Bualuang Securities has released its latest outlook on Thailand’s economic and equity market prospects, emphasizing the significant role of political uncertainty in shaping the country’s fiscal trajectory and investment sentiment. The report details two scenarios based on the extent of the “policy gap” that could arise from potential disruptions in the political landscape.
Scenario 1 (Base Case):
Assuming the next general election occurs as scheduled (between February 1–8, 2026) and a new government is formed by May 2026, Thailand faces unavoidable short-term economic pressure. The dissolution of parliament would immediately halt ongoing stimulus measures (such as “Kon La Krueng Plus Phase 2”), while public investment disbursement could shrink by 30–40% from normal levels during the caretaker period. Consequently, GDP growth is expected to slow in Q1/2026, creating a “soft patch.” However, once the new government is operational, fiscal disbursement and economic stimulus are expected to accelerate in Q3/2026 during a “catch-up quarter.” Bualuang maintains its GDP growth forecast for 2026 at 1.6% YoY, with an anticipated recovery in the latter half of the year.
Scenario 2 (Worse Case):
If border tensions with Cambodia escalate, leading to election delays and a government not formed until late Q3/2026, the impact would intensify. A prolonged period without a functioning government would not only freeze the current fiscal year’s budget but also delay preparation for the 2027 budget. Private sector investment decisions would be put on hold, disrupting economic recovery momentum. In this scenario, Thailand’s economy would face a prolonged slowdown, with GDP growth for 2026 reduced to just 1.2% YoY.
Thai Equity Market Strategy: Quality Over Hype
For the Thai stock market, Bualuang maintains a 2026 SET Index target of 1,440. The report cautions against the traditional pre-election rally narrative, historically associated with 2-3% gains in the 60 days leading up to an election, particularly among domestic consumption-related sectors like banking, retail, finance, and food. Structural challenges such as high household debt continue to compress profit growth and foster an environment of “slower growth,” reducing the positive impact of political campaign-led optimism.
Strategic Approach:
Investors are advised to look beyond short-term rallies. The first half of 2026 is expected to be subdued due to economic weakness from the policy gap, but this is seen as an accumulation opportunity ahead of a probable rebound in the second half, when fiscal disbursement accelerates.
The preferred strategy is “Quality Carry”—focusing on high-quality, high-dividend, and stable stocks with a proven track record of positive returns during dividend season over the past five years, acting as a buffer in volatile markets.
Sector and Stock Picks:
Bualuang favors the banking sector, citing attractive valuations and yield prospects. Notable top picks include KTB, with robust reserves and low PBV relative to ROE, and SCB, which leads in dividend yields—aligning with the dividend play theme for early 2026.
