Bank of Thailand’s move to suspend both dividends and share buybacks means that they want banks to maintain equity in the midst of the economic downturn caused by Covid-19, the reserves will be used to help companies weather the pandemic storm.
As expected, stocks of financial institutions fell by more than 5% following the announcement from Bank of Thailand on Friday evening for banks to suspend dividends and share buy backs for 2020, in order to maintain equity for businesses during Covid-19.
Shares of Bangkok Bank, Siam Commercial Bank and Kasikorn Bank fell 5-6% on Monday morning at opening.
There will be a sector rotation during this wait for dividends, and industry analysts are eying the energy sector, as it’s having a “moment”.
This move by Bank of Thailand will certainly impact the overall market sentiment, as it sends a signal that perhaps financial institutions are struggling.
However, central banks in Europe, United Kingdom to New Zealand has also issued similar policies during March-April in order to cope with the economic pressures of the pandemic. It should just send short-term shockwaves, but time will tell.
