Thailand is set for more political upheaval after Pita Limjaroenrat was barred by parliament from running for prime minister Wednesday, angering his supporters and opening the door for his coalition partners to seek the top job.

Thailand’s parliament will convene on July 27 to vote again on the country’s new prime minister. Pita, the leader of the party that won the May general election, was blocked from heading the next government with lawmakers deciding he cannot be nominated again — his first attempt to get parliament’s backing last week failed as conservative parties and the military-appointed Senate voted against him.

The moves leave Pita with near-zero chance of leading the country, although the eight-party pro-democracy coalition he cobbled together after the May 14 polls still has a shot at ending the nearly decade-long military-backed rule. Pita has already said he’s willing to let coalition partner Pheu Thai lead government formation efforts should he fail in his attempts to secure power or remove the voting powers of the 250-member Senate — stacked with allies of the royalist establishment — in prime minister selections.

Pheu Thai, the second-biggest party in the coalition, looks set to have the opportunity to take up the reins and lead efforts to form the next government, with former property tycoon Srettha Thavisin tipped to be the party’s main pick for premiership. Another option could be Paetongtarn Shinawatra, the youngest daughter of ousted former premier Thaksin Shinawatra.

Local equities had their longest winning streak since the start of the year, with the SET Index rising for a fifth straight day on hopes that a Pheu Thai candidate in place of Pita would have a better chance of forming government.

100,000-strong March

Shortly before parliament blocked Pita’s bid Wednesday, a court had suspended Pita as a lawmaker, pending a final verdict on his disqualification over alleged breach of election rules. Pita urged his supporters to fight alongside him. Protesters gathered outside of the parliament gates Wednesday, with police officers in flak jackets lined up on the other side.

Supporters also started gathering on Rajadamnoen Road in front of Bangkok’s Democracy Monument Wednesday night. The protest leader Arnon Nampa called on sympathizers outside of Bangkok to join them, with a plan to hold a 100,000-strong march to the government house to condemn Pita’s ouster from the race.

The developments bear uncanny similarities to earlier ones against Thanathorn Juangroongruangkit, leader of Move Forward’s predecessor party. Thanathorn was found guilty by the same court for holding media shares and disqualified as a lawmaker. His party, known as Future Forward, was later dissolved in another case, igniting a mass protest movement in 2020 that led to unprecedented calls for monarchy reforms.

What is certain is a period of political limbo, leaving caretaker Prime Minister Prayuth Chan-Ocha, who came to power in a 2014 coup, in charge in the interim and policy making stalled.

The key risk will be a delay in endorsing the nation’s annual budget for the year starting Oct. 1, which could hurt spending in an economy already reeling from slowing exports. Protests are also a risk to tourism, the only growth engine currently operating at full steam.

“We do not rule out the possibility that PM selection will spill over into August,” said Tim Leelahaphan, a Bangkok-based economist at Standard Chartered Bank Plc. “We expect political noise to rise further even after PM selection concludes, as it remains to be seen how voters will perceive the selected PM.”

Although investors previously wagered that the political deadlock in Thailand may come to an end soon, concerns over the delay in forming a government more than two months after the elections as well as approving the budget are pushing up borrowing costs for companies.

The yield of 5-year BBB-rated local currency notes in Thailand has jumped nearly 10 basis points in July, while that of similar notes in Indonesia and Malaysia fell around 5 and 7 basis points, respectively, according to data compiled by Bloomberg.

Coalition Math

With Wednesday’s vote indicating that a candidate might get only one shot at becoming prime minister, Pheu Thai might risk its chance should it continue to stick with Move Forward — whose pledge to reform the so-called lese majeste law that punishes anyone defaming or insulting the royals is opposed by the conservative camp.

The Constitutional Court hearing a separate case seeking Move Forward’s disbandment only strengthens the case for Pheu Thai to explore options.

“This is a very good and legitimate excuse for forming bigger, new alliances to garner enough votes for prime minister approval,” said Napon Jatusripitak, visiting fellow at ISEAS-Yusof Ishak Institute.

Pheu Thai may be tempted align with conservative groups such as Bhumjaithai Party of cannabis champion Anutin Charnvirakul or Palang Pracharath Party of former army chief Prawit Wongsuwan.

For now, Pheu Thai leader Cholnan Srikaew maintained that the coalition with Move Forward is intact. He said Thursday that his party is waiting for Pita’s group to set up a meeting discuss the coalition’s plan for July 27.

--With assistance from Napat Kongsawad, Suttinee Yuvejwattana, Pathom Sangwongwanich, Anuchit Nguyen, Margo Towie, Ian Sayson and Harry Suhartono.