BANGKOK, July 5 |
BANGKOK, July 5 (Reuters) – Thailand’s opposition Puea Thai
Party scored a landslide election victory on Sunday and the
scale of its win suggests there could be some respite in a
six-year political crisis.
The stock market jumped 4.7 percent on Monday and
was steady on Tuesday. Here is a look at some likely stock
market winners and losers under the new government.
WHICH SECTORS WILL WIN FROM POPULIST POLICIES?
Puea Thai plans easier access to credit, a jump in the
minimum wage plus price subsidies that should spur consumption.
This should boost the retail and property sectors.
Top convenience store chain CP All , whose shares
hit a six-week high on Monday, retailer Big C Supercenter
, Siam Makro and building materials supplier
Home Product Center should benefit.
Puea Thai promises zero-percent mortgages, exemption from
transfer and mortgage fees and a 50 percent cut in business tax
for first homes priced below 4 million baht ($130,000).
Property firms will benefit as the policies will both boost
demand and cut costs. Top homebuilder Land Houses is
among top picks and its shares hit an eight-week high on Monday.
Developers that focus on medium- to low-priced homes such as
LPN Development , Supalai , Pruksa Real Estate
and MK Real Estate could benefit the most.
Stronger demand and populist spending in rural
areas should boost spending on house renovation, helping
building material firms like Siam Cement and Siam City
Cement .
Puea Thai is also expected to implement a policy of
returning tax to first-time car buyers, which should stimulate
demand and benefit car parts makers such as Somboon Advance
Technology and AAPICO Hitech .
However, a big rise in the minimum wage will push up
operating costs in labour-intensive industries. Hana
Microelectromics , Star Microelectronic and
Cal-Comp Electronics may be affected.
“If they try to introduce a 30 pct increase in six months,
I think it’s going to be very difficult for many, many
businesses,” Richard Han, chief executive of integrated circuit
packager Hana, told Reuters.
“It will be a huge amount to absorb in that short space of
time because manufacturers cannot improve their productivity to
absorb that cost,” he said.
WHAT ABOUT INFRASTRUCTURE?
Spending on infrastructure projects should continue, but
some projects may be delayed by the change in government. Top
contractor Italian-Thai Development could benefit most
from spending, followed by Ch Karnchang .
Italian-Thai surged 33 percent to hit an eight-month high
after the election, while CK jumped 9 percent.
But Sino-Thai Engineering and Construction may be
hurt by the political change and its shares fell 5 percent on
Monday. Chaowarat Charnveerakul, leader of Bhum Jai Thai Party,
part of the outgoing coalition, is a founder of the company.
WHY IS THE TELECOMS SECTOR IN THE SPOTLIGHT?
Puea Thai wants to liberalise the telecoms industry, with a
new regulatory framework and new licences for third-generation
mobile and satellite services.
That would benefit top mobile firm Advanced Info Service Pcl
(AIS) and satellite firm Thaicom ,
affiliates of Shin Corp Pcl , which was founded by de
facto Puea Thai leader Thaksin Shinawatra.
Second-ranked Total Access Communication may also
benefit although it has to face unrelated questions relating to
whether its main shareholder, Norway’s Telenor ,
infringed Thai foreign ownership laws.
Shares in AIS hit a five-year high on Monday, while Thaicom
traded at a three-year high. Shin Corp surged 8 percent.
“With Puea Thai in power, the ICT (Information and
Communications Technology) sector should boom again because they
have experience in the industry. Its policy to give tablet PCs
should stimulate development of content and related business,”
said Watchai Vilailuck, CEO of Samart Corp .
Thaksin made his fortune in the telecoms sector with Shin
Corp before his family sold a controlling stake in the company
to Singapore’s Temasek Holdings in 2006.
The outlook for rival True Corp , which appears to
have done well under the Democrat government, seems less rosy.
After the collapse of a tender for new 3G bandwidth amid
regulatory wrangling, True signed deals with CAT Telecom that
extended its concession by 15 years and enabled it to be the
first to launch nationwide 3G services on an existing network.
The True-CAT deal was already being probed by state
agencies. True is part of unlisted food conglomerate Charoen
Pokphand Group, which is among big donors to the Democrat Party.
The government is investigating the operating concessions of
AIS and Thaicom. Analysts say the risk of them having to pay
higher fees or fines may be reduced with Puea Thai in power.
WHICH OTHER FIRMS ARE IN THE SPOTLIGHT FOR POLITICAL LINKS?
Shares in SC Asset Corp , the property arm of the
Shinawatra family, hit a seven-year high on Monday. Yingluck
Shinawatra, destined to be the next prime minister, was SC’s
president until being selected to head Puea Thai’s campaign.
Yingluck is Thaksin’s sister. Although she has now resigned
all her positions in the company, some investors feel SC Asset
will benefit while she leads the government.
Her husband Anusorn Amornchat is president of handset
distributor M-Link Asia Corp . Shares in M-Link, which
was founded by Thaksin’s other two sisters, jumped 29 percent to
hit a three-year high on Monday.
WHAT ABOUT STATE COMPANIES?
Analysts expect more political interference and continued
price subsidies, although Yingluck has said state-run firms were
“not dynamic” and state control was not good.
Top energy firm PTT Pcl , which suffers losses in
its natural gas for vehicles (NGV) business as a result of state
intervention to hold down prices, wants the next government to
review policy so that NGV prices reflect costs.
The new government may review policies on state-controlled
firms such as PTT, Thai Airways International ,
second-largest lender Krung Thai Bank and broadcaster
MCOT . The finance ministry currently plans to reduce
its holdings in the four companies.
Outgoing Finance Minister Korn Chatikavanij backed the idea
of selling at least part of the state’s 51 percent in Thai
Airways but the transport minister was opposed.
Thai Airways’ plan to start a budget airline was also caught
up in wrangling between the finance and transport ministries.
($1 = 30.41 Baht)
(Additional reporting by Ploy Ten Kate and Saranya Suksomkij;
Editing by Alan Raybould)