Asean’s predictable elections could boost growth

Elections are scheduled in Thailand, Indonesia and the Philippines in the next few months, leading to speculation about how political activity will affect Asean’s markets.

Thailand’s much-delayed general election is due on March 24, followed by the Indonesia presidential and legislative elections on April 17 and parliamentary votes in the Philippines on May 13. All three benchmark stock indexes ended lower last year, as investors ditched emerging markets amid rising interest rates in the US and the looming threat of a trade war initiated by Donald Trump.

But there are hopes political contests in the three major Asean economies could stimulate spending.

“We find that both government and consumer spending tend to grow strongly in both Indonesia and the Philippines in the run-up to elections. That strength appears to persist even in the months after the elections,” said analysts at Malaysian financial services firm Maybank Kim Eng.

“For Thailand, years of political uncertainty may have dented the relationship, making it hard to ascertain pre-election spending trends.”

Growth in Thailand has been subdued in recent years due to political instability.

Military-appointed Prime Minister Prayut Chan-o-cha is well-placed to retain the job on March 24, because of the controversial 2017 constitution which seeks to weaken the grip of populist parties. The constitution was “approved” after a national referendum where campaigning for “no” votes was forbidden.

Military-enacted measures include a 20-year national strategy to bind civilian governments to implement junta policies, a senate selected by the generals with powers to check and remove MPs and a new electoral system that favours minor parties designed to create weak, unstable coalition governments.

If Prayut held on to power in Asean’s second-largest economy, some analysts said it would be positive for long-term economic continuity and preserve the junta’s vast infrastructural projects. However, protests could break out if “the electorate feels that it is being denied free elections” and hinder growth, according to consultancy Capital Economics.

Taking a lesson from the populist parties backed by telecoms tycoon Thaksin Shinawatra that the generals expelled from office in the 2006 and 2014 coups, the junta announced cash handouts of Bt87 billion (US$2.75 billion) for the elderly and low-income population in the run-up to the election.

If the handouts translate into higher consumer spending, shares in retailers, including Thai-listed convenience store operator CP All and Singapore-listed Thai Beverage, are likely to rise, according to Maybank Kim Eng.

The Thai election campaign was rocked last week by the Constitutional Court’s decision to disband the Thaksin-backed Thai Raksa Chart Party.

The unanimous decision followed the party’s surprise move to name Princess Ubolratana Mahidol, the elder sister of King Maha Vajiralongkorn Bodindradebayavarangkun, as its prime-ministerial candidate at the general election.

It leaves Thaksin’s main party, Pheu Thai, with only 250 candidates in 350 constituencies and the self-exiled former premier with little chance of securing the heavy majority his support base should secure. His parties have won every democratic vote since 2001.  

The court decision also points to a hopelessly politicised judiciary which recently exonerated anti-Thaksin yellow-shirt leaders over the 2013 siege of parliament.

It remains to be seen whether Thaksin’s support base in the northeast and north of Thailand will accept a military-organised election that ensures their preferred populists are denied power.

The newly formed anti-junta Future Forward Party has added interest to the election. The progressive party has been more outspoken than the competition in campaigning against junta-rule continuing after the election.
Youthful leader Thanathorn Juangroongruangkit has promised a military-containing constitutional change if elected. But it seems unlikely the generals will allow the former vice president of the Thai Summit Group, Thailand’s largest auto parts manufacturer, to prosper electorally this month. Also, the party’s electoral posters mostly contain pictures of baby-faced candidates, who look far too young to win majority support.


Indonesia, the largest Asean economy, is scheduled to hold presidential and parliamentary elections on April 17.

President Joko “Jokowi” Widodo increased government and social spending in his last budget before the twin April elections. This contributed to consumer spending and banking stocks rises, said Joanne Goh of Singaporean bank DBS.

Goh singled out Indonesian stocks include Bank Central Asia and noodle maker Indofood Sukses Makmur for a potential investment.

Polling pointed to a Jokowi lead to retain the presidency against an uninspiring opposition candidate, Prabowo Subianto. Goh said neither candidate is expected to derail Indonesia’s steady economic progress.

“On a relative basis within the region, Indonesia stands out as one with resilient domestic demand amid the global economic slowdown and a prime beneficiary of lower oil prices and interest rates,” the analyst added.


The parliamentary votes in the Philippines will be seen as a judgement on President Rodrigo Duterte, halfway through his six-year term.

The blood-thirsty populist has enjoyed high recent approval ratings and his allies are expected to retain a parliamentary majority. Duterte has increased spending in his latest government budget, with a focus on social and infrastructure projects.

Media conglomerate ABS-CBN was mentioned as a possible investment ahead of the Philippine election with advertising revenues due to rise.

To conclude, none of the three countries offers the real chance of a political shakeup similar to the May 2018 general election in Malaysia but their economies might prosper from the continuity that the predictable polls offer.


Thailand is covered in election banners. Picture credit: Asean Economist