Investors on edge in Asia’s worst-performing market after election

BLOOMBERG 

A week after Thailand’s pro-democracy parties garnered an historic win in national elections, investors are getting nervous over the formation of a coalition government.
The uncertainty has triggered an outflow of funds since the May 14 poll, worsening the rout in Asia’s worst-performing stock market this year and sending the baht lower against the dollar. While the coalition is formalising its alliance, the selloff may continue until there’s clarity on the new leadership.
“Investors will wait for any further positive political development” before making any investment decisions, said Rakpong Chaisuparakul, an analyst at KGI Securities (Thailand) Pcl in Bangkok.
The Move Forward Party, which won the most seats in the election, aims to win parliamentary support for a coalition of more than 300 members with its leader Pita Limjaroenrat as prime minister.
The benchmark SET Index added 1%, trimming its post-election retreat to 2%. The baht weakened 0.2% against the dollar, set for a fifth day of losses.
“Thai equities will still face selling pressure in the short term from the uncertainty about the formation of new government, and there’s deep concern about the Move Forward party’s urgent policies, such as an increase in the minimum wage, that would be negative for the market,” said Narongdach Juntarapaisarn, an analyst at Aira Securities Pcl in Bangkok. “The announcement of an MoU by the coalition parties in the new government should make its policy framework clearer to the market.”
Investors withdrew $513 million from the nation’s bond market for the first weekly outflow in a month, and sold $312 million of local equities, according to data compiled by Bloomberg.