The Thai stock market experienced a sharp decline on Wednesday, falling 1.71% amid escalating political tensions between Thailand and Cambodia. This downturn has been attributed primarily to significant sell-offs by foreign investors. On June 18, the SET index dropped by 19 points, closing at 1,094.58 points with a trading volume of 36.04 billion baht.
Foreign investors net sold 1.13 billion baht as tensions mounted, particularly over a leaked audio clip of a conversation between Prime Minister Paetongtarn Shinawatra and Cambodian leader Hun Sen. Piriyaphon Kongwanich, Director of Fundamental Analysis at Bualuang Securities, stated that the fall in the stock market stems mainly from rising political tensions, exacerbated by the leaked audio clip. “Concerns have also been heightened regarding the Interior Ministry, with reports suggesting Deputy Prime Minister Anutin Charnvirakul may withdraw from the government, potentially weakening its parliamentary strength,” he noted.
Investment strategist Gun Hathaisattha from CGS International Securities echoed similar sentiments, highlighting that heavy selling followed concerns about the Thai-Cambodian border conflict and uncertainty over a Cabinet reshuffle.
Thai market faces political turbulence
“The escalating tensions and political instability, particularly regarding the Bhumjaithai Party’s position, have contributed to market volatility,” he said.
Wijit Arayapisit of Liberator Securities emphasized that internal government conflicts, particularly between Bhumjaithai and Pheu Thai Party, might lead to a significant shift in the political landscape if Bhumjaithai decides to move to the opposition. “This shift would narrow the government’s majority, potentially making it difficult to pass key legislation,” he explained. Prakit Sirivattanaket, Managing Director of Merchant Partners Asset Management, added that the market’s sharp drop was precipitated by the leaked audio clip.
“The market initially showed a slight positive trend, but the appearance of the clip caused a severe downturn as investors reacted to its content,” he explained. Amid these tensions, the Thai government has issued a statement reaffirming its commitment to national sovereignty, while conversations continue around the repercussions of the leaked call between Thai and Cambodian leaders. As political uncertainty continues to weigh on the market, brokers are urging caution, with some predicting that the index could fall further to around 1,050 points if the situation does not stabilize.
Investors are advised to consider rotating into Global Play sectors or Defensive Play segments until the political landscape becomes clearer.
