SET FACES PRESSURE FROM TARIFF DEVELOPMENTS

The Stock Exchange of Thailand performed well in early May after the Bank of Thailand cut its benchmark interest rate by another quarter-point in late April to 1.75%, the second reduction this year.

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First-quarter results that exceeded market expectations also helped sentiment.

The SET Index moved up to 1,221.34 points in mid-May, helped by news of a 90-day “truce” under which the US and China agreed to reduce their ruinous triple-digit tariffs on each other's goods. Despite the positive news, however, the index started sliding down, especially in the last week of May.

One factor was the rebalancing of market weightings in the influential MSCI (Morgan Stanley Capital International) index, effective at the end of May. We had been expecting net outflows of around 12 billion baht, and on the last trading day of the month we saw the highest market turnover of more than 73 billion baht.

The SET ended the month at 1,149.18 points, down 4% from April, though average daily turnover was up 9.9% to 42.8 billion baht.

First-quarter GDP for Thailand grew 3.1% year-on-year, better than market expectations. But it probably will end up being the best quarter for this year. Exports grew from frontloading of shipments before US tariffs kicked in. We expect exports to slow down from now on and the second half could see negative figures as well.

We have also revised down our GDP growth targets for 2025 and 2026 to 1.6% and 1.4%, from previous forecasts of 2.1% and 1.8% respectively. We have a base assumption that the US tariff rate for Thailand will average 20% (from 36% announced earlier). This will be the main source of pressure on GDP growth for the next two years.