Thai interest rate cut fuels stock market surge
Analysts see equities jump as liquidity shifts
Thailand’s stock market has been handed a shot of adrenaline after the Bank of Thailand (BoT) slashed its policy rate by 25 basis points to 1.50%, a move analysts say could send the SET index surging to 1,370 points by the year’s end.
Market watchers hailed the rate cut as the start of “a policy-led re-rating phase” that will redirect domestic liquidity from low-yield government bonds into equities.
“This is more than just cheaper borrowing—it’s a recalibration of Thailand’s economic engine,” said Krungsri Securities Assistant Managing Director and Head of Research, Koraphat Vorachet.
In the short term, households and small businesses stand to benefit from reduced funding costs, while bond yields are set to rise, compressing risk premiums across capital markets. This could bolster confidence in real estate investment trusts (REITs) and utility stocks.
Banks may face pressure on profit margins, but analysts argue asset quality should improve as consumer purchasing power rebounds.
“Every 25 basis point cut could lift the SET index by 50 to 55 points.”
The global backdrop is also playing into Thailand’s hands. The US Federal Reserve is expected to trim rates in September, while China has announced a massive 1 trillion yuan (around 5.05 trillion baht) stimulus package. A stronger baht—trading at 32.3 to the US dollar—has already lured capital inflows to regional markets.
Investors are now eyeing winners from the new policy. Power producers, banks, and consumer-linked stocks are forecast to gain the most. Siam Commercial Bank, Krungthai Bank, and Kasikornbank could benefit from lower credit costs, while companies like Krungthai Card, Muangthai Capital, AP Thailand, and CPALL may see improved cash flows and borrowing conditions, Bangkok Post reports.
Risks remain. A weaker tourism recovery, higher oil prices, or trade disruptions could derail the rally, while political uncertainty—particularly the Constitutional Court’s pending verdict on the prime minister’s leaked audio—adds volatility.
Even so, brokerages remain upbeat. Finansia Syrus Securities predicts another rate cut later this year to keep momentum alive.
“The direction is clear—liquidity is moving back into equities.”
With global and domestic winds shifting in its favour, Thailand’s stock market is gearing up for what could be its strongest rally in years.
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