Although uncertainties persist in both the Thai and global economies, bank stocks have recently regained attention. Could this indicate a market rebound phase with investors increasing their holdings in large-cap stocks?
Starting with Mongkol Puangpetra, Deputy Managing Director for Investment Strategy at Dao Securities (Thailand). He told Thairath Money that the Thai stock market (SET Index) has seen widespread buying across various industries, approaching 1,600 points, particularly in three main themes:
1. Banks and high-dividend stocks.
2. Sectors benefiting from economic stimulus measures, such as WHA industrial estates.
3. Industries previously impacted by the war, including airlines, hotels, and power plants, as the market has largely priced in these effects.
Additionally, investors are gradually buying the top 10 largest stocks, often targeted first by foreign investors. The firm has adjusted its portfolio focus to CPF, CPN, COM7, GULF, BGRIM, and KBANK, moving away from the previous holdings of ADVANC, SCB, and KTB.
Regarding dividend stocks, banks remain attractive for three main reasons: 1) accumulation ahead of dividend payments expected in Q2/2026; 2) significant recent price declines; 3) being core market stocks with current dividend yields around 7%. The three banks of interest are KBANK, SCB, and KTB.
However, investing in bank stocks requires close monitoring of factors such as interest rates, which affect net interest margin (NIM) sustainability, and credit quality, particularly non-performing loans (NPLs). The emergence of branchless 'virtual banks' this year is not expected to impact listed banks due to differing customer bases.
From Prakit Siriwattanaket, Managing Director of Mershin Partners Asset Management. He explained that although bank stocks have benefited from rising interest rates over the past 2-3 years, their core lending business faces increased challenges. Loan growth depends heavily on the Thai economy; a downturn could impact existing loans, requiring higher provisions and thus reducing bank profits and shareholder dividends.
Therefore, the key to buying dividend stocks is understanding the source of the dividends, as past returns do not guarantee future payouts. Even if a stock looks good now, ongoing business developments must be monitored.
Prakit personally finds dividend stocks attractive when they have strong cash flow and relatively stable income streams, such as PTT or telecommunications firms like ADVANC, which face limited competition. Companies that manage costs well can maintain competitiveness, achieve steady profit growth, and sustain dividend payments.
Selecting high-dividend stocks requires more than just yield; multiple factors must be considered. DBS Vickers Securities (Thailand) highlights four key points investors should understand and check before buying.
Ultimately, the crucial factor is not just which stocks pay high dividends, but understanding how sustainable and robust the underlying businesses are. Long-term investors must do thorough homework because when portfolios decline, only the investor bears the risk.
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