Thai stocks skyrocketed yesterday, posting the highest gain since March last year and breaking the 1,400-point barrier.
The Thai baht also advanced as investors took heart from the formation of a new Pheu Thai-led government, hoping for policy continuity.
The Stock Exchange of Thailand (SET) rose 2.79% to 1,403 points in late afternoon trade yesterday with a trading value of 71.5 billion baht.
The baht soared by as much as 1.5% against the dollar to 33.69 -- the strongest level since May last year.
As the timeline for the new cabinet was unveiled, optimism regarding economic policies from the new government should underpin sentiment in local markets, said Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand).
The new cabinet is slated to take the oath of allegiance on Sept 6 and address economic and social policies on Sept 11. The flagship policy remains a cash handout for 14-15 million low-income or vulnerable Thais, which should increase consumption momentum in the fourth quarter, he said.
Analysts at Pi Securities said the Thai bourse was supported by domestic politics following royal endorsement of the new cabinet led by Paetongtarn Shinawatra and the establishment of the Vayupak Fund, a policy announced by the previous government.
The Vayupak Fund is expected to attract 100-150 billion baht to the Thai stock market, prompting investor speculation on targets of the fund, said the brokerage.
Asia Plus Securities (ASPS) said the Vayupak Fund will be traded on the SET on Oct 15.
The SET index, after breaking 1,400 points, has the next resistance level at 1,430 points, consistent with a stronger baht, which is expected to trade at 33.40-33.50 to the greenback, said ASPS.
"The political vacuum has ended," the brokerage said in a research note.
The cabinet is set to hold a special meeting to present its policies to parliament, probably on Sept 10-12, then start work in mid-September, noted ASPS.
"The government should prepare for stimulus measures, with an additional 2024 budget of 122 billion baht and 2025 budget bill likely to be passed soon, enabling strong growth in the second half," said the brokerage.
Vayupak Fund 1 (VAYU1) is expected to be offered to the public on Sept 16 and list on the SET in October, with a budget of more than 300 billion baht for short and long-term economic policies, said ASPS.
The brokerage recommends stocks held by Vayupak Fund or that may be added to the VAYU1 portfolio and carry AAA ESG ratings. These picks include: PTT, PTT Oil and Retail Business (PTTOR) Bangchak Corporation (BCP), Siam Cement (SCC), Central Retail Corporation (CRC), CG Packaging (SCGP), Kasikornbank (KBANK), Charoen Pokphand Food (CPF) and Advanced Info Service (ADVANC).