Thai stocks reverse gains as opposition parties secure strong majority in election

Thai stocks roseate concisely portion the Thai baht gave up aboriginal gains aft momentarily touching a three-month precocious connected Monday. Investors are awaiting much tangible outcomes of Sunday's wide election, aft preliminary results showed the country's pro-democracy parties secured a beardown majority.

It remains to beryllium seen which parties volition yet signifier the caller Thai authorities arsenic a conjugation is needed since some absorption parties don't person capable votes to signifier a caller government.

A calculation by Reuters based connected information from the country' Election Commission suggests the anti-military Move Forward party, led by Thai businessman Pita Limjaroenrat, would triumph the astir seats, followed by the Pheu Thai party.

If confirmed, this would correspond a resounding rejection of pro-military parties led by erstwhile premier curate Prayut Chan-o-cha, ending 9 years of pro-military rule.

Official certification of the results are expected to beryllium finalized wrong 60 days aft the polls close.

The Set Composite Index concisely traded 0.3% higher astatine the unfastened connected Monday earlier paring gains and was past trading 0.2% lower.

The Thai baht strengthened 0.6% connected Monday to 33.73 against the U.S. dollar, its strongest level since February earlier this year.

"We person to carnivore successful caput that determination person been a batch of tricky concern successful Thai authorities implicit the years," Thitinan Pongsudhirak, prof of authorities and planetary relations astatine Chulalongkorn University told CNBC's Sri Jegarajah successful Bangkok.

"The largest winning enactment should beryllium capable to signifier the government, but that's not the case. There are 3 steps to it: Winning the elections is 1 thing, forming the authorities is the 2nd proposition and the biggest situation to get you connected Prime Minister," helium added.

The Pheu Thai enactment has enactment guardant Paetongtarn Shinawatra — the girl of erstwhile Thai premier curate Thaksin Shinawatra — arsenic its campaigner for premier minister, portion Reuters reported that Limjaroenrat besides has "set his sights acceptable connected being premier minister."

Separately, Thailand's gross home merchandise for the archetypal 4th grew 2.7%% year-on-year, beating expectations of a 2.3% rise.

Ahead of the election's results, Citi economist Nalin Chutchotitham wrote successful a Sunday enactment that Thailand's economical outlook is apt to beryllium small changed successful the pursuing months.

"We expect Q1 GDP maturation to stay tepid, but capable to awesome that the system bottomed retired successful Q4 2022, which would enactment the BOT [Bank of Thailand]'s complaint hike," she said.

Thailand's cardinal bank's argumentation presently stands astatine 1.75%, and volition adjacent conscionable connected May 31. Citi expects the Bank of Thailand to rise its benchmark involvement complaint by different 25 ground points.

Chutchotitham besides expects the caller authorities to beryllium confirmed successful August and the economy's full-year 2023 fiscal fund slated to beryllium announced sometime successful the last 4th of the year.

"Over the medium-term, economical outlook could spot accrued risks of populist economical policies which could rise questions connected aboriginal fiscal discipline," she wrote.

According to Pongsudhirak, determination could beryllium unrest "if there's a systematic subversion, distortion oregon manipulation of the results we saw yesterday" since Sunday's elections were "a profound, earth-shaking effect for Thai authorities implicit the past 2 decades."

"We person been stuck with this Thaksin, anti-Thaksin cycle," the Chulalongkorn University prof said. "Now, with the Move Forward Party's triumph yesterday, the Thai radical person spoken up for alteration and reform."

He pointed retired that the Move Forward enactment is "unlike the Thaksin party."

"First of all, it is not aligned to Thaksin — it has a precise antithetic agenda, it is not a populist enactment per se. It wants organization reforms of Thailand's accepted institutions, the military, the monarchy and the judiciary – the basal causes of Thailand's situation the past 2 decades."

Pongsudjirak said helium expects a much market-based, progressive economical argumentation absorption from immoderate Move Forward-led government, that is pro-foreign investment, anti-monopoly, with much contention being enforced and small- to medium-sized companies "getting a amended stock of the deal."

— CNBC's Jihye Lee contributed to this report.