As global interest rates continue to decline, analysts suggest that Thai banks are poised to benefit, especially with the Bank of Thailand likely to reduce its policy rate again in December.
Last Wednesday, the Monetary Policy Committee made a surprising move by lowering the policy rate by 25 basis points (bps) to 2.25%, marking the first reduction in over four years.
Following suit, both Indonesia and the Philippines also decreased their interest rates by 25 bps.
This trend is echoed by major economies, including the European Central Bank, which has implemented three rate cuts totaling 75 bps, the Bank of England with a 25 bps reduction, and the US Federal Reserve, which cut rates by 50 bps once.
Developed nations are expected to adopt easing monetary policies to boost their economies.
Bloomberg forecasts interest rates for year-end 2025 to be 3.5% in the US, 2% in the eurozone, 3.75% in the UK, and 2.0% in Thailand, according to Asia Plus Securities (ASPS).
Bualuang Securities (BLS) noted in a research report, “The Bank of Thailand is anticipated to cut interest rates again during its December meeting.”
They further stated, “Following the interest rate cut, banking stocks are expected to improve, paving the way for new investment projects and quality loans.”
BLS recommends Bangkok Bank (BBL), Kasikornbank (KBANK), and Krungthai Bank (KTB) as top investment choices among Thai banks.
ASPS advises investors to consider three groups of stocks that are likely to gain from the falling interest rate environment.
The first group comprises stocks positioned for higher income, such as brokerage firms KGI Securities Thailand (KGI), Maybank Securities Thailand (MST), and FNS Holdings (FNS); retail stocks like CP Axtra (CPAXT), CP ALL, and Berli Jucker (BJC); and real estate companies such as AP Thailand (AP), SC Asset Corporation (SC), and Supalai (SPALI).
The second group includes stocks expected to experience reduced financial costs but with currently low valuations. This category features petrochemicals like Indorama Ventures (IVL) and PTT Global Chemical (PTTGC); financial firms such as Muangthai Capital (MTC), Srisawad Corporation (SAWAD), and Ngern Tod Lor (TIDLOR); along with building materials such as Siam Cement (SCC) and construction companies like Ch. Karnchang (CK) and Sino Thai Engineering and Construction (STEC).
The third group focuses on high-dividend stocks, including PTT, Tisco Financial Group (TISCO), CPN Retail Growth Leasehold REIT Unit (CPNREIT), Digital Telecommunication Infrastructure Fund (DIF), and Land and Houses (LH).
Krungsri Capital Securities (KCS) expressed that the rate cuts should stimulate the economy, alleviate financial burdens on consumers, enhance their purchasing power, and increase the number of quality loans available to banks.
The recent rate reduction occurred amid tensions in the Middle East, bleak forecasts for the Chinese economy, and the ongoing uncertainty surrounding the US-China trade war, as noted by the brokerage.
KCS recommends that investors focus on stocks benefiting from lower interest rates, including hire-purchase companies such as MTC and JMT Network Services (JMT); power plant operators Gulf Energy Development (GULF) and Global Power Synergy (GPSC); high-debt companies like CP ALL, True Corporation (TRUE), and IVL; real estate businesses including AP Thailand (AP), Sansiri (SIRI), and SC; and those in the high-yield sector, particularly Advanced Info Service (ADVANC).
