Despite talk of there being economic instability if Puea Thai formed a coalition, the fact that they were able to win a majority as opposed to a plurality -  there would have been instability if they won less than 230 and formed a government – means it is likely to mean that the market response will be positive as we are starting to see.*

Reuters:

“Winning by a big margin would ease the problem of the military intervening and make it easier for them to form the government and implement all their policies,” said Kongkiat Opaswongkarn, chief executive of broker Asia Plus Securities.

“We expect a jump when the stock market opens and this is because it is a big win, with less risk of having the military meddling with politics.”

The baht rose more than 1 percent against the dollar Monday, outperforming other Asian currencies.

Thailand market

Pic: AP.

WSJ:

The Thai baht rose after the opposition For Thais Party swept to a decisive election victory Sunday. While the stronger euro is also aiding sentiment, a Bangkok-based dealer said the market’s reaction is largely linked to the election, which investors hope will bring some stability, adding that “the government should be pretty strong for at least a year.”

BP: A year?

Bloomberg with the headline “Thai Baht Rises as Opposition Claims Election Win”:

Investors have sold Thai stocks and the baht over the past month on concern a disputed result would spark violence. The decisive win by Thaksin’s allies may bring stability to a nation beset by clashes between his supporters and opponents that claimed more than 100 lives since the last vote in 2007.

“The stability of the new government is very important for both local and foreign investors,” said Voravan Taraphum, chief executive officer of BBL Asset, a unit of Thailand’s biggest lender, which oversees about $4.9 billion of assets. “The return of overseas investment into Thai stocks will help the baht appreciate.”

Thailand’s baht rose 0.4 percent to 30.68 per dollar as of 7:41 a.m. in Sydney.

…

“Pheu Thai’s majority victory is positive for the economy,” Vana Bulbon, chief executive officer of UOB Asset Management (Thailand) Co., which oversees the equivalent of $1.8 billion of assets, said by phone yesterday. “It will let them control key economic ministries, allowing better coordination and implementation of policies. Politics has been the key risk discouraging overseas investors from putting more money into Thailand.”

The SET may gain as much as 3 percent today, said Jitra Amornthum, head of research at Finansia Syrus Securities Pcl.

BP: As one other analyst in the articles says, foreign investors may be more cautious. That quote by UOB is key. One of the problems that the Democrats faced was Bhum Jai Thai’s control of the Commerce Ministry. Bhum Jai Thai had their own interests and agenda and this often differed with the Democrats. Hence, disputes arose and from what BP has heard second hand from a senior Democrat is that the Democrats regret giving up Commerce although without giving it up they probably wouldn’t have been able to get into government in December 2008.

What ministries will the likely coalition partners of Chart Thai Pattana, Chart Pattana Puea Paendin, and Palangchon get? BP imagines that CPPD will want Energy. Chart Thai Pattana will likely want Agriculture or Transport. There will be one financially profitable ministry that Puea Thai must give up.

*Post caffeine fix have reworded this sentence to make more sense although the substance is the same.