Thailand Microeconomic Weekly Update #32

THAILAND MACROECONOMICS WEEKLY UPDATE

The Bank of Thailand’s Monetary Policy Committee (MPC) implemented a 25 basis points hike, increasing the policy rate from 2% to 2.25%, in line with market expectations. Despite economic recovery leading to a rise in employment, the country’s official jobless rate remained steady at 1.1% in the second quarter, as reported by the government. However, the retailer sentiment index for July 2023 displayed a persistent decline for the third consecutive month, with the level reaching 43, impacting various retail businesses, especially convenience stores, due to weaker purchasing power among low-income households. Additionally, Thailand experienced a 10% year-on-year drop in gold demand in the second quarter, according to the World Gold Council’s report. On a positive note, the country has welcomed 15 million international arrivals in the first seven months of the current year.

INDUSTRY

MEDIA AND PUBLISHING

GMM Grammy Public Company Limited (GRAMMY)

GMM Grammy Public Company Limited has announced that its Board of Directors approved the plan for the Initial Public Offering (IPO) of GMM Music Company Limited (GMM Music), subsidiary of GMM, and the listing of the ordinary shares of GMM Music on the Stock Exchange of Thailand.The proportion of the number of the newly issued ordinary shares and existing ordinary shares of GMM Music to be offered in the IPO (the “IPO Shares”) will not exceed 30.00 percent of the total paid-up capital of GMM Music after the capital increase and the offering of the IPO shares. After the offering of the IPO Shares, the company will remain a major shareholder and the controlling person of GMM Music, and GMM Music will retain its status as the company’s subsidiary.

PROPERTY DEVELOPMENT

Sansiri Public Company Limited (SIRI)

Ananda Development Public Company Limited (ANAN)

The luxury condominium, “The Ashton Asoke,” located in Bangkok and developed by Ananda Development Pub Co., Ltd., is currently facing a crisis. Recently, the Supreme Administrative Court made a judgment that resulted in the revocation of a crucial construction permit for the project. The court ruled that the permit was obtained unlawfully, as the Ashton Asoke project failed to meet specific regulatory standards.

One of the main issues highlighted by the court was the absence of an appropriate entrance for the building. According to building control legislation, a minimum width of 12 meters connecting to a thoroughfare is required, which the project did not fulfill. Adding to the complexity, it was discovered that the project had encroached on part of the Mass Rapid Transit Authority of Thailand’s (MRTA) land to create its entrance, making the situation even more legally problematic. This unauthorized use of MRTA’s land was seen as a significant violation of regulations.

As a result of the court’s ruling, the construction permit was deemed illegal, posing a serious challenge for “The Ashton Asoke” condominium project.

ENERGY AND UTILITIES 

Energy Absolute Public Company Limited (EA)

Energy Absolute Public Company Limited has entered into a Memorandum of Understanding (MOU) with two prominent Chinese partners, EVE and Sunwoda, to collaborate on a joint study and establishment of a factory in Thailand for manufacturing electric vehicle battery cells and electric energy storage systems. The initial production capacity of the factory is targeted at 6 GWh.

The primary objective of this study is to create competitive costs within the battery electric vehicle (EV) and electric energy storage (ESS) industry, in response to the growing demand for batteries in the future. EA Group, which includes the battery market in Thailand and ASEAN, is particularly keen on venturing into the electric vehicle manufacturing and assembly sector, having consistently invested in establishing a production base in Thailand.

BANKING

Kasikornbank Public Company Limited (KBANK)

Kasikornbank (KBank) has initiated the spin-off of its investment business into a new entity, aiming to achieve profits of 5 billion baht within the next three years. This move not only paves the way for new S-curve business opportunities in the long term but also creates a pathway for growth and innovation. The newly established entity, named Kasikorn Investure Co (KIV), functions as a holding company within the KBank Group. It will provide financial services tailored to individuals and entrepreneurs in small businesses, with a particular focus on underserved customers who face challenges in accessing loans from traditional banks.Through this restructuring, KBank gains increased flexibility to expand its retail loans under a new digital-based business model. Emphasizing partnership as a key strategy, the bank aims to facilitate business expansion and, simultaneously, reduce the price-earning ratio and credit costs to optimize efficiency and financial performance. Overall, this strategic move positions KBank for growth in the investment sector while prioritizing customer-centric solutions for those underserved by traditional banking practices.

SECTORAL UPDATE

Last week the SET closed at 1,530.46 points, an increase of 1.45 points (+0.09%), trading value of 44,510.28 million baht. 
 
 
 

The SET index last week was expected to fluctuate between 1500 and 1545 as investors wait for clarity on the government formation after the MPC meeting and the current Relative Strength Index (RSI) is at 44.57, indicating a neutral market sentiment.

 

The USD/THB exchange rate is anticipated to range between 34.60 and 35.00. Investors may exercise caution and monitor developments before making significant market decisions.

In the beginning of August Foreign investors have continued to be net sellers due to the delay of the government formation.

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