The Thai stock market is showing renewed hope after unofficial election results indicated a victory for the Bhumjaithai Party, causing the SET Index to surge past 1,400 points in response to the prospect of forming the most stable government in decades.
TISCO points to this phenomenon as a clear sign that investors are "buying" Thailand's future, driven by the return of political confidence at a time when global stock markets are entering a consolidation phase and face valuation risks.
However, they believe the Thai stock index has the potential to reach the 1,500-point target, provided the economic engine is strong. Thus, the new government faces urgent tasks to restore liquidity and rebuild investor confidence.
Paiboon Nalinthrangkurn, Chief Executive Officer of TISCO Securities Company Limited He revealed that the Thai stock market rose above 1,400 points with heavy trading volume following unofficial election results, reflecting that the market is "buying the future" of the Thai stock market.
From a valuation perspective, he sees the Thai stock market regaining appeal as a "safe haven" because global and technology stocks have already risen significantly and may be entering a consolidation phase.
Moreover, excluding the impact of DELTA shares, Thai stocks are among the cheapest in Asia, with a price-to-earnings ratio around 12.9 and an average dividend yield of 4%. Additionally, listed companies' profits show recovery signs, with the first nine months' profits surpassing the entire previous year's profits.
He assesses that the index could test 1,500 points in the future if the new government demonstrates seriousness in addressing structural economic problems, thereby restoring market confidence.
A key condition is that the Anutin 2 government's economic policies must address structural issues with clear, actionable plans that can be implemented immediately. Investors want to see genuine efforts to tackle Thailand’s structural economic challenges.
Specifically, problems like high debt levels, low savings and investment rates, and overall low economic productivity, along with policies that enhance the manufacturing and agricultural sectors’ potential through innovation and modern technology.
As an urgent proposal to revive the stock market, he suggests the government should push forward new tax relief measures, such as the TISA (Thai Individual Savings Account) model, which could attract more stock market investments.
However, the program design must provide real incentives, be easy to understand, and avoid complicated conditions that limit participation. It should separate the investment limit from existing retirement savings, propose a new investment ceiling with full tax relief up to 500,000 baht, and require a five-year holding period to draw funds back into the market and create long-term stability.
Paiboon also emphasized the importance of the "Wealth Effect," the impact of rising stock markets on investor wealth, noting that a 10% increase in Thailand’s market capitalization would raise investor wealth by over 1.2 trillion baht.
This would psychologically encourage spending and economic circulation, directly stimulating the economy with substantial funds. Combined with economic multipliers, it is expected to boost GDP by up to 1% without any government budget expenditure.
. Methus Rattanasorn, Head of Economic Analysis at the TISCO Economic and Strategy Unit (TISCO ESU) He revealed that although economic fundamentals remain fragile, investment sentiment in the capital market has moved in the opposite direction, with the Thai stock index rising sharply by 40 points after unofficial election results showed the Bhumjaithai Party winning a landslide victory.
This reflects the prospect of forming the most stable government in decades, unlike past coalition governments that often did not complete their four-year terms, leading to renewed investor confidence.
Currently, Thailand’s growth potential is steadily slowing, now at only about 2.3%, indicating deeply rooted structural problems.
Key engines like the export sector, especially the automotive industry, are losing competitiveness, while the tourism sector, once a strong performer, is being overtaken by competitors like Japan, Indonesia, and Vietnam.
Additionally, Thailand faces a demographic structural crisis with a declining working-age population and fewer young people being born, contrasted with an expanding elderly population, reducing the main drivers of GDP growth. The new government’s challenges are therefore considerable.
Methus notes that all parties have populist policies, and short-term economic stimulus measures remain necessary, especially the "Khon La Khrueng Plus" program, which is expected to support GDP growth by about 0.15-0.2%, raising the growth target this year from 1.6% to 1.8%.
However, fiscal policy still faces constraints from tight budgets and public debt reaching 65%. Without serious reforms, debt could hit a 70% ceiling within 1-2 years, affecting the country's credit rating.
With limited resources, Thailand should focus on attracting foreign direct investment (FDI). Although Asia’s investment share has declined, BOI applications still show Thailand’s appeal. The key challenge is adjusting conditions so these funds create jobs and better connect with domestic supply chains.
On monetary policy, the Monetary Policy Committee has limited "ammunition" left. The interest rate cut is expected to be delayed until April instead of February, with future moves depending on the US Federal Reserve's actions.
A major risk is delay in forming the government; prolonged processes could disrupt the 2027 budget and slow public spending in the last quarter. But if everything proceeds smoothly, Thailand's economy could grow better than currently forecasted.
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