The benchmark SET (Stock Exchange of Thailand) index recorded losses in the two months prior to the vote in all the elections since 2006, which marked the start of the most recent manifestation of Thai political instability.
After elections the SET tends to reverse some of these losses, at least in the initial days after the vote, possibly reflecting relief that the election was completed.
While the rally in the SET was short-lived following the 2007 election it’s worth that global factors were in play and the SET had outperformed the MSCI Asia (excl Japan) index for a couple of months after the vote.
Meanwhile the performance of the Thai baht in the lead-up to - as well as the immediate aftermath of - past elections was mixed. That said, the THB has historically strengthened against the US dollar in the first month after an election, with 2005 the main exception.
It’s worth noting the THB outperformed other Asian currencies during the 2005-06, 2008 and 2010 periods of political unrest, so other factors - including Thailand’s external position - may be a bigger driver for the THB when compared to domestic politics.
Krystal Tan is an economist at ANZ