Thai shares retreated on Thursday as investors weighed in the risk of lower interest rates on earnings of commercial banks, while most share markets in Southeast Asia rebounded as easing monetary policies in Asia helped lift the risk asset sentiment.
Bangkok’s key SET index was down 0.35 per cent at midday, giving up an almost 1 per cent gain on Wednesday after the central bank surprised the market with an interest rate cut to help revive the slowing local economy.
Large-cap banks such as Siam Commercial Bank and Krung Thai Bank reversed Wednesday’s gains.
Siam Commercial Bank cut its lending and deposit rates on Thursday following the central bank’s interest rate decision.
“We should keep a close eye on the decisions of commercial banks to lower their interest rates or not. However, interest rates are unlikely to be lowered by more than 25 bps, in order to maintain the net interest margin, limiting downside risks to big banks,’’ broker Maybank Kim Eng Securities said in a report.
Stocks in Malaysia recouped some losses over the past three sessions, while Indonesia rebounded from a more than two-week closing low on Wednesday and the Philippines gained after the previous day’s fall.
A surprise interest rate cut by South Korea’s central bank on Thursday helped lift an index of Asian stocks away from the previous session’s seven-week lows, while the prospect of higher US interest rates buoyed the dollar.
Stocks in Vietnam eked out small gains. Singapore is set to extend losses for a fourth session after a moderate gain in early trading.