before the new election, potentially depressing confidence. If Thailand's GDP growth falls below 0.6%, there is a chance of a technical recession, meaning two consecutive quarters of negative GDP growth.
Historical data on previous dissolutions show that the Thai baht fluctuated both before and after dissolution, tending to weaken slightly by about 0.8% before and 0.6% after dissolution on average. Additionally, in some one-month periods, the baht appreciated over 2.0%, which could cause rebounds or some weakening.
Regarding foreign investment flows one month after dissolution, capital outflows (Net Sell) frequently occur, happening 5 times out of 6 cases, with an average net outflow of -10.859 billion baht.
The Thai stock market's historical performance from 1996 to 2023 shows that returns in the one month after dissolution are mostly negative except once in 2013, with an average one-month return after dissolution at -6.7%.
: Analysis from Krungsri Securities Public Company Limited. They opine that although the dissolution announcement came earlier than the market expected, the recommended strategy is to "stay on the buy side," as the main outlook leads to an election producing a more stable government.
Based on past election cycles that typically experience an Election Rally (in 2005, 2007, and 2011) with gains of 3-5% within 5-8 months, the key investment themes suggested include:
Pi Securities Public Company Limited. Their analysis states that the Prime Minister has announced the dissolution of parliament. Following this, elections must be held within 45-60 days, expected in the first week of February 2026. From now until a new government forms, the current government remains in place, but ongoing projects requiring the new government will not proceed.
Therefore, measures like TISA previously considered may be shelved until a new finance minister takes office. In the short term, investors may focus on political uncertainty and may choose to take profits from stocks, but it is believed this situation will be brief, with investors soon returning to consider stimulus measures from the new government.
Historically, the stock market tends to rise before elections, with sectors showing strong returns before and after elections including retail and telecommunications. If short-term panic occurs, it is seen as an opportunity to accumulate stocks in these sectors. Additionally, commercial banks are attractive due to high dividends combined with reasonable share prices.
Nonetheless, short-term political uncertainty may pressure the stock market, but the downside is expected to be limited because ultimately expectations will focus on the new government and stimulus policies.
Strategically, if there is a market pullback, it is an opportunity to accumulate stocks in retail (CPALL, HMPRO), shopping centers (CPN), commercial banks (BBL, SCB), finance (MTC, TIDLOR), and tourism (CENTEL, MINT).
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