Strategy Note /

Thailand: Shinawatra scion tops opinion poll, election likely before May 2023

  • Paetongtarn 'Ung Ing' Shinawatra takes a big lead in latest local opinion poll; she is the daughter of former PM Thaksin

  • She has consolidated support from Pheu Thai (largest national party) and taken share from military and liberal rivals

  • Election likely before May 2023; this poll is another signal that change from military-dominated government on the way

Thailand: Shinawatra scion tops opinion poll, election likely before May 2023
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

Tellimer Research
27 June 2022
Published byTellimer Research

With the next election in Thailand likely before May 2023, a scion of the Shinawatra political dynasty and the Pheu Thai political party they dominate have taken large leads in the latest opinion polls.

This follows multiple attempts at no-confidence votes in parliament for the incumbent, military-backed Prime Minister Prayut Chan-o-cha, a comprehensive loss for the military-associated candidate in the Bangkok gubernatorial election in May, and the mass youth protests of recent years.

All of this suggests that should the government, which ultimately traces its mandate back to the military coup of 2014, stick to the electoral timetable, and the military play a more neutral role via its appointees in the upper house of parliament than in 2019, then a change in leadership may be on the way.

Shinawatra scion leads in the opinion polls for Thailand PM

But, if the baton is passed, then it will be back to a historical rival of the military, the Shinawatra-led Pheu Thai party, rather than a party like Move Forward, which is arguably closer to the sentiments of the mass protesters seen in recent years.

The Shinawatras are hailed for their business-friendly policies by their supporters and reviled for their alleged corruption by opponents. Their Pheu Thai party is particularly strong in the north and north-east of Thailand. Relative to the military, which is closely aligned with the US, the Shinwatras are a little more open to China as well.

To the degree that they are likely more successful in driving domestic and foreign investment, a transition of power to the Shinawatras will be welcomed by the market.

But the same cannot be said of the youthful, mass protestors who have targeted the military, the elected government that took over from the military junta, and, occasionally, the monarchy, in recent years.

The key driver of the Thai equity investment case remains the global recovery in tourism. The sector drives over 10% of GDP directly, and adding the indirect contribution likely doubles this figure.

Leadership change on the way

Three events suggest that a change in leadership in Thailand is on the way but back to an old established rival of the military, rather than the party closest to the protest movement of recent years.

  1. Shinawatra back on pole in the polls – A Shinawatra scion leads the latest opinion poll, conducted during 20-23 June, on preferences for the prime minister.

    Paetongtarn 'Ung Ing' Shinawatra, aged 35, is the daughter and niece, respectively, of former prime ministers Thaksin and Yingluck Shinawatra. Her political party, Pheu Thai, is also polling well ahead of its rivals.

    Her rise since the start of the year appears to have consolidated Pheu Thai's support base in the face of the breakaway Thai Sang Thai party, as well as drawn support away from the military-backed party of incumbent Prime Minister Prayut Chan-o-cha and from the liberal upstart party Move Forward (which stands for anti-military, anti-corruption and, occasionally, anti-monarchy).

  2. Votes of no confidence and ruling coalition stress – The fourth attempt, since the 2019 election, to hold a vote of no confidence in Prime Minister is currently underway.

    He is the leader of the military coup in 2014, and the governments following the 2013 and 2019 elections.

    The opposition parties are in the minority and their ambitions are to exploit and exacerbate divisions within the ruling coalition as much as dismiss the government entirely.

    Prayut survived the last rumblings for a no-confidence vote when his fiscal 2023 Budget was passed with a 58% parliamentary vote in favour at the start of June.

  3. An independent won the Bangkok governor vote – The May 2022 Bangkok guberantorial election was won by Chadchart Sittipunt, an ex-Pheu Thai member who ran as an independent candidate, with 52% of the vote and 61% turnout.

    He comprehensively defeated, with a vote count six-fold greater, Asawin Kwanmuang, the military-appointed governor since 2016. Although, it should be noted that Asawin did not run as a candidate from Palang Pracharath, the party of Prime Minister Prayut.

    Bangkok is the sole province to independently elect its governor, as all others are appointed by the interior minister. This election was the first since the 2014 military coup and could be viewed as a barometer of opinions on Prayut's government prior to the general election.

Next election likely before May 2023

The prime minister is chosen by the combination of the 250-member upper house of parliament (which is appointed entirely by the military and where each member formally has no party affiliation) and the 500-member lower house (which is elected).

Shinawatra has won support off all other candidates

Shinawatra-led Pheu Thai party has the largest support base

Thailand is the most liquid tourism play in EM and cheap relative to history, too

Thailand is the most liquidly traded top-down equity exposure to tourism available in emerging markets, with over 10% direct contribution to GDP from the sector, and average daily traded value (last six months) in the equity market of over US$2bn.

The market appears cheap, in terms of trailing PB relative to history, compared with peers in Asia EM and Tourism EM.

  • The local SET Index is down 10% in total US$ terms ytd, second only to Indonesia in Asia EM.

  • Trailing PB of 1.2x (for trailing ROE of 9%) is a 36% discount to the five-year median.

  • Forward PE is 16x (for 16% consensus earnings growth in 2022f and 2.8% dividend yield) is close to par with the five-year median.

  • The real effective exchange rate is close to 100 and to its 10-year median.

Thailand among the cheaper equity markets in Asia EM

Tourism in EM: economic exposure and equity valuation

Related reading

Thailand youth-led protests add to old schism and sclerosis, Oct 2020

Thailand: divisive election result, as expected, May 2019

Tourism's recovery potential is shown by Iceland, June 2021

EM equity strategy recap during the market rout, June 2022