Bangkok: Asia Plus Securities anticipates the newly appointed Governor of the Bank of Thailand (BOT), Vitai Ratanakorn, will implement interest rate cuts one to two times this year, with expectations for the SET index to climb to 1,376 points by the end of 2015.
According to Thai News Agency, Mr. Therdsak Taveethiratham, Executive Director of Asia Plus Securities Co., Ltd. (ASPS), highlighted that the recent appointment of Vitai Ratanakorn by the Cabinet signals potential interest rate reductions due to expected export slowdowns, a strengthening baht, and less effective economic engines. He predicts one interest rate cut may occur in September, possibly followed by another later in the year, which has already positively influenced the Thai stock market. A further 0.25% interest rate cut could bolster the stock market by around 70 points.
The Thai stock market faces a risk factor from the US import tax, although it is expected to drop below 36%. Should this not materialize as anticipated, Thailand's GDP growth might fall below 1.3%, surpassing neighboring countries. Despite this, the impact on the Thai stock market is projected to be minimal as it has absorbed much negative news and is on a recovery path. Additionally, more listed companies are expected to engage in share buybacks, with the second half of the year forecasted to outperform the first half.
Asia Plus Securities projects the Thai stock index (SET INDEX) to achieve a target of 1,376 points by the end of 2025, based on an EPS of 86 baht per share and a policy interest rate of 1.75% with MEYG at 4.50% (+1 SD), offering significant upside potential from the current index level of 1,140-1,170 points.
Negative factors impacting the Thai stock market in the first half of 2025 appear to be waning, including a temporary lull in Middle Eastern conflicts, political stability unlikely to disrupt the 2026 budget bill drafting, and minimal economic fallout from Thailand-Cambodia tensions. The primary concern remains the negotiation of US import tariffs.
The research team forecasts that Thai listed companies will average 262,550 million baht in profits per quarter in the second half of the year, marking substantial growth from the previous year's low base. The annual profit estimate stands at 1.06 trillion baht or 86 baht/share, reflecting a 17% increase from the prior year's 73.5 baht/share, considered more conservative than BLOOMBERG CONSENSUS. Sectors with ongoing profit growth expected to perform well in the third quarter include Finance, Electronic Parts, Hospitals, Real Estate, and Transportation.
Foreign fund inflows are projected to increase in the second half of the year, spurred by the attractive valuation of Thai stocks. Institutional and foreign investor selling pressures are expected to diminish, with LTF funds totaling only 117 billion baht, a decrease of 102 billion baht YTD. Foreign ownership of Thai stocks has also decreased to a recent level of 24.2%.
The SET index currently shows a low valuation, with a 2025 PBV of less than 1.0 times (-2SD), among the lowest globally (MSCI ACWI has a PBV of 3.0 times), while boasting a 2025 DIVIDEND YIELD of 4.8% (+1SD), one of the highest worldwide.
Investment strategies suggest focusing on large stocks across various industries offering high dividend yields or profit growth in 2025, including PTT, SCC, CPALL, BDMS, TRUE, and PLANB.