Retail, banking and tourism sectors are expected to benefit from the policies of the new coalition government in Thailand, which is led by the Move Forward Party.
The party won the most seats in the general election held on May 14, 2023, ending nine years of pro-military rule.
The retail sector is likely to benefit from the proposed cash handouts, lower electricity and fuel costs, and increase in minimum wages that will increase the purchasing power of the Thai people. Some of the leading retailers in Thailand include Central Group, The Mall Group, Robinson Department Store and Big C Supercenter.
The banking sector is also expected to see an improvement in loan demand and asset quality, as the new government will likely ease some of the restrictions imposed by the previous military regime. The banking sector has been struggling with high levels of non-performing loans and low profitability due to the sluggish economy and political uncertainty. Some of the major banks in Thailand include Bangkok Bank, Siam Commercial Bank, Kasikornbank and Krung Thai Bank.
According to analysts, the party’s policies focus on boosting the efficiency of the economy by reducing monopolies and increasing welfare for all. This should increase people’s purchasing power and improve the economy. Some of the stocks that are poised to gain from this policy direction are:
- Central Retail Corporation (CRC): The largest retail conglomerate in Thailand, which operates department stores, supermarkets, convenience stores and e-commerce platforms. CRC reported a 12% increase in revenue to 63.2 billion baht and a 75% surge in net profit to 2.31 billion baht in the first quarter of 2023.
- Krungthai Bank (KTB) and Kasikornbank (KBANK): Two of the largest commercial banks in Thailand, which offer a wide range of financial services to individuals and businesses. KTB and KBANK are expected to benefit from the increased lending demand and lower non-performing loans as the economy recovers. KTB reported a 25% increase in net profit to 9.8 billion baht in the first quarter of 2023, while KBANK reported a 21% increase in net profit to 13.6 billion baht in the same period.
- COM 7: A leading distributor and retailer of mobile devices and accessories in Thailand, which operates under the brands Banana IT, BNN and iStudio. COM 7 is expected to benefit from the growing demand for smartphones and gadgets as well as the expansion of its store network.
- KCE Electronics (KCE): A manufacturer of printed circuit boards (PCBs) for various industries, such as automotive, industrial, medical and telecommunications. KCE is expected to benefit from the rising demand for PCBs as well as its competitive edge in technology and quality.
On the other hand, some of the sectors that are expected to face challenges from the new government’s policies are:
- Energy: The Move Forward Party has pledged to reform the energy sector by promoting renewable energy sources and reducing dependence on fossil fuels. This could affect the profitability and growth prospects of power conglomerates such as Gunkul Engineering (GUNKUL), Gulf Energy Development (GULF), B.Grimm Power (BGRIM) and Global Power Synergy (GPSC).
- Construction: The Move Forward Party has pledged to increase the minimum wage and support small and medium-sized enterprises (SMEs). This could increase the labor costs and competition for construction companies such as Sino-Thai Engineering and Construction (STEC) and CH.Karnchang (CK).
- Telecommunications: The Move Forward Party has pledged to break up monopolies and support fair competition in various sectors, including telecommunications. This could affect the market share and pricing power of dominant players such as Intouch Holdings (INTUCH), Advanced Info Service (ADVANC) and True Corporation (TRUE).
The Thai stock market is likely to remain volatile in the short term as investors await more clarity on the formation of the new government and its policy implementation. However, in the long term, analysts expect that a stable and democratic government will be positive for the Thai economy and market sentiment.