After losing 9% year-on-year in the first nine months of 2025, the Stock Exchange of Thailand (SET) index is moving into the final quarter with more bullish sentiment, topping 1,300 points in early October thanks to the new government’s economic stimulus and an easing cycle for Thai interest rates.
The Anutin Charnvirakul government unveiled a stimulus package for its four-month tenure, aiming to lift domestic consumption and public confidence. Core measures include an expanded “Khon La Khrueng” co-payment scheme, easing consumers’ cost of living, and debt restructuring support for small businesses, supplemented by tourism revival initiatives.
Endorsed by the cabinet on Oct 7 with a budget of 44 billion baht, the co-payment scheme creates a powerful but temporary boost for the last two months of the year. Petrol prices were previously cut, while electricity tariff and train fare reductions are on the cards.
Tourism revival measures, including incentives for second-tier destinations, are expected to potentially add 2-4 million visitors over the next 12-18 months, according to CGS International Securities (Thailand).
“The Thai bourse is being driven mainly by the performance of the new government’s stimulus policies, such as the co-payment scheme and secondary province tourism promotion, all of which are positive for stock investment,” said Apichat Poobunjirdkul, senior strategist at Tisco Securities.
To stay firmly above 1,300 points, daily trading value on the SET should exceed 40 billion baht, said Mr Apichat, as the current trading value of roughly 30 billion baht is considered “too low”.
The SET should also benefit from falling Thai interest rates, he said.
“Past data indicates the Thai index reacted positively to every rate cut by the Bank of Thailand, except for the reduction during the pandemic,” said Mr Apichat.
A cut of 25 basis points (bps) generally lifts the SET index by 50 points, according to the brokerage.
SHORT-TERM BOOST
Chaiyatorn Sricharoen, an analyst at CGS International Securities (Thailand), said the brokerage anticipates incremental spending of 40-70 billion baht from the co-payment programme, equivalent to a GDP bump of 0.2-0.4 percentage points.
“In our view, the scheme ensures high marginal propensity to consume, especially among low-income households who must co-pay, but the exclusion of chain retailers could divert share from modern trade to traditional trade,” he said.
Meanwhile, electricity tariff cuts are seen as the most impactful lever among the cost-of-living relief programme in terms of lifting consumption. A 5-10% cut or roughly 0.20-0.40 baht per megawatt-hour (unit) could save households 75-150 baht per month and create modest demand from fast-moving consumer goods companies, according to CGS.
Despite near-term visibility of the government’s policy package, structural reforms remain politically uncertain, said Mr Chaiyatorn.
“We believe structural policies, such as infrastructure investment, agricultural upgrades, and long-stay visa reform, face significant political constraints under a minority coalition government,” he said.
Rakpong Chaisuparakul, senior vice-president of KGI Securities (Thailand), said while domestic factors look more positive regarding a short-term stimulus, most of the prepared packages were largely priced in.
As a consequence, the brokerage believes the SET index could extend some gains in October, but the upside seems to be limited, he said.
EASING CYCLE
Soraphol Tulayasathien, senior executive vice-president of the SET, cited the Federal Reserve’s rate cut in September, the first reduction since December 2024, as one of the reasons boosting the Thai index by 3% last month.
Despite the rebound, Thailand’s benchmark index fell by 9% in the first nine months of this year, with foreign investors net sellers of 96.2 billion baht worth of Thai stocks.
The Fed is widely expected to slash the federal funds rate when it meets on Oct 28-29, lowering borrowing costs and preventing the shaky job market from collapsing.
According to CME Group’s FedWatch tool, investors expect the Federal Open Market Committee to trim the rate by 25 bps to a range of 3.75% to 4%, marking the lowest level since December 2022.
“Following the September cut, two more reductions are expected,” said Mr Soraphol.
Monetary policy easing has prompted global investors to increase their holdings in stocks and safe-haven assets, particularly gold, the price of which has surged to record highs in global markets.
In Thailand, the Monetary Policy Committee (MPC) on Oct 8 left its key interest rate unchanged at 1.5%, after a reduction of 25 bps in August.
The central bank has lowered the policy rate four times, by 100 bps, since October last year.
Veeravat Virochpoka, head of research at FSS International Investment Advisory Securities, said the MPC is expected to trim rates once or twice over the next 12 months, bringing the one-day repurchase rate to 1% to bolster the subdued economy.
Pipat Luengnaruemitchai, emerging Asia economist at BofA Securities, shared a similar view, adding most MPC members remain relatively hawkish, preferring to preserve policy space and believing monetary policy is not an effective tool to support the economy.
“While the decision to maintain the rate this time was in line with our expectations, we continue to anticipate cuts to the terminal rate of 1%, given the weak economic momentum, low inflation and strong baht,” he said.
Looking ahead, Mr Soraphol said challenges remain in terms of the US debt ceiling, the state of the US economy, and uncertainties surrounding American fiscal and monetary policy.
Stock market analysts agree, noting the direction of US monetary policy remains unclear as US macro readings are still strong and Fed officials are split into dovish and hawkish camps.