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Thailand’s incumbent conservative coalition, which came to power through a coup in 2014, lost the lower house elections to pro-democracy opposition parties who have formed a coalition. The stunning victory of the opposition in the Thailand elections comes after the 2020 unrest and represents a significant shift in public opinion.
The Move Forward Party, led by 42-year-old Harvard graduate Pita Limjaroenrat, won 151 of the 500 seats in the lower house. Whereas Pheu Thai, founded by former-Prime Minister Thaksin Shinawatra, won 141 seats. The two parties, combined with four other pro-democracy parties, would control 309 seats in the lower house, the House of Representatives.
Move Forward’s Limjaroenrat said at a press conference, “The people of Thailand have already spoken their wish, and I am ready to be the prime minister for all of you whether you agree with me or you disagree with me.”
While there is a clear outcome, there are still 250 seats in the Senate that are completely appointed by the military-backed government. They are allowed to vote on the prime minister. Additionally, reports indicate that the new coalition will not include any of the parties from the now-dissolved conservative government.
Thailand election outcome – good or bad for markets?
While the preliminary results for the Thailand election are out, official results may take up to another two months. In a pre-election insight, DBS said, “First, there could be delays in forming the new government due to the prolonged time needed to agree on a coalition, hindering policymaking. Second, any large-scale protests following the elections – that were seen previously – could also disrupt economic activity.”
Thailand’s stock market has been the worst performing in Asia this year, and the election results were expected to give a push. The SET Index ended 1.28% lower on Monday, May 15.
Darunrat Piyayodilokchai, Head of Thailand Equities, Asian Equities, at abrdn, says: “The Thai equity market is experiencing some unexpected corrections following the election results. Sectors impacted by the opposition MFP party’s anti-monopoly and liberalization policies have been particularly hard hit. These include utilities, for example. On the other hand, trade and tourism are proving more robust, as growth in the tourism sector remains unbroken.”
Pheu Thai previously said it would give cash handouts to 55 million citizens if it comes to power, and the money will be distributed using tokens and blockchain-based digital wallets. Some of the other promises include an increase in minimum wages, a minimum monthly household income guarantee and policies to boost farm income and give farmers a debt moratorium for three years.
A lot of other parties too had freebies and cash handouts in their election manifesto, but it is not yet clear how they would be funded. The country’s household debt was a major talking point in the days leading up to the election. The country has one of the highest ratios of household debt against GDP of 87.5%, as per the Bank of International Settlements, with one in every three Thai citizens are in debt.
Meanwhile, the Move Forward party, which wants to amend rules to discuss Thailand’s royal family, said that it too would work on increasing minimum wages, setting limits on informal debt restructuring and subsidising housing loan and rent payments. While Move Forward’s Limjaroenrat has claimed victory, there is still uncertainty as he would need 376 votes in a joint session of the lower house and the military-appointed Senate.
“Investors will focus on the outcomes of coalition talks, as well as how specific policy proposals will play out as talks begin.” Morgan Stanley economists said in a note.
Meanwhile, Thailand’s GDP growth in Q1 was stronger than expected thanks to the recovery in tourism.
“Most parties announced policies to boost domestic consumption and a focus on infrastructure investment before the election. Therefore, we believe that with the final composition of the government, there will be a realignment of the economic agenda that will promote the continued growth of the Thai economy,” said abrdn’s Piyayodilokchai.
