Top Fund Says Thailand Election Will Boost Stocks Despite the Drama

(Bloomberg) -- Thailand is braced for more political drama from a court ruling that may disband a party contesting this month's election. One of the nation's top funds says the poll will boost stocks despite the tension.

The new government is likely to implement investment-friendly policies that bolster the economy, said Dennis Lim, the president of MFC Asset Management Pcl, which oversees about $15 billion of assets. That should spur equities providing the next administration is stable, he said.

“Whoever comes to power, they will get a nice honeymoon period,” Lim said in an interview Tuesday in Bangkok, adding he expects “a lot of good news to be dribbled into the market” in the six to nine months after the vote.

Thailand's benchmark SET Index rose an average of 6.6 percent in the month after four major polls dating back to 2001, according to data compiled by Bloomberg. So far this year, the index has climbed about 4 percent, trailing a 9.3 percent advance in the MSCI Asia Pacific Index. International investors sold a net $82 million of Thai equities Wednesday, the eighth straight day of outflows, according to data compiled by Bloomberg. So far this year, they have pulled out a net $135 million after a record selloff of $8.91 billion in 2018.

The Constitutional Court's ruling on whether to dissolve the Thai Raksa Chart party, which is linked to exiled former premier Thaksin Shinawatra, is due at 3 p.m. in Bangkok on Thursday. The Election Commission called for its break up over a failed bid to install a Thai princess as its candidate for prime minister.

Thaksin or his allies have won every election since 2001, only to be unseated by the courts or the military. Parties linked to him have been dissolved in the past, leading to deadly street protests.

This time around the dissolution may have a limited impact on Thai equities, as most investors have already factored it in, according to Lim. Consumer spending and tourism will remain the major drivers for Thai economic growth, he said.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Sunil Jagtiani, Margo Towie

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