Historical Data Shows SET Index Will Rally Right After Fed’s Pausing Rate Hikes, Analyst Says

Thailand’s main bourse SET Index fell more than 8% from the beginning of this year as concerns over recession, accelerated by continuous interest rate hikes by major economic countries such as the United States of America, England and the European Union.

SET Index underperformed regional stock markets Malaysia’s FTSE Bursa was down 4.64% YTD, while main bourses in Vietnam, Indonesia, South Korea and China were all in positive territory with the Korean Kospi Index leading the pack with 12.88% gain since the beginning of this year.


Asia Plus Securities (ASPS) expected the U.S. central bank to raise the rate by 25 basis points from 5.00% to 5.25% tonight, followed by the European Central Bank tomorrow and the Bank of England on May 11 by 25bps each.

The brokerage firm noted that the Fed is expected to start cutting its policy rate in 3Q23 as inflation slows down. Meanwhile, the ECB and the BOE are projected to raise the interest rates 2-3 more times – since their inflations are still high and far from the targets of 2% – and then cut the rates in 4Q23.

More importantly, ASPS pointed out that based on historical data, stock markets tend to rally when the Fed holds the interest rate; SET index jumped 19.7% in 2006-2007 and rose 8.8% in 2018-2019.