New Thaksin controversy hits Thai stocks’ prospects

Global and local politics, including the Election Commission’s (EC) decision to accept a case against Thaksin Shinawatra for dominating the internal issues of the ruling Pheu Thai Party, are limiting the upside for the Stock Exchange of Thailand (SET) after the Thai index briefly topped the 1,500-point range on Friday, say analysts.
Locally, political tensions have risen since the EC accepted the petition seeking Pheu Thai’s dissolution.
Independent lawyer Thirayut Suwankesorn filed the complaint asking the Constitutional Court to order Mr Thaksin, the country’s former premier, and the ruling party to halt attempts to undermine the country’s constitutional monarchy and of violating Article 49 of the Constitution.
The EC found that the complaints have merit. On Oct 18, the commission appointed a committee to investigate the case that could lead to the dissolution of the party.
At present, the key legal complaints against Pheu Thai are that there is possible domination by Mr Thaksin on the party’s internal issues and a possibility that it is jeopardising Thailand’s constitutional monarchy, said Rakpong Chaisuparakul, senior vice-president of KGI Securities (Thailand).
“We believe that there will be a few weeks before more developments on the political complaints against the Pheu Thai party come out,” he said.
In terms of global politics, Chinese president Xi Jinping on Sunday unexpectedly told his military to prepare for a conflict. He did not elaborate, but Mr Rakpong suggested most investors were assuming the Chinese leader was referring to rising tension between China and Taiwan.
Meanwhile, a survey suggested Republican candidate Donald Trump was making gains on Kamala Harris once again.
“China needs to be vigilant on the possible consequences if Mr Trump wins the [US presidential] election next month,” Mr Rakpong noted.
In the Middle East, geopolitical tensions may rise further if the conflict between Israel and Iran and its proxies escalate, hurting oil supplies.
“In the near-term, Thai and global politics have become the key issues to cap the stock market’s upside,” Mr Rakpong said.
According to Asia Plus Securities (ASPS), the EC’s probe into Mr Thaksin and Pheu Thai is expected to be concluded within 30 days, although it could be extended by another 30 days.
If the EC rules that Pheu Thai must be dissolved, the EC will forward the case to the Constitutional Court for further consideration, said the brokerage.
Last Friday the SET index was hit by fresh political uncertainty, falling from a high of 1,506.82 points to finish at 1,489.82 points.
“While waiting for the court’s ruling, the SET may fluctuate as foreign fund outflows continue,” ASPS said in a research note.