Thailand Microeconomic Weekly Update #5

 MACROECONOMICS WEEKLY UPDATE

The Thai Chamber of Commerce predicts more than 20 million tourists in 2023 although exports will still experience pressure from a global economic recession.

The economy has only recently started to revive, SMEs still have some issues, and this could postpone investment and election campaign plans that suggest an increase in wage costs. 

Rates are likely to climb by 0.5% in these critical meetings while the market will closely look at FED chairman’s Jerome Powell’s interest rate guidance for the coming year.In the coming week there will be monetary policy meetings from major central banks starting with the FOMC on the 13-14 of December and the ECB and BoE on the 15 of Dec. 

 A recovering economy that will be dependent on tourism will support employment, household income, and domestic consumption, as evidenced by a consumer confidence index rising to a 20-month high, but inflation is still rising and is still above the BOT target of 1-3% for headline inflation.

  Thailand’s headline consumer price index (CPI) rose by a less-than-expected 5.55% in November from a year earlier, the slowest pace in seven months, helped by lower food prices, government data showed on Wednesday.

 The core CPI index in November was up 3.22% from a year ago, versus a forecast rise of 3.20%, and following October’s 3.17%, the ministry said.However there is  a  downtrend in inflation is expected to continue from here on which will be a positive for the market and increase foreign fund inflow

The Average headline inflation is still expected at 5.5% to 6.5% for the whole of 2022 and should fall to 2% to 3% in 2023 due to a base effect and a global recession risk, according to senior commerce ministry official. According to the University of the Thai Chamber of Commerce (UTCC) reported on Thursday that the consumer confidence index is rising to a 20-month high during November from 46.1 in October.

INDUSTRY   

Tourism

According to Finance Minister Arkom Termpittayapaisith, Thailand has welcomed 9.78 million tourists (information from the Immigration Office as of December 5, 2022) and it is expected that on December 10, 2022, the number of foreign tourists accumulated to soar to 10 million. full as TAT has set targets in 2022, reflecting the success in reviving tourism in 2022, and bolstering Thailand’s reputation as a top travel destination for both domestic and international travelers.

In addition, Prime Minister Prayut Chan-o-cha on Tuesday ordered the Transport Ministry to directly contact international airlines to increase flights into the country following a surge in demand, according to government spokesman Anucha Burapachaisri.

The Hotel business operator Sentiment Index has improved due to the entering of the high season and recent APEC meeting leading to a recovery of all hotels in the region despite some pressure from the labor market and higher costs with hotel occupancy recovering towards pre pandemic levels.

The Outlook for tourism remains positive as demand is increasing and it is the key sector that will continue to bolster the economy.

ENERGY 

BCPG Public Company Limited (BCPG)

The cabinet approved the Public Health ministry’s proposal to reduce the fee for medical treatment visa under the Non-MT category from 6,000 to 5,000 Baht, this visa allows multiple entries and is valid for 1 year. The visa holder can stay for 90 days and will start on 1 Jan 2023. The new visa will help to promote Thailand to be a medical hub and be medical tourism.

Thailand currently allows tourists coming for medical treatment if they apply for a tourist visa or non-immigrant visa that can stay for 60 days maximum.

This news will be positive for the hospital sector especially Bumrungrad hospital (BH) and Bangkok Dusit Medical hospital (BDMS) because their customer base is about 30-65%.

Star Petroleum Refining Public Company (SPRC)

Star Petroleum Refining Public Company Limited has informed the Stock Exchange of Thailand that the Company’s Board of Directors Meeting No. 4/2022 held on December 6, 2022 has approved the investment in the product distribution business in petroleum with the condition that a resolution must be approved by the shareholders’ meeting of the company on 31 Jan. 2023. The following transactions comprise investment in the business of distribution of such petroleum products:

  1.  Acquisition of 100% shares of Chevron Lubricant (Thailand) Limited from Chevron Asia Pacific Holdings Limited (“CAPHL”) and CT Nominee Holdings (I) LLC (“CTN1”); and (3) CT Nominee Holdings (II) LLC (“CTN2”) whereby the Target Company is a company incorporated in Thailand that will acquire the distribution business. Petroleum products currently operated by Chevron (Thai) Limited (“CTL”) and related assets from CTL.

  2. Acquisition of 2,877,500 ordinary shares and 5,528,430 preferred shares of Thai Petroleum Pipeline Co., Ltd. (“Thappline”), representing 9.91% of the total shares from CAPHL. Thappline operates in the business of transportation and distribution of oil via pipeline system.

  3.  By purchasing shares and lending money to limited companies to be established under Thai law, two companies (“New Company”), one of such new companies will purchase a total of 19 plots of land, which are land used in petroleum products distribution business, from Star Holdings Company Limited (“SHC”).

The assets involved in the transaction are 427 Caltex gas stations, divided into 403 retailer owned and operated gas stations and corporate owned and operated gas stations. 24 companies and 16 million shares or 2.5% of the company’s total shares. Bangkok Aviation Fuel Services Public Company Limited BAFS.

Therefore, investing in the distribution business of petroleum products is considered a strategic expansion strategy that will enable the company to acquire and maintain the end customer base in the petroleum product distribution business and reduce dependence on income from Chevron group customers.

After the investment, the Company will be able to recognize revenue and profit from the Petroleum Product Distribution Business. and other related service businesses immediately.

BANKING 

Siam Commercial Bank (SCB)

On Wednesday the  interest rates went up and SCB was the first bank to do so following the Bank of Thailands (BOT)’s latest policy rate hike. Raising its deposit interest rate to 0.25-1.4% per year and loan interest rate to 0.125%-0.25%, effective today (December 7). Meanwhile, SCB’s minimum retail rate (MRR) will be raised from 5.995% to 6.12% per year, and the minimum loan rate (MLR) will go up from 5.5% to 5.75%. Finally, the minimum overdraft rate (MOR) will go up from 6.095% to 6.345% annually

Bank of Ayudhya  (KRUNGSRI)

BAY’s consumer credit unit, Krungsri consumer, reported 10 month 2022 card spending +19% yoy, new loan +16% yoy, new card subscribers 357,200 growth +34% yoy. 

Most credit card spending comes from insurance, gas, online shopping, and household items. 

These are all positive developments for the sector as this signifies confidence in the economy to raise rates in tandem with the BOT.

LHBANK, TTB, CIMBT

LHBANK, TTB and CIMBT provide Bt2.44b syndicated loan for Synphaet hospital to develop medical complex Ramintra projects.

FINACIAL 

UOBHK completed acquisition of retail securities business and capital market products from Asia Wealth Sec (AWS) on December 6th by acceptance of the transfer of the partial retail securities business and/or capital market products, after AWS’ business were halted by the SEC in relation to MORE fiasco.

COMERCIAL 

The consumer confidence index increased to a 20-month high in November from 46.1 in October, according to a report released on Thursday by the University of the Thai Chamber of Commerce (UTCC). Boosted by improved economic activity following the easing of the COVID-19 curbs and higher foreign tourist arrivals, a survey showed on Thursday.

The domestic economy will also remain a key driver to the Thai Economy to make up for weaker exports.

Thailand SET Index

Foreign investors were net sell with local institution this week awaiting which happens awaiting key central bank meetings.

The SET index has gone sideways down from the long holiday weekend and investors waiting for US inflation data and FED meeting next week.

SET index should trade around 1600 – 1650 with to account for a larger swing during the key central bank meetings next week.

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