Thai shares dropped over 5 percent on the first trading day of the year, suggesting hopes for a happy new year may be scarce amid concerns the elections set for February may not proceed.
In early December, Thailand's Prime Minister Yingluck Shinawatra dissolved parliament and called a snap election in an unsuccessful effort to defuse anti-government protests. Since then, the main opposition, the Democrat party, has said it will boycott the election and protesters have prevented candidates from registering.
Last week, the Election Commission recommended that the election be delayed until all sides supported it – a scenario many see as highly unlikely.
The benchmark SET dropped 5.23 percent to close at 1230.77, tapping its lowest levels since September 2012, for an around 15 percent loss since protests began in late October.
"We don't know whether the elections can go on under the circumstances," said Adithep Vanabriksha, chief investment officer at Aberdeen Asset Management in Thailand.
"The market is also concerned protests are going to continue later this month and they may step it up to pressure the prime minister. That's probably the main concern at the moment," he said.
The protests were triggered in early November by parliament's consideration of a government-backed amnesty bill that could have allowed former Prime Minister Thaksin Shinawatra, who was ousted in a 2006 coup d'etat, to return home without facing time in prison for a graft sentence in 2008 as well as granting immunity to politicians implicated in 2010 violent protests which killed about 90 people.
While that bill was dropped, the street protests have broadened out to an explicit call for Yingluck, who is Thaksin's sister, to step down. In addition, the anti-government protesters are now calling for replacing their country's democracy with an unelected "people's council" for an undefined period of time.
Part of the demand may be due to widely held expectations that Yingluck's political party, which has won every election since 2001, will once again sweep into power.
In a report in early December, Morgan Stanley estimated the MSCI Thailand index could drop as much as 25 percent in a bear-case scenario including "constant political friction."
(Read more: Violent protests expose cracks in Thai economy)
While the protests have been large, to-date they've also been in relatively isolated areas of the capital, away from the central business district, but that may be about to change, Adithep noted. "They've said they're going to step it up from the 13th onward and really make life difficult," he told CNBC. "People are worried about that as well."
But he noted that under the circumstances, the decline in shares hasn't been too bad. "Earnings have held up so far, which is probably one of the main reasons why," he said. "If you look at the macro aspects, things are looking tough and we'll have to see how that plays into companies' earnings," he said, noting the protests began as the economy was already slowing.
Historically, the market has generally been springy in the face of political turmoil.
(Read more: Thailand's investors spooked by 'forgiveness')
In the months after the September 2006 coup, the SET dropped around 15 percent, then climbed around 44 percent by mid-2007. After the August 2008 unrest, which included protesters seizing Bangkok's airports, the index fell around 45 percent to a December trough before climbing more than 90 percent within 10 months.
During 2010's March-to-May protests, the SET dropped around 12 percent before climbing more than 44 percent from its trough by the end of the year.
Another factor possibly helping to support the market in a country known as the Land of Smiles: general optimism.
"It was hard to see how things were going to turn out in the last five to six years. It's an ongoing problem since the coup in 2006," Adithep said. "We will be able to work things out in the end. I don't think it's the Thai way to go to war."
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1