Election officials carry ballot boxes at a provincial election center in Narathiwat province, southern Thailand Sunday. (AP/Apichart Weerawong) April 3 (Bloomberg) -- Thai Prime Minister Thaksin Shinawatra's gamble on a snap election won't give him a clear mandate for policies aimed at spurring the economy, after the three biggest opposition parties boycotted yesterday's polls.
Thaksin's Thai Rak Thai -- or Thais Love Thais -- party was uncontested in 278 of the 400 voting districts. The law calls for by-elections in any uncontested seat where a party fails to win the support of 20 percent of eligible voters. Unofficial results will likely be known from late tonight.
The political conflict may be an obstacle to Thaksin's 1.7 trillion baht ($44 billion) five-year spending plan, free trade deals pending with Japan and the U.S., and planned state asset sales. Brokerages including Morgan Stanley, Lehman Brothers Holdings Inc. and UBS AG have downgraded their growth forecasts for Thailand's $183 billion economy in the past month.
This worst-case scenario is ``very likely,'' said Marc Faber, managing director at Hong Kong-based Marc Faber Ltd. ``Then there will be a standoff and it could become difficult to rule the country. The opposition parties will be relentlessly demonstrating and possibly it will turn violent.''
Faber expects that would weaken the baht, which has risen about 5 percent this year, and reduced spending and investment could slow economic growth to as little as 4.5 percent, from earlier forecasts of 6 percent.
Rising Protests
Thaksin called the poll three years early amid a rising tide of protest in the capital, Bangkok, where activists have been demanding his resignation since November. Their grievances range from the sale of state assets to allegations that billionaire Thaksin, 56, is abusing his unprecedented political power for personal profit.
Thailand's benchmark stock SET index has fallen 1.2 percent since Thaksin called the election Feb. 24, having previously gained 3.9 percent since the start of the year. It is now ``relatively good value,'' according to Faber, who correctly predicted the U.S. stock market crash in October 1987, because it's ``already inexpensive.'' There are ``numerous'' companies that are ``solid'' with dividend yields of between 6 percent and 7 percent.
Thai stocks ended 2005 as the cheapest in Asia with an average share price to estimated earnings of 11.25 times.
Political Jitters
Credit Suisse Group, in a note March 6, said while ``political jitters are likely to dominate market sentiment in the next three months,'' there has never been much certainty about politics in Southeast Asia's second-largest economy. Over the last three decades, there has been a new government on average every 2.5 years in Thailand -- a ratio maintained in the past ten years -- and the current election is about due, it said.
Weekly protests ballooned into daily mass rallies after Thaksin's family in January sold its 49.6 percent stake in Bangkok-based telecommunications group Shin Corp. to investors led by Singapore's Temasek Holdings Pte.
While Thai Rak Thai's popularity among Thailand's majority rural population means it is virtually assured a victory even with strong opposition campaigns, low turnouts in opposition strongholds like the south and parts of Bangkok mean the vote is likely to lead to court cases and attempts to change electoral laws to form a government, academics predict.
The vote won't end protests, and Thaksin may find himself forced to temporarily step aside for a royally-appointed interim government while compromises are sought, said Sombat Thamrongthanyawong, Dean of the School of Public Administration at Thailand's state-owned National Institute of Development Administration predict.
Opposition Boycott
"The opposition parties aren't even participating in the vote and it means that they can claim later that the results aren't legitimate, regardless of what the tally looks like,'' said Michael Kurtz, a Hong Kong-based strategist at Bear Stearns Asia Ltd., who expects Thai business and consumer sentiment to be "subdued'' for months.
Poll watchers are looking for turnout and the number of no vote ballots -- where voters cross a box saying they don't support any of the candidates -- as the most important counts in this election. These figures are crucial in determining how much of the vote will be invalid, and how long the uncertainty may last.
UBS AG, Europe's largest bank by assets, on March 31 lowered its economic growth forecast for Thailand this year, citing delays in the Southeast Asian government's spending plan.
Thailand's gross domestic product may rise 4.8 percent this year, from an earlier 5.4 percent estimate, Christa Janjic, a Singapore-based economist with UBS, said in a report. The economy may grow 4 percent in 2007, she said.
"Policymaking has ground to a halt because of the ongoing political controversy, which this weekend's election is unlikely to resolve,'' Janjic wrote.
To contact the reporter on this story:
Beth Jinks in Bangkok at bjinks1@bloomberg.net.
Thaksin's Thai Rak Thai -- or Thais Love Thais -- party was uncontested in 278 of the 400 voting districts. The law calls for by-elections in any uncontested seat where a party fails to win the support of 20 percent of eligible voters. Unofficial results will likely be known from late tonight.
The political conflict may be an obstacle to Thaksin's 1.7 trillion baht ($44 billion) five-year spending plan, free trade deals pending with Japan and the U.S., and planned state asset sales. Brokerages including Morgan Stanley, Lehman Brothers Holdings Inc. and UBS AG have downgraded their growth forecasts for Thailand's $183 billion economy in the past month.
This worst-case scenario is ``very likely,'' said Marc Faber, managing director at Hong Kong-based Marc Faber Ltd. ``Then there will be a standoff and it could become difficult to rule the country. The opposition parties will be relentlessly demonstrating and possibly it will turn violent.''
Faber expects that would weaken the baht, which has risen about 5 percent this year, and reduced spending and investment could slow economic growth to as little as 4.5 percent, from earlier forecasts of 6 percent.
Rising Protests
Thaksin called the poll three years early amid a rising tide of protest in the capital, Bangkok, where activists have been demanding his resignation since November. Their grievances range from the sale of state assets to allegations that billionaire Thaksin, 56, is abusing his unprecedented political power for personal profit.
Thailand's benchmark stock SET index has fallen 1.2 percent since Thaksin called the election Feb. 24, having previously gained 3.9 percent since the start of the year. It is now ``relatively good value,'' according to Faber, who correctly predicted the U.S. stock market crash in October 1987, because it's ``already inexpensive.'' There are ``numerous'' companies that are ``solid'' with dividend yields of between 6 percent and 7 percent.
Thai stocks ended 2005 as the cheapest in Asia with an average share price to estimated earnings of 11.25 times.
Political Jitters
Credit Suisse Group, in a note March 6, said while ``political jitters are likely to dominate market sentiment in the next three months,'' there has never been much certainty about politics in Southeast Asia's second-largest economy. Over the last three decades, there has been a new government on average every 2.5 years in Thailand -- a ratio maintained in the past ten years -- and the current election is about due, it said.
Weekly protests ballooned into daily mass rallies after Thaksin's family in January sold its 49.6 percent stake in Bangkok-based telecommunications group Shin Corp. to investors led by Singapore's Temasek Holdings Pte.
While Thai Rak Thai's popularity among Thailand's majority rural population means it is virtually assured a victory even with strong opposition campaigns, low turnouts in opposition strongholds like the south and parts of Bangkok mean the vote is likely to lead to court cases and attempts to change electoral laws to form a government, academics predict.
The vote won't end protests, and Thaksin may find himself forced to temporarily step aside for a royally-appointed interim government while compromises are sought, said Sombat Thamrongthanyawong, Dean of the School of Public Administration at Thailand's state-owned National Institute of Development Administration predict.
Opposition Boycott
"The opposition parties aren't even participating in the vote and it means that they can claim later that the results aren't legitimate, regardless of what the tally looks like,'' said Michael Kurtz, a Hong Kong-based strategist at Bear Stearns Asia Ltd., who expects Thai business and consumer sentiment to be "subdued'' for months.
Poll watchers are looking for turnout and the number of no vote ballots -- where voters cross a box saying they don't support any of the candidates -- as the most important counts in this election. These figures are crucial in determining how much of the vote will be invalid, and how long the uncertainty may last.
UBS AG, Europe's largest bank by assets, on March 31 lowered its economic growth forecast for Thailand this year, citing delays in the Southeast Asian government's spending plan.
Thailand's gross domestic product may rise 4.8 percent this year, from an earlier 5.4 percent estimate, Christa Janjic, a Singapore-based economist with UBS, said in a report. The economy may grow 4 percent in 2007, she said.
"Policymaking has ground to a halt because of the ongoing political controversy, which this weekend's election is unlikely to resolve,'' Janjic wrote.
To contact the reporter on this story:
Beth Jinks in Bangkok at bjinks1@bloomberg.net.
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