CLSA Securities reports growing optimism among investors regarding the Thai stock market, driven by heightened political stability but expressed desire to see structural reforms. At the recent Investors’ Forum in Hong Kong, CLSA engaged with ten investors who, while currently underweight in Thailand, expressed openness to increasing their exposure if more constructive policies are enacted.
Political Stability Key to Investor Sentiment
Investors highlighted the recent political transition—marked by Prime Minister Anutin Charnvirakul of the Bhumjaithai party—as a positive development, viewing it as a solution to recent political deadlock. However, CLSA notes the new government’s effective timeline of six months—including four months until house dissolution and two for elections—is likely too short to implement significant reforms. Meanwhile, the market expects imminent stimulus measures, which are anticipated to most benefit retailers. Stocks such as Central Pattana (CPN), CP ALL, CPAXT, and OSP garnered the most attention from Hong Kong’s investors.
Focus on Stimulus and Consumption
While specific details have yet to be released, government plans include the return of the co-payment (50:50) scheme for shopping and additional relief programs aimed at reducing living costs. Potential policy shifts may see the discontinuation of the Bt20 flat fare for rides, introduction of soft power initiatives, and casino legalization under consideration.
Sector-Wide Performance Driving SET Gains
Quarter-to-date, the SET Index gained 19%, buoyed by robust performance in electronics (+63%), transportation (+33%), construction (+33%), finance (+30%), and commerce (+18%). Notably, DELTA, dominating the electronics sector, surged 65% and contributed 60 points to the SET, while AOT and Thai Airways propelled transportation sector gains.
Elections Likely to Fuel Market Optimism
Reviewing patterns from past elections (2007, 2011, 2019), the SET Index typically climbed 2.2%-3.5% in the three months before polling, with commerce outperforming. In contrast, the 2023 election saw a 6.2% drop amid reform uncertainty and coup fears. Looking ahead to the 2Q26 election, CLSA expects renewed hope and optimism to support the market. The firm sets a 2026 SET Index target of 1,355, with the current PE multiple (15.2x 2026 earnings) below the average for 2017-19 and 2022-25 (excluding the COVID period). Under-ownership in Thai equities suggests potential for a near-term PE expansion.
CLSA’s top picks include Bumrungrad, CP ALL, Central Pattana (CPN), Erawan Group (ERW), Minor International (MINT), and Muangthai Capital (MTC).
