HSBC downgraded Thailand's equities to underweight from neutral amid the poor macro-economy and expensive valuations.
"Thailand's economic boom didn't last long," HSBC said in a note, adding that consumer confidence is falling as the effect of populist policies is wearing off, the strong baht has hurt business sentiment and household debt is rising.
Thailand's household debt swelled to 77.5% of gross domestic product (GDP) at the end of the first quarter, close to the 80% level where Bank of Thailand governor Prasarn Trairatvorakul felt financial stability may be at risk, limiting the economy's ability to keep growing. Thailand's household leverage is escalating to catch up to South Korea, which had the highest household debt in Asia at 88% of GDP at the end of March. Malaysia's household debt stood at 80.5% of GDP.
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