Falling interest rates to benefit Thai banks

As global interest rates are clearly on a downward trend, with the Bank of Thailand expected to cut its policy rate again in December, banking stocks should benefit, according to analysts.
Last Wednesday, the Monetary Policy Committee unexpectedly cut the policy rate by 25 basis points (bps) to 2.25%, the first reduction in more than four years.
Indonesia and the Philippines also lowered their interest rates by 25 bps.
Major economies are following the same path, with the European Central Bank slashing rates three times by 75 bps, the Bank of England once by 25 bps, and the US Federal Reserve once by 50 bps.
Developed countries are expected to use easing monetary policies to lift their economies.
Bloomberg predicts interest rates at year-end 2025 in the US at 3.5%, eurozone 2%, the UK 3.75%, and Thailand 2.0%, said Asia Plus Securities (ASPS).
“The Bank of Thailand is expected to cut interest rates again at its December meeting,” Bualuang Securities (BLS) said in a research note.
“Banking stocks will improve after the interest rate cut, with new investment projects starting to emerge and new quality loans coming.”
BLS recommends Bangkok Bank (BBL), Kasikornbank (KBANK) and Krungthai Bank (KTB) as top picks among Thai banks.
ASPS said investors should assess three groups of stocks that will benefit from the downward interest rate cycle.
The first group involves stocks with the opportunity for higher income, such as brokerage stocks, recommending KGI Securities Thailand (KGI), Maybank Securities Thailand (MST) and FNS Holdings (FNS); retail stocks, including CP Axtra (CPAXT), CP ALL and Berli Jucker (BJC); and real estate firms such as AP Thailand (AP), SC Asset Corporation (SC), and Supalai (SPALI).
The second group covers stocks where financial costs will decline that have laggard prices. These sectors include petrochemicals, namely Indorama Ventures (IVL) and PTT Global Chemical (PTTGC); finance, including Muangthai Capital (MTC), Srisawad Corporation (SAWAD) and Ngern Tod Lor (TIDLOR); building materials, namely Siam Cement (SCC); and contractors such as Ch. Karnchang (CK) and Sino Thai Engineering and Construction (STEC).
The third group comprises 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) said it believes the rate cuts will help to stimulate the economy, reduce consumers’ financial burden and improve their purchasing power, and increase quality loans for banks.
Last week’s rate cut came at a time of tensions in the Middle East, dim prospects for the Chinese economy, and an uncertain US-China trade war, said the brokerage.
KCS recommends investors opt for stocks benefiting from lower interest rates, including hire-purchase businesses such as MTC and JMT Network Services (JMT); power plant operators such as Gulf Energy Development (GULF) and Global Power Synergy (GPSC); the high-debt group, namely CP ALL, True Corporation (TRUE) and IVL; real estate businesses such as AP Thailand (AP), Sansiri (SIRI) and SC; and the high-yield group, particularly Advanced Info Service (ADVANC).