The recent dissolution of Thailand’s parliament on December 11, 2025, in preparation for elections as early as February 1, 2026, has elevated political and policy uncertainty, posing risks to both the economy and the stock market. Analysts from Asia Plus Securities note that policy disruptions could suppress economic growth in the fourth quarter of 2025 and potentially increase the risk of recession if GDP growth dips below 0.6% year-on-year.
Historical data indicates that such political events tend to negatively impact the Thai stock market in the short term and trigger foreign capital outflows. In the current environment, Asia Plus suggests a defensive investment strategy, favoring stocks with high dividend yields like SCB (~8%), as well as companies with robust earnings such as ERW and TOP, the latter potentially benefiting from increased fuel demand due to colder weather and broader geopolitical tensions.
Thailand’s stock market has struggled over the past decade, plagued by persistent foreign outflows in 8 of 10 years. This is attributed to the market’s perceived lack of growth prospects compared to neighbors like Vietnam, Taiwan, and South Korea. The withdrawal of institutional support—following the removal of Long-Term Equity Funds (LTF)—has further reduced long-term liquidity, making major index rallies unlikely without new positive catalysts.
Daol Securities noted the ongoing downward pressure on the SET Index, with support levels at 1,250 and 1,242 points, highlighting that political uncertainties could create a “policy vacuum.” This could specifically affect sectors benefiting from economic stimulus measures and public spending. In contrast, defensive stocks and banks are expected to outperform during this period of volatility.
Kingsford Securities projects increased downside risk for the SET, with immediate support at 1,212–1,228 points and resistance at 1,260. The firm notes that, on average, the index has dropped 4.6% one month following the past five dissolutions of parliament. Despite the risk, stocks that benefit from election campaign activity—such as TKS, PLANB, VGI, CPALL, BJC, ADVANC, and TRUE—may offer speculative opportunities during the run-up to the polls.
