Thailand’s stock market on edge ahead of PM’s court ruling; political uncertainty looms

The Thai stock market is closely watching the outcome of the Prime Minister’s court case, with potential political developments raising concerns about short-term pressure on the Thai stock index. The market closed on August 28 at 1,250.09 points, rising by 2.06 points (0.17%), reflecting the market's cautious outlook as it waits for the Constitutional Court’s decision on Paetongtarn Shinawatra’s case. The uncertainty surrounding the political situation could create short-term pressure on the Thai stock market, as this issue remains a key focus.

Deputy Finance Minister Paopoom Rojanasakul stated that the government is confident in its ability to complete its term, asserting that no issues will affect public trust. He reassured that all ministries, including the Ministry of Finance, remain focused on implementing policies to benefit the nation.

Two scenarios for "current or new PM"

Therdsak Thaveeteeratham, Executive Director at Asia Plus Securities, explained that the political situation could follow two main paths: the current Prime Minister staying or a new Prime Minister being appointed. The Pheu Thai Party is expected to maintain leadership, but the situation could be impacted by the party’s narrow majority, which might lead to a dissolution of parliament by the end of 2025 or early 2026.

Should the political situation remain in line with the system, the impact on the Thai stock market is expected to be limited, with the market likely to adjust to clearer political direction. The passage of the 2026 budget has already been approved by parliament, and easing pressure could accelerate government spending in Q4 2025, boosting liquidity. Furthermore, stock prices remain attractive, with potential for a policy rate cut boosting foreign inflows, supporting market liquidity and driving the index to 1,300 points.

“If political change follows the system, the market should remain calm. The political situation will become clearer, which will positively affect sentiment in the period of investor uncertainty,” Therdsak concluded. He advised investors to focus on stocks that are expected to benefit from falling interest rates, such as those in non-bank sectors, real estate, and high dividend-paying stocks.

Three possible court scenarios

Apichat Phubanjerdkul, Senior Director of Strategic Analysis at TISCO Securities, outlined three possible outcomes for the Prime Minister’s case:

1. Resignation—though unlikely, as this should have occurred earlier if that was the decision.

2. Court dismisses the case—in which case the Prime Minister would retain full qualifications to continue serving.

3. Negative ruling—the Prime Minister could be removed from office, which is the most likely scenario and would result in the entire Cabinet being dismissed, followed by a vote for a new Prime Minister in September 2025.

If the third scenario occurs, the stock market may experience short-term volatility due to political uncertainty and a power vacuum, with foreign investors possibly lacking clarity on the situation, which could temporarily dampen confidence.

However, once the political situation clarifies and a new Prime Minister is elected, markets typically recover, and the stock market index is likely to rise. The short-term support level for the stock index is 1,230 points, with an upside potential of 1,300 points if there are no further complications.

Apichat said that given the current market volatility, investors are advised to hold some cash while awaiting clarity on the court’s decision. If market fluctuations present negative outcomes, it could provide a buying opportunity, as the government will eventually settle and a new Prime Minister will be confirmed. Historically, markets tend to react positively once political clarity is established. The key strategy is to buy during volatility and hold until the new Prime Minister is appointed.

AIMC president: Political issues impact temporarily, stocks still viable

Chavinda Hanratanakool, President of the Association of Investment Management Companies (AIMC) and Managing Director of Krung Thai Asset Management (KTAM), stated that the country’s political situation and the Thai-Cambodian border tensions are temporary issues that will not significantly impact the market in the long term. She also highlighted the downward interest rate trend expected in 2025, which could offer further opportunities.

Chavinda emphasised that Thailand’s stock market remains an investable market, where funds use a strategy of adjusting investments by selling for profit during market rallies and buying during dips. The focus is on rotating stocks with high dividends and growth potential in line with the economic cycle, while remaining cautious with export-related stocks.

Opportunities for stock gains and potential changes

Gun Hathaisattha, Chief Investment Strategist and Economist at the Research Division of CGS-International Securities (Thailand), commented that if the court ruling on the Prime Minister’s case leads to the end of the current government and a shift to Chaikasem Nitisiri, the Pheu Thai Party’s candidate for Prime Minister, the stock market is unlikely to see a decline.

Historically, stock indices tend to rise when political outcomes are unfavourable to the current government. Gun noted that during previous administrations, including that of Prime Minister Srettha Thavisin and Prime Minister Paetongtarn Shinawatra, the stock market often responded positively when the political situation was uncertain.

Foreign investor buying pressure could be a factor, driven by a desire for political change. When events undermine the current government, the stock market tends to rise, and foreign funds are typically quick to buy in such scenarios.

For investment strategy, Gun suggests that if the Thai stock market index falls to a support level of 1,220 points, it would be a good opportunity to consider buying stocks like MOSHI, PTT, SCB, and KTB, as these companies represent a diverse mix of industries, helping to spread investment risk.

Gun also mentioned that domestic factors, particularly the court ruling on the Prime Minister’s audio clip case later this week, indicate that if the outcome is unfavourable to the current government, the stock market will likely experience short-term positive reactions, according to historical trends.