Bualuang Securities (BLS) wrote in its research that the current political situation in Thailand is likely to lead to the formation of a minority government, which would have a limited timeframe of no more than four months to operate.
Although there is a chance that the FY2026 Budget Act will be approved by the Senate as per procedure, the power limitations and the transitional government’s short tenure may constrain the use of the new budget. Moreover, if the House is dissolved and new elections are called, budget disbursement could face further delays.
Historical data shows that during general election periods, government investment disbursement typically drops by 30-40% compared to normal times.
Such delays are likely to affect GDP growth, particularly in 4Q25 and 1Q26, potentially reducing economic expansion by about 0.2%. This outcome suggests that even if the fiscal 2026 budget passes through all legal steps, but without sufficient political stability, the budget system may not be able to serve as an effective tool for economic stimulus.
BLS outlines two main political scenarios:
1) Bhumjaithai Party forms an alliance with the People’s Party (60% probability): Expect the Pheu Thai Party to have a high chance of dissolving the House, with new elections needing to be held by December this year (within 45-60 days after dissolution).
2) Pheu Thai Party forms an alliance with the People’s Party (40% probability): The government may function for about four months before dissolving the House at year-end, with elections held by February.
Regarding the stock market impact, if a government is formed quickly, the market may anticipate economic stimulus measures from the new administration. Historical statistics indicate that, among the ten most recent elections, the Thai stock market typically rises during the three months leading up to election day—a period known as a “pre-election rally”—delivering an average return of approximately 3%.
Sectors tied to domestic consumption such as banking, retail, finance, and food tend to benefit the most due to positive expectations for stimulus policies.
However, more recent data reveals that among the last five elections, a pre-election rally occurred only in two cases and mainly under conditions of political stability and clear economic growth momentum. This indicates that such rallies depend heavily on investor confidence in both the economy and political climate.
For the upcoming election, the probability of a robust pre-election rally seems limited due to several uncertainties. These include ongoing legal cases involving key political parties, sluggish economic prospects, and administration under a minority government for the next four months—all of which may weigh on overall investor sentiment.
BLS analysts maintain their year-end SET Index target at 1,280 points. The investment strategy therefore focuses on selective stocks with clear fundamentals and a defensive growth profile. WHA Utilities and Power PCL (SET: WHAUP), for example, is expected to begin recognizing revenue from its Data Center projects in industrial estates from the second half of 2025 into next year.
WHAUP also boasts compelling valuations, with a 2025 PER of approximately 12.5x, compared to peers like Global Power Synergy PCL (SET: GPSC) at 23x and B.Grimm Power PCL (SET: BGRIM) at 19x, while offering an attractive dividend yield of around 6%.
