ThailandS government is moving to address the economic fallout from recent severe flooding in the southern provinces, with a proposed extension of its popular “Half-Half” co-payment scheme. The program, which provides a 50% subsidy on purchases, is expected to be discussed by the Cabinet next week as authorities assess the damage-estimated at over 1.6 billion baht across ten provinces as of November 27-and work to revitalize local economies. Beyond immediate relief, the response also includes close observation of the Bank of Thailand’s upcoming monetary policy decisions and potential shifts in the Thai stock market.
Thailand’s Cabinet is expected to approve a special phase of the “Half-Half” economic stimulus program next week, aimed at bolstering the country’s southern provinces.
November 28, 2023
Thailand’s government is preparing additional economic support for its southern region, which has been significantly impacted by recent flooding. According to reports, the Cabinet will consider approving a special extension of the popular “Half-Half” co-payment scheme during its next meeting.
The program extension is specifically targeted at provinces affected by the floods, with the goal of stimulating local economies. The southern region accounts for 8% of Thailand’s overall GDP, making its economic health a significant factor for the nation. The city of Hat Yai, a key tourism destination, is also within the affected area.
Positive news emerged regarding the flooding in Hat Yai, Songkhla province, with reports indicating that the situation likely peaked on November 25. Authorities anticipate a gradual improvement beginning November 26, as rainfall decreases. While high tides between November 26-29 may present some drainage challenges, conditions are expected to improve significantly from November 30 to December 3, with a return to normalcy anticipated around mid-December. Other southern provinces are also expected to see water levels recede starting November 26.
Analysts are also examining the potential impact of the floods on the Thai stock market. Sectors expected to benefit include consumer staples, with companies like CPALL, CPAXT, BJC, and CRC potentially seeing increased demand. Businesses involved in home repairs, such as DOHOME, GLOBAL, HMPRO, MRDIYT, and TOA, could also experience a boost.
Meanwhile, the Bank of Thailand’s (BOT) monetary policy committee meeting in December is under close scrutiny. The central bank is weighing whether to lower interest rates, but opinions are divided. Current indications suggest the committee is leaning towards maintaining the current rate, preferring to observe the effects of the government’s economic stimulus measures before considering a reduction at the February meeting.
The prevailing sentiment among investors is that a rate cut in December is unlikely. However, should the BOT unexpectedly lower rates, it would likely be viewed as a positive surprise for both the bond and stock markets. This could bolster rate-sensitive sectors like finance and real estate.
Some analysts predict the BOT may still reduce the policy rate once in December and twice more in the first half of next year. Companies with high levels of floating-rate debt, such as CENTEL, GPSC, and TRUE, could benefit from lower borrowing costs. Increased consumer spending could also benefit companies like AP and MTC.
Finally, stock market observers are anticipating changes to the SET50 and SET100 indices in January-June of next year. GLOBAL, ITC, and SAWAD are seen as potential additions to the SET50, while BCP, KKP, and VGI may be removed. The Stock Exchange of Thailand is expected to announce the changes in mid-December. For the SET100, BPP, CKP, and SAPPE are potential additions, while JTS, MBK, and WHAUP could be removed.
