(Bloomberg) -- The Thai central bank’s surprise rate cut is likely to provide further momentum to the country’s equity market in the fourth quarter, the local exchange’s chief said.
“It gives an optimistic view for the last quarter for Thailand,” Asadej Kongsiri, the president of Stock Exchange of Thailand, said in a Bloomberg TV interview on Thursday, referring to the rate decision. “There are certain sectors of companies listed on the stock exchange that will benefit from this.”
Asadej’s optimism underscores relief in the market as a lower borrowing cost eases the pressure of a stronger baht. That will help exporters and tourism-related firms, he said.
Domestic shares have surged more than 17% from a low in August as authorities implemented a series of measures to revive investor confidence after a number of corporate scandals, concerns over illegal short selling and a spell of political turmoil dented sentiment. That’s turned the Thai stock benchmark into one of the best performers globally in the second half of the year after ranking at the bottom in the first six months.
Bank of Thailand on Wednesday unexpectedly cut its benchmark interest rate for the first time in more than four years. That spurred a 1.4% advance in the Stock Exchange of Thailand SET Index and prompted overseas investors to buy $126 million of local shares on a net basis after 14 days of outflows.
The gauge extended gains by as much as 0.9% on Thursday.
The exchange is also working on a plan to encourage companies to raise their valuations and build a research infrastructure to help small-cap firms, Asadej said. It’s in discussion with the government and brokerages to deploy artificial intelligence “to help develop at least initial research” for less-covered companies.
The recent rally in Thai stocks also bodes well for the pipeline of initial public offerings, he added. “We’re hopeful that they will come to market next year,” given the support from the state-controlled Vayupak Fund and ESG-focused funds as well as foreign inflows, he said.
The Vayupak Fund last month raised 150 billion baht ($4.5 billion) from retail and institutional investors to buy local stocks as part of the government’s efforts to boost the market. In July, the government also approved tax allowance and a shorter lock-up period for ESG-focused funds to shore up local shares.
--With assistance from Anand Menon and Eduard Gismatullin.
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