Chaotic Thai result is near investors' worst case: Clara Ferreira-Marques

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SINGAPORE (March 26): Thailand's chaotic electoral result is near investors' worst case scenario. A vote to end direct military rule has slid into confusion, with accusations of cheating and both main rivals claiming they can form a government. A clear outcome may be weeks away, at best. With foreign funds already selling out of shares, that's a poor prospect for a cooling US$460 billion economy.

Early results for the first election since a 2014 coup, released on Monday, showed the Pheu Thai party, which supports ousted prime minister Thaksin Shinawatra, won 137 seats in the lower house, against 97 for the pro-army party Palang Pracharat, which took a surprising lead in the popular vote.

But it's far more complicated: there are still 150 seats to be allocated, using a complex formula, and that outcome may not be clear until May. Worse, under a new system devised by the military, a prime minister requires a majority in both houses, including the 250-seat Senate, appointed by the junta.

Either side will require a coalition to rule. Even a government under coup leader Prayuth Chan-ocha, unused to compromise, would face hefty opposition in the lower house from the pro-democracy bloc.

All of this, plus accusations of incompetence against the Electoral Commission and vote-rigging, heralds a period of uncertainty and jostling. Just as unsettling has been the monarchy's reemergence in politics. Rare and cryptic comments from King Maha Vajiralongkorn are widely seen as support for the junta leaders.

This rapid descent into disarray should worry. Back in 2013 to 2014, according to Capital Economics, unrest took 0.7 percentage points off growth. Tourism is key to the economy, and foreign investment is much-needed to prop up suboptimal growth. Overseas ownership of equities is already at a 20-year low, according to Swiss bank UBS. Since the beginning of this month, the Thai market has seen more than US$500 million in net outflows.

So far, there are no large scale protests on the streets — and markets are holding fairly steady, presumably in the hope of a return to order, even if that is to the ugly status quo ante, or thereabouts. For now, Thailand’s one step closer to really scaring investors.


  • Thailand’s two main political parties each claimed that they had enough support to form a coalition government on March 25, a day after the country went to the polls for the first time since a 2014 military coup.
  • Both the pro-army party, seeking to keep junta leader Prayuth Chan-ocha as prime minister, and the opposition linked to former premier Thaksin Shinawatra, said they could command enough parliamentary seats.
  • On March 25, the Election Commission posted the winners of 350 seats contested on a first-past-the-post basis, out of a total of 500 in the lower house. The pro-Thaksin Phew Thai Party was ahead with 137 seats, compared to 97 seats for the Prayuth’s Palang Pracharat Party. Official results for the remaining 150 “party seats”, will not be announced until May 9.
  • Pheu Thai has said it is considering a legal challenge over poll irregularities, and Thaksin wrote in a New York Times article on March 25 that the government should reflect “the will of the people, not the will of the junta”.
  • On the eve of the March 24 vote, King Maha Vajiralongkorn made an unexpected statement on the election, recalling a comment made by his late father on the need to put “good people” in power and prevent “bad people from… creating chaos”.
  • The Thai baht strengthened slightly against the US dollar on March 25, to 31.58. On the same day, Thailand’s benchmark stock index initially fell less than neighbouring bourses battered by US recession fears, but fell further as it became clear the result was contested, ending the session down 1.2%.


Clara Ferreira-Marques is a Reuters Breakingviews columnist. The opinions expressed are her own.