Bank of Thailand's Rate Cut Boosts Market Sentiment
The Bank of Thailand's unexpected rate cut last week boosted the SET index above 1,500, impacting various sectors. This 25 basis point cut, surprising many market participants, strengthened rate-sensitive stocks and weakened the baht. While this move benefits the finance and property sectors, global economic slowdown risks remain a concern.
In a surprising move, the Bank of Thailand cut its policy interest rate by 25 basis points last Wednesday, boosting the SET index by 20 points and pushing it above 1,500 for the first time since August 2023.
The rate cut, decided by a 5-2 vote from the Monetary Policy Committee, was unexpected, as most market participants anticipated any rate change would occur at the committee's December meeting.
This policy change favored rate-sensitive stocks across finance, property, and energy sectors, and weakened the baht following its prior appreciation.
Technical signals suggest a sideways movement in the SET index, with attention turning to third-quarter earnings results from banks and listed firms.
The rate cut, two months ahead of expectations, is projected to impact 2024 bank earnings minimally while supporting loan growth for major banks like BBL, KTB, and KBANK. Other financial entities such as MTC, SAWAD, TIDLOR, and JMT will benefit from reduced core funding costs.
Property markets are expected to gain from yield improvements, with projected 5-6% dividend yields this year and potential 1-2% upsides to 2024 earnings forecasts due to the debt structure.
Nonetheless, global economic risks persist, driven by potential US economic slowdown warnings, peaking semiconductor sales, and investor complacency.
The rate cut, decided by a 5-2 vote from the Monetary Policy Committee, was unexpected, as most market participants anticipated any rate change would occur at the committee's December meeting.
This policy change favored rate-sensitive stocks across finance, property, and energy sectors, and weakened the baht following its prior appreciation.
Technical signals suggest a sideways movement in the SET index, with attention turning to third-quarter earnings results from banks and listed firms.
The rate cut, two months ahead of expectations, is projected to impact 2024 bank earnings minimally while supporting loan growth for major banks like BBL, KTB, and KBANK. Other financial entities such as MTC, SAWAD, TIDLOR, and JMT will benefit from reduced core funding costs.
Property markets are expected to gain from yield improvements, with projected 5-6% dividend yields this year and potential 1-2% upsides to 2024 earnings forecasts due to the debt structure.
Nonetheless, global economic risks persist, driven by potential US economic slowdown warnings, peaking semiconductor sales, and investor complacency.
