The move is driven by the downward trend of interest rates, good prospects for ministerial approval for the interconnection charge rate for telecom operators and a second round of bidding for electricity from independent power producers (IPPs).

"We expect that interest rates will fall. The interconnection charge rate and the IPPs bidding should be concluded soon," Keith Neruda, UBS Securities (Thailand) head of Thai Research, said yesterday.

While the property sector will benefit from falling interest rates, Neruda said that the banking sector on the other hand would be less positively affected. UBS therefore rated bank stocks' prospects as neutral.

The international brokerage has also given a neutral rating to energy stocks, given weakening oil prices.

Paul Donovan, UBS Global Economics, forecast that the US Federal Reserve Bank would from March start to cut its key interest rate. UBS expects a 100-basis-points decrease throughout the year.

He predicted that the Bank of Thailand would follow suit by lowering its policy signal rate by around 150 basis points next year.

Donovan said he expected gross domestic product to grow by 3.9 per cent next year, compared to this year's 4.3 per cent.

The lower forecast is mainly due to the domino effect caused by the global economic slowdown and domestic political issues.

He said foreign direct investment (FDI) would also slow down.

"FDI in Thailand will gradually recover. So far, no FDI has been pulled back, however the inflow of new investment funds is not significant," said Donovan.

Due to weak exports and an investment slowdown, Donovan forecast that the baht would be Bt37 against the US dollar at the end of next year. During the year, there might be some volatility.

Piyarat Setthasiriphaiboon

 The Nation