Thailand's stock rally this year would be stunning even without a mid-May coup, but analysts are divided on whether the market can get a second wind.
"Market sentiment will soon turn sour," Kasem Prunratanamala, an analyst at CIMB, said in a note Tuesday. "The market has priced in most of the good news while slow progress in policy implementation is likely to disappoint."
He expects a slew of issues will weigh on shares ahead, including the likelihood the new government will offer only minimal farm subsidies, an anticipated rise energy prices and a likely dent to consumption from a possible increase in the value-added tax next year.
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"We would not chase the market at this level," he said, noting shares are trading around 12.8 times 2015 forecast earnings, or 9 percent above their historical mean. Kasem advises waiting until the SET index falls below 1400.
The index closed Wednesday at 1591.89 after surging more than 29 percent from where it opened the year.
But others expect the party will continue.
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"Despite lofty valuation we see limited downside as it is supported by domestic liquidity that has limited investment alternatives," Maria Lapiz, an analyst at Maybank-KimEng, said in a note Monday, tipping the index could rise toward 1642. "The SET can be considered a safe haven in the short term."
In addition, she expects foreign funds could step up their buying in the country after essentially remaining absent since last year.
Amid political turmoil in 2013, foreign investors pulled around 194 billion baht, or $6 billion, from Thai shares, reversing the inflows from the previous four years. So far this year, foreign investors have sold a net $327 million worth of Thai mutual funds and exchange-traded funds, according to data from Jefferies.
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"With the political leadership delivering stability to the country, foreign investors, especially active-fund types, could start to gradually increase exposure," she said.
After more than six months of political protests and two days of martial law, Thailand's army chief General Prayuth Chan-ocha declared the military had seized power in a coup in May. The country has faced 19 military coups, 12 successful, since it became a constitutional monarchy in 1932.
In addition, "if the anticipated sell-off of the Indonesian stock market, post fuel hike in November 2014, comes to pass, the SET could pick up some of the foreign flows," Lapiz said.
Others also cite some general optimism over the market.
"Clients remain positive on Thailand," Nithi Wanikpun, an analyst at Nomura, said in a note this week after marketing meetings in Singapore and Kuala Lumpur. "We did not sense that there was a big rush to exit."
But he noted that many investors were concerned that large-cap stocks were fully valued and looking for new ideas.
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For its part, Nomura is staying positive on Thai stocks.
"Although short-term correction in the market has not been ruled out, we believe long-term fundamentals remain intact," Nithi said, expecting the index could reach 1839 by the end of next year.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1