Bangkok Stock Market Plunges: Political Crisis, Trade War Fears
Rising political tensions in Thailand are casting a shadow over the nation’s stock market and jeopardizing ambitious government projects, including a proposed entertainment complex and casino. This assessment comes from China Galaxy Securities (CGS), which has lowered its 2025 target for the Stock Exchange of Thailand (SET) index.
The source of the unease stems from an impending no-confidence vote against Prime Minister Paetongtarn Shinawatra, scheduled for the final week of March. While Kasem Prunratanamala, head of research at CGS International Securities, believes the prime minister is likely to survive the vote, the political wrangling between the ruling Pheu Thai Party and its coalition partner, the Bhumjaithai Party, is creating uncertainty. This friction, Mr. Kasem argues, could significantly impede progress on key government initiatives, including the much-anticipated entertainment complex. The uncertainty itself, regardless of the vote’s outcome, makes investors hesitant and could depress market activity.
Adding to the domestic pressures are international trade concerns. Thailand faces the potential for retaliatory tariffs from the United States, a scenario that could significantly impact the Thai economy. According to the Bank of Thailand, the U. S. represents Thailand’s largest export market, accounting for a substantial 18% of total exports in the previous year—a marked increase from 13% in 2019. This growing trade imbalance has resulted in a record-high trade surplus for Thailand with the U. S., reaching 6.6% of GDP in 2024, up from just 2.5% in 2019. Citing data from Worldpopulationreview.com, Mr. Kasem notes that Thailand ranked 11th globally in terms of its trade surplus with the U. S., which swelled to a staggering $35 billion last year, a significant jump from $29 billion in 2023.
While Mr. Kasem acknowledges that Thailand may not be the immediate target of U. S. trade actions—given its surplus with the U. S. is smaller than that of countries like China, Mexico, and Vietnam—the mere possibility of such tariffs introduces a level of risk that could further dampen investor confidence. This potential for trade disputes, combined with internal political pressures, has led CGS to revise its year-end SET index target downwards from 1,530 points to a more conservative 1,380 points.
In light of these combined domestic and global headwinds, the outlook for the Thai stock market appears tempered. While Mr. Kasem believes the downside risk remains relatively limited, he doesn’t foresee any significant positive catalysts in the short term. One potential glimmer of hope lies in the Finance Ministry’s plan to extend tax deductions on certain long-term equity funds, allowing investors to deduct up to 500,000 baht. However, CGS believes this measure is unlikely to significantly stem redemptions, as many investors already hold significantly more than the deductible amount.
The confluence of political uncertainty and the looming threat of trade disputes creates a complex and challenging environment for the Thai economy. The future of major projects like the entertainment complex hangs in the balance, while the stock market navigates a landscape fraught with potential pitfalls. The coming months will be crucial in determining the extent to which these challenges impact Thailand’s economic trajectory.
