Asia Plus Securities predicts the new Bank of Thailand governor will cut interest rates once or twice this year, anticipating a significant boost for the Thai stock market.
Therdsak Thaveeteeratham, an executive director at Asia Plus Securities, stated that following the cabinet’s appointment of Vitai Ratanakorn as the new central bank governor, significant rate cuts are expected. This is due to anticipated slowing exports in the second half of the year, a strong Thai baht, and weakening economic drivers. He expressed confidence in at least one rate cut this September, with a second possible before year-end. A single reduction of 0.25% could lift the stock market by approximately 70 points.
The primary risk for the Thai stock market this year remains potential US import tariffs. However, there is hope that the rate will be lower than 36 percent. If not, Thailand’s GDP growth could fall below 1.3 percent. The firm believes the market has already absorbed much of this negative news and will gradually recover, with more listed companies expected to initiate share buybacks. Overall, the market’s performance in the second half of the year is projected to be better than in the first.
Asia Plus Securities forecasts the SET Index will reach 1,376 points by the end of 2025. This is based on an earnings per share of 86 Thai baht and a policy interest rate of 1.75 percent, offering considerable upside from the current index range of 1,140 to 1,170 points.
It was also assessed that negative factors pressuring the market in the first half of 2024 have begun to ease. These include a temporary calm in the Middle East conflict and domestic political issues not expected to impact the 2025 budget bill. Meanwhile, the remaining major concern is the ongoing tariff negotiations with the United States.
The research division expects profits for Thai-listed companies in the second half of the year to average 262.55 billion Thai baht per quarter. This represents significant growth from the low base of the previous year. The full-year profit is estimated at 1.06 trillion Thai baht, or 86 Thai baht per share, a 17 percent increase from the previous year. Five industry groups are expected to see continued profit growth and perform well in the third quarter. These are finance, electronic parts, hospitals, real estate, and transportation.
Foreign fund flows are expected to gradually return in the second half of the year as Thai stock prices are currently low. Selling pressure from institutional and foreign investors is also anticipated to lessen.Currently, the SET index is considered to have an attractive valuation, with a price-to-book value for 2025 below 1.0, among the lowest globally. The dividend yield for 2025 is projected to be a high 4.8 percent, also one of the highest in the world.
For investment strategy, the firm recommends large-cap stocks diversified across several industries that offer high dividend yields or strong profit growth for 2025. These include PTT, SCC, CPALL, BDMS, TRUE, and PLANB.
Source: NNT
Asia Plus Securities Predicts Interest Rate Cuts Will Propel Thai Stocks in H2
