The banking subindex rose 1.2 percent, outperforming a 0.5 percent gain in the broader stock market, amid selective buying in some interest rate sensitive stocks ahead of a central bank rate review due later in the day.
Among shares actively traded by turnover, Thanachart Capital Pcl gained as much as 5.2 percent to a 16-year high of 45.5 baht and state-run Krung Thai Bank Pcl jumped 4 percent to 26 baht.
Thirteen out of 17 economists expected the monetary policy committee of the Bank of Thailand to leave the one-day repurchase rate at 2.75 percent.
Any 25-basis-points rate cut would hurt the aggregate net interest margin (NIM) by 2.1 basis points and impact the bottomline by 1 percent and most banks would see a negative impact from a rate cut, Maybank Kim Eng Securities said in a report.
“On the other hand, if interest rates go on a downtrend for the long-term, this will be positive for valuation assessments for banking stocks,” the broker said.
“Even though we remain positive on the growth outlook and maintain our overweight rating for banks, we prefer a selective buy strategy after the recent share price rally. TCAP is our top pick on the cheapest valuation with outstanding growth,” it said.
Reporting by Viparat Jantraprap in Bangkok; Editing by Sunil Nair