The Thai stock market experienced a significant 1.71% drop on Wednesday, June 18, due to escalating political tensions between Thailand and Cambodia. The decline was driven by a substantial sell-off by foreign investors, who net sold 1.13 billion baht. Piriyaphon Kongwanich, Director of Fundamental Analysis at Bualuang Securities, attributed the fall primarily to political issues, particularly the border tensions.
A leaked audio clip of a conversation between Prime Minister Paetongtarn Shinawatra and Cambodian Senate President Hun Sen fueled concerns over rising political tensions. Gun Hathaisattha, Investment Strategist at CGS International Securities, noted that the market’s reaction was also influenced by the potential Cabinet reshuffle and uncertainty over whether Deputy Prime Minister and Interior Minister Anutin Charnvirakul would shift to the opposition. Reports suggested that Anutin might withdraw from the government, further destabilizing the parliamentary situation and contributing to market instability.
Rumors of Anutin’s withdrawal from the coalition government have heightened concerns, as his move could reduce the government’s parliamentary majority to a narrow margin. With critical decisions requiring around 248 votes in parliament, this instability has driven further sell-offs by foreign investors. Investment strategist Wijit Arayapisit of Liberator Securities noted that internal conflicts within the government, particularly between the Bhumjaithai and Pheu Thai parties, significantly contributed to the market’s decline.
Market drop tied to political issues
Prakit Sirivattanaket, Managing Director of Merchant Partners Asset Management, emphasized the impact of the leaked audio clip on the sharp market drop, explaining that the content of the clip severely affected investor confidence. The ongoing political uncertainty, coupled with economic concerns, poses a risk of further declines in the Thai stock market.
In response to the crisis, the Thai Stock Exchange has announced a four-point plan aimed at restoring market confidence. Brokers have urged caution in this volatile environment and have outlined strategies for investing in the Thai stock market amid the turmoil. Yuanta Securities recommends rotating into Global Play sectors, such as upstream energy, refining, and petrochemicals, or allocating funds to Defensive Play segments, including the REIT group.
Investors can then look to accumulate large-cap stocks with strong earnings growth once the political landscape becomes clearer. The SET 50 index fell more than 1% to 690 on Thursday, hitting its lowest level since early April. Losses were broad-based across the bourse, with notable declines from Advanced Info Service (-2.2%), Gulf Energy Development (-3.1%), CP All (-3.9%), and Bangkok Dusit (-2.9%).
The benchmark index has now declined by approximately 23% this year.
