Banking stocks jump on rise in US bond yield

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Stocks in the banking sector bounced during the mid-day break on Friday as the 10-year US treasury bond yield rose to 1.57 per cent in Asian trading, creating a positive sentiment around increasing interest rates, said analysts.

Kasikornbank (KBANK), the second largest commercial lender by total assets, traded at 150 baht per share, rising 3.81 per cent, with a heavy transaction value of 3.82 billion baht. The price was the highest since December 2019.

Bank of Ayudhya (BAY) gained 5.93 to 35.75 baht per share, Siam Commercial bank (SCB) rose 2.30 per cent to 111 baht per share, and Bangkok Bank (BBL) jumped 1.61 per cent to 126.50 baht per share.

“Banking stocks rebounded, with speculation on the rising 10-year US bond yield,” said an analyst at RHB Securities, adding that this should be “an uptrend for a while from an inflation trend that could increase the interest rate, which is beneficial for the banking group,”

An analyst at Yuanta Securities selected KBANK as a top pick for the day, estimating the profits in 2021 to grow 14 per cent year-on-year to 33.7 billion baht.

Likewise, Country Group Securities recommended buying KBANK at the target price of 149 baht given its loan growth among big banks. “We believe that its outstanding loan growth relative to peers is mainly driven by the high proportion of SME loans in its portfolio,” they added.

As a result, KBANK “could be one of the biggest beneficiaries of a domestic economic recovery post Covid-19” backed by the government’s relief measure to offer low-cost loan programs and the revival of tourism, the analyst said.

The bank’s loan portfolio comprised 33 per cent of small and medium enterprise clients, 21 per cent higher than other big banks in Thailand.

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