The Bank of Thailand is expected to cut interest rates only once this year, at its June meeting, propping up the Stock Exchange of Thailand (SET) index from a low of about 1,350 points at present to a high of 1,450 points this quarter, according to Asia Plus Securities (ASPS).
Taking a conservative view, the brokerage sees the Thai index hitting 1,570-1,580 points by the end of 2024, assuming the Federal Reserve lowers US interest rates only once this year, most likely at its September meeting, said executive vice-president Therdsak Thaveeteeratham.
"Thai GDP has expanded less than expected, with the growth the lowest in the region and lower than the potential growth outlook. Yet we see very limited downside risks for the time being," he said in a briefing yesterday.
The economy should benefit when the delayed fiscal 2024 budget begins to be disbursed as early as next week or the beginning of May, said Mr Therdsak.
The government's digital wallet policy is projected to be implemented in the fourth quarter to stimulate domestic consumption, along with 848 billion baht worth of direct investment being considered by the Board of Investment, he said.
ASPS forecasts the SET index, which slipped below the key resistance level of 1,350 points last Friday, to bottom out this quarter based on the expected interest rate cut in June and the extension of trading hours from 4.5 hours to 5, which started in late March.
Stock market regulators are also planning to strengthen their supervision of short selling and program trading in the second quarter, which should help to increase SET turnover to more than 70% per year, said Mr Therdsak. Average trading volume has decreased by half from 88 billion baht per day in 2021 to 44 billion baht now, he said.
"We anticipate the central bank will cut rates by 25 basis points at its June meeting. Although the cut is minimal, it sends a clear signal that monetary and fiscal policies are moving in the same direction to stimulate the economy. That is what investors have been waiting for," said Mr Therdsak.
Meanwhile, ASPS played down the impact of the conflict between Israel and Iran.
"The ongoing conflicts in the Middle East, like other recent wars, have a psychological impact on stock markets, but the damage is unlikely to be severe unless the US takes part in the fighting," said Bamrungpong Chevatanakornkul, senior vice-president for investment at ASPS.