Thai Consumer-Finance Stocks Lead in Asia But Maybe Not for Long

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Thailand's consumer-finance stocks have emerged as the top performers in Asia but the surge faces a test from slumping economic growth.

Srisawad Corp., Krungthai Card Pcl, and Muangthai Capital Pcl delivered the past month's best total returns among Asian peers with a minimum $1 billion market value, according to data compiled by Bloomberg.

At the same time, Thailand's slowdown is a big risk for Krungthai Card's target of a 10% increase in personal loans and credit card spending in 2019, Chief Executive Officer Rathian Srimongkol said in an interview.

“Weak exports and tourism will continue to take a toll on the overall economy,” Rathian said Monday in Bangkok. “We'll focus on preventing our asset quality deteriorating.”

Southeast Asia's second-largest economy expanded at the slowest pace since 2014 in the first quarter, hurt by the U.S.-China trade war and a surging currency. Household debt remains elevated, and lenders are expected to focus on credit quality as the outlook deteriorates.

Krungthai Card's earnings growth in the April-June period probably slowed from the previous quarter, mainly because of a pickup in unpaid loans, said Rathian. The firm plans to boost marketing and compete in new segments, such as credit backed by used vehicles.

Srisawad, Krungthai Card and Muangthai Capital each delivered total returns of about 10% or more in the past month, the Bloomberg-compiled data shows. They have been helped by a pick up in foreign purchases of Thai stocks, and optimism that the incoming government will inject economic stimulus.

The stimulus is urgently needed, according to Paiboon Nalinthrangkurn, chief executive officer of Tisco Securities Co. in Bangkok.

“Household debt levels pose a major risk to the economy,” he said.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Subramaniam Sharma

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