The worst-performing stock market in Southeast Asia is UBS’ Top Pick

There is a lot of optimism about Thailand as its tourism potential, says Kelvin Tai of UBS Global Wealth Management, but political headwinds could be a game-changer.

While Thailand is a “big beneficiary” from China’s reopening and expected tourism boost, outbound tourism from China has been “very scanty” so far. Tai told CNBC’s “Squawk Box Asia” on Thursday.

He added that employment numbers in China should rise first.

Thai said Thailand also needs to reinvest in infrastructure and rebuild at a faster rate. The country had plans to build infrastructure on its eastern coastal side via new ports and airports, but “that hasn’t really happened at this point,” according to Taye.

He said this was largely due to the policy that Thailand had to “get it right…just right”.

Preliminary results showed that the two Thai opposition parties, Move Forward and Pheu Thai, together secured 99% of the votes counted during the May 14 general election, Reuters reports.

But in order for the leading Movement Forward party to form a new coalition government, it will need to enlist the support of junta-appointed senators who will vote for the next prime minister, according to Reuters.

The Electoral Commission has 60 days to validate the election resultsAfter that, the prime minister is chosen.

Thai said the election in Thailand is a “potential game changer”.

After the vote showed pro-democracy parties winning a solid majority, the Thai baht jumped on Monday to its strongest level since February this year.

While the benchmark SET initially rose when the results came in, it eventually gave up those early gains.

Indeed, Thai stocks have been the worst performers in Southeast Asia this year, but Thai says Thailand is his “top pick” in the region.

Thailand’s SET index is down 9.22% this year, the biggest slowdown in the broader Asia-Pacific region. By comparison, Malaysia fell about 4.5%, and Indonesia’s Jakarta Stock Exchange index fell 2.2% in the same period, according to FactSet data.

Tai added that another concern is that companies linked to the monarchy could be pushed back by the change in government.

The Move Forward party called for reforms to the monarchy, including a change to the defamation law.

Thai said Thailand should also look to its workforce to drive growth. He said the country’s fertility rate and aging population were “one of the worst in the world”, but workers could be brought in from neighboring Cambodia and Laos to try to boost the workforce. He added that the cultural and linguistic similarities between those countries make it “easy” for Thailand to do so.

However, Thailand may first have to change its immigration policy. He explained that even after foreign workers have been in Thailand for many years, “they are still considered immigrants and are not… part of the local population.”

He added that Thailand should consider giving migrants a clear path to residency.