Once the royal decree officially announcing the "dissolution of parliament" was issued, Thailand entered the "new election" phase, with the voting day expected to occur in early February 2026.
This major political change extends beyond the parliamentary arena, directly impacting economic stability and, most significantly, the Thai stock market, which faces a new wave of uncertainty following this decision to dissolve parliament.
Securities analysts from various firms have differing views and strategies to cope with the "political vacuum" until a new government forms. Some brokers clearly point to the risk of economic stagnation and warn of signs of foreign capital outflows. At the same time, this could be a golden opportunity to buy stocks in anticipation of the "Election Rally" phenomenon that often follows.
"Dissolution of Parliament" pressures the economy and Thai stock market.
The research division of Asia Plus Securities Company Limited stated in an analysis that the latest possible date to hold the election is no later than Tuesday, 10 Feb 2026 GMT+7. Traditionally, general elections are held on Sundays, so the new election is expected on either 1 Feb or 8 Feb 2026 GMT+7.
The impact on Thailand's economy includes increased uncertainty on several issues, such as the People Co-Payment Plus Phase 2 program, the TISA agreement, the 40-baht all-day electric train policy, new mega projects, the Thai-Cambodia border issues, and retaliatory tax negotiations with the United States.
This raises the risk of "policy paralysis" in Q4 2025, which could dampen confidence. If Thailand's GDP grows below 0.6%, there is a chance of entering a technical recession, meaning GDP contracts for two consecutive quarters.
Historical data on past dissolutions show that the Thai baht fluctuated both one month before and one month after the dissolution, tending to weaken slightly on average by about 0.8% before and 0.6% after. Moreover, in this one-month period, the baht appreciated by over 2.0%, which could contribute to some rebounds or weakening.
Regarding foreign investment flows one month after dissolution, net capital outflows occurred frequently, happening 5 times out of 6, with an average net outflow of 10.859 billion baht.
Looking at the Thai stock market’s movement from 1996 to 2023, returns one month after dissolution were negative almost every time except once in 2013. The average return one month after dissolution was minus 6.7%.
It could be a buying opportunity ahead of the “Election Rally.”
Krungsri Securities Public Company Limited’s analysis noted that although the dissolution announcement was earlier than the market expected, the recommended strategy is to "stay on the buy side" because the main scenario leads to elections that will yield a more stable government.
Based on past election cycles, an Election Rally usually occurs (in 2005, 2007, and 2011), with gains of 3-5% within 5 to 8 months. The recommended investment themes include:
Stocks benefiting from falling interest rates such as MTC, SAWAD, ADVANC, CPALL, TRUE; domestic-oriented stocks like KBANK, KTB, MTC, SAWAD, CPALL; and stocks linked to accelerating BOI approvals, especially in Data Centers such as WHA, GULF, and BGRIM.
Concerns arise that TISA may be delayed.
Pai Securities Public Company Limited stated in an analysis that the Prime Minister announced the dissolution of parliament. Following dissolution, elections must be held within 45-60 days, expected in the last week of the first week of February 2026 GMT+7. Until a new government forms, the current government remains in place. However, ongoing projects that require continuity into the next government cannot proceed.