Thai Power Plant Stocks Tumble After Thaksin’s Electricity Price pledge
Shares of several prominent Thai power plant companies took a notable hit during the morning trading session on October 26th, following comments made by Thaksin Shinawatra, a key figure in the Pheu Thai Party, about perhaps slashing electricity prices.
Among the hardest hit was GPSC, which saw its shares plummet 8.05%, or 3.00 baht, to close at 34.25 baht. Trading volume reached 84.21 million baht, a significant increase from the opening price of 36.25 baht. BGRIM also experienced a decline, falling 4.21% (0.80 baht) to 18.20 baht, with a trading volume of 41.97 million baht. GULF saw a more modest decrease of 1.30% (0.75 baht), closing at 56.75 baht, with a trading volume of 252.83 million baht.
The market reaction stems from Shinawatra’s recent speech in Chiang Rai province, where he suggested reducing electricity bills to 3.70 baht per unit. This represents an 11% decrease from the current rate of 4.15 baht per unit. “Mentioning the idea of reducing the electricity bill this year to 3.70 baht/unit, or an 11% reduction from the current 4.15 baht/unit, it remains to be followed up on details in practice to see which groups it will affect,” noted Maybank Securities (Thailand) in their analysis.
Maybank Securities (Thailand) further points out the potential implications of this proposal. If the electricity price were to drop to 3.70 baht per unit, it would fall below the base electricity price of 3.78 baht per unit. This uncertainty, coupled with the lack of concrete details regarding the implementation of such a policy, has created a negative short-term outlook for power plant groups, notably GPSC and BGRIM.
Though, the analysts also highlight a potential silver lining. A decrease in electricity rates could positively impact private sector operators who are significant electricity consumers. This presents a complex scenario with both potential benefits and drawbacks for various sectors of the Thai economy.
The situation underscores the sensitivity of the Thai energy market to political pronouncements and the ongoing uncertainty surrounding future energy policies. Further clarification on the proposed electricity price reduction is expected to influence market sentiment in the coming days.
By Jirayut Chansongsakul/Sasithorn Simaporn
Thai Power Stocks Tumble: Expert Analysis on Thaksin’s Electricity Pledge
World Today News’s Senior Editor,Emily Carter,sits down wiht energy market analyst Jiraroong Suphab,to unpack the recent dip in Thai power plant stocks following Thaksin Shinawatra’s proposed electricity price cuts.
Emily Carter: Jiraroong, thanks for taking the time. As you know, we saw some some pretty dramatic drops in Thai power plant stocks recently, following comments by Thaksin Shinawatra about possibly lowering electricity prices. Can you shed some light on what’s happening?
Jiraroong Suphab: Absolutely, Emily. The market reaction was quite predictable, given the nature of the proposal. Shinawatra’s suggestion to reduce electricity bills to 3.70 baht per unit, an 11% decrease from the current rate, immediately raised concerns among investors in the power sector.
emily Carter: Why is that?
jiraroong Suphab: Simply put, lower electricity prices directly impact the profitability of power plants. If electricity costs less, the revenue generated by these companies will inevitably decline. This is especially true for companies like GPSC and BGRIM, who saw the most significant dips in their stock prices.
Emily Carter: The article mentions Maybank Securities Thailand expressing worries about the potential drop in prices falling below the base electricity price. Can you elaborate?
Jiraroong Suphab: Yes, that’s another crucial aspect. If the electricity price falls below the base rate of 3.78 baht per unit, it could trigger a chain reaction, potentially impacting investment in new power generation projects and even destabilizing the energy market.
Emily carter: but there are also potential benefits to lowering electricity prices, right?
Jiraroong Suphab: You’re right, emily.lower electricity costs could be a boon for certain sectors,especially private sector operators who are major consumers of electricity. This could stimulate economic activity in those areas.The challenge is finding a balance that benefits both the power sector and the broader economy.
Emily carter: So what’s next? How will this situation likely unfold?
Jiraroong Suphab:
It’s now a waiting game. Further clarification from Thaksin Shinawatra or the Pheu Thai Party regarding the details and timeline of this proposal is crucial. The market is craving certainty. Until than, I expect continued volatility in the share prices of Thai power plant companies.
