Thailand Weekly Economic Update

Thailand’s economy looks good for beginning year, with major foreign investors mainly acting as buyers and driving the economy forward. The Thai baht strengthened as capital inflows from abroad boosted the economy.Inflation seems to be better adjusted when fuel prices fall.

The influx of tourists, primarily from Russia and Europe, has continued to boost the Thai economy. However, when the value of the Thai baht increased relative to the US dollar, import prices decreased in accordance with the trade balance deficit.

Thailand is expected to hold a general election next year, with political parties kicking off their campaigns offering promises that will affect the fiscal stability and competitiveness in the long term, as Thailand still faces several economic challenges.

Philippines Macroeconomic Updates

• The Philippines’ two top property developers, SMPH (P36.40, +3.70%) and ALI (P31.50, +5.18%) led the index higher, offsetting the losses from CNVRG (P15.46, -3.98%), MPI (P3.46, -4.16%) and GTCAP (P439.00, -6.60%). CNVRG, MPI, and GTCAP were sold down as part of the MSCI Index review, which downgraded the three companies from the MSCI Standard Index to the MSCI Small Cap Index. Optimism on SMPH and ALI was likely fueled by a study released by property listing website Lamudi, which showed that OFWs are keen again on using their money to lease or purchase a permanent home for their families in the Philippines.

• S&P Global Manufacturing PMI for November came in at 52.7 vs 52.6 in October, sustaining the brisk business activity seen since troughing out in July 2022. According to the release, Employment Index fell below the 50.0 mark, which is the first slide in the workforce numbers since March. ASEAN November Manufacturing PMI declined to 50.7 vs 51.6 in October.

• While ASEAN countries continued to show expansion in business activity, this is the softest manufacturing reading during the past 8 months. Singapore’s 56 was the top performing ASEAN nation, followed by the Philippines at 52.7, Thailand’s 51.1 and Indonesia’s 50.3. Malaysia and Vietnam dragged with PMI readings of 47.9 and 47.4 respectively.

• The BSP chief expects the Fed to hike by 50 basis points on its upcoming meeting, followed by a series of 25-basis-point hikes moving forward. Considering this, Medalla stated that the BSP would likely respond with a 25 or 50-basis-point rate increase on its December policy meeting. Medalla said, “Certainly we will not do zero and I cannot speak for the rest of the board. But I think the board members will probably be split between whether doing 25 or 50.”

• Members of the Development Budget Coordination Committee (DBCC) announced Monday (December 5) that growth will likely ease up next year to settle within 6-7%, coming from 2022’s 6.5-7.5% forecast range. Year-to-date growth is at 7.7% as of September. Growth is seen picking up anew between 6.5-8% annually between 2024 to 2028.

• The Bangko Sentral ng Pilipinas (BSP) expects inflation to decelerate in the coming months after hitting another high of 8% in November 2022. The Philippine Statistics Authority reported on Tuesday (December 6) that inflation last month surged faster due to a 10% increase in food prices from a year ago, followed by higher costs of restaurant menu items and tourist accommodation, combined with increases in other products like clothing, footwear, alcohol, tobacco, household furnishings, and health expenses.

• In an interview with journalists after the economic managers’ meeting on Monday, November 4, Diokno assured the Bangko Sentral ng Pilipinas has a deep arsenal of foreign exchange, a part of which could be diverted to the Maharlika Investment Fund, a pet project of President Bongbong Marcos. Diokno pointed out that the country’s gross international reserves are good for 7.5 months of the country’s import bill, or more than double the three-month forex reserves standard.

• The Bureau of Immigration (BI) sees an increase in the number of tourist arrivals in the country during the holiday season. In October alone, the PHilippines recorded more than 600,000 tourist arrivals. Sandoval attributed this to the relaxation of travel restrictions due to the country’s improved COVID-19 situation.

• Former President and now Senior Deputy Speaker Gloria Macapagal Arroyo insisted there’s a powerful safeguard against the misuse of the proposed Maharlika Wealth Fund amid concerns it will become a slush fund of select individuals. She added that Marcos won’t be commandeering the fund by himself, as he will have reliable experts around him.

• Rizal Commercial Banking Corp. expects the peso to trade between 55.30 to 56.00 next week. The local currency closed at P55.71 a dollar from P56.1 on Thursday. Volume reached USD1.28 billion, up from Thursday’s USD898.7 million.

Industry News

Real Estate and Properties

• Manuel Villar disclosed last Friday that he plans on investing around $1-Bn to expand into the integrated gaming resort business, beginning with the redevelopment of Vista Mall Global South located along the C5 extension in Las Pinas. With a 18,000 square meter (sqm) gross floor area, the mall will be converted into a Las-Vegas style casino roughly around the size of Solaire’s gaming space. By redeveloping an existing structure, Villar would be saving about a year of construction work. He also mentioned that the casino will not necessarily focus on high rollers but will focus instead on slot machines for the mass market, in line with Las Vegas gaming hub models.

• Consunji-led DMCI Homes saw sales skyrocket in the third quarter, pushing earnings higher by a quarter to P1.15 billion. From July to September, DMCI Homes grew sales and reservations by 159 percent to 2,610 units, comprising of 1,473 residential units and 1,137 parking slots. With stronger sales and higher selling prices, DMCI Homes registered a 177 percent spike in its total sales value to P11.7 billion.

• The Court of Appeals has approved a compromise deal between businessman Jose Go’s bankrupt Ever Gotesco and government-owned Land Bank of the Philippines, which slashed P252 million off his original debt. In a November 24, 2022 decision, the court’s Special Sixteenth Division acknowledged the new agreement between the two parties in settling Ever Gotesco’s outstanding loans. The compromise amount is set at P73 million, representing a principal amount of P50 million plus interest of P23 million

Industrials

• D&L Industries of the Lao family has deferred anew the start of commercial operations of its manufacturing plant in Batangas due to delays in processing permits and certifications, as well as the late arrival of shipments from various overseas suppliers on account of global supply chain disruptions. Start of commercial operations of the facility was initially slated in May 2022, and was later on moved to January next year.

• Iloilo City Mayor Jerry Treñas said the provincial government is excited over the plans of International Container Terminal Services, Inc. (ICTSI) to take over the Iloilo Commercial Port Complex.

• In a regulatory filing, Apex said its board approved the acquisition of 1.9 million shares of Asia Alliance Mining Resources Corp. (AAMRC) for $42.89 each share or a total consideration of $81.50 million. Apex Mining said $5.5 million would be paid upon signing of the share purchase agreement, while the balance of $76 million will be paid in four equal annual installment over the next five years.

• In a stock exchange filing, Prime Media said its parent company RYM Business Management Corp. and the majority shareholders of Golden Peregrine Holdings Inc. have proceeded with the execution of an amended memorandum of agreement (MOA). The amended MOA, which was approved by the company’s board of directors in July 2021 and by its shareholders in September last year, will lead to the acquisition of Golden Peregrine as a direct subsidiary, and Philippine Collective Media Corp.(PCMC) as an indirect subsidiary.

• An education powerhouse is in the making with the planned merger of the National Teachers College (NTC) and Affordable Private Education Center Schools (APEC), two schools owned by iPeople Inc. of the Ayala and Yuchengco families. The merger, however, is still subject to the filing of the relevant applications and obtaining the requisite regulatory approvals, including the endorsement of the Commission on Higher Education and Department of Education, and the green light from the Securities and Exchange Commission.

Power and Utilities

• Semirara Mining & Power Corp. chairman Isidro Consunji warned of a possible “challenging” supply scenario” in 2023. The Luzon grid has already been placed in yellow and red alerts in the past week due to thin supply. Consunji said liquefied natural gas (LNG) is not yet fully available in 2023 thus electricity prices will likely go up.

• The Ayala Group’s listed energy platform, ACEN Corp. is set to complete its acquisition of a project company developing a 60-megawatt solar power plant in Pangasinan by the middle of the month. ACEN disclosed that it executed an agreement for the purchase of Sungrow Power Renewables Corp. and Havilah AAA Holdings Corp. ’s shares and/or subscription rights in Sinocalan Solar Power Corp. (SSPC).

Philippines Stock Market

• The PSEi jumped 232.25pts (+3.61%) to close at 6,674.38 despite local inflation for November coming in higher than expected at 8.0% (vs. consensus estimates of 7.8%), driven by the higher cost of food items.

• The broader All Shares (+2.17%) and sectoral indices also inched higher.

• Value turnover increased 39% to P5.8Bn while foreign funds saw net inflows (+P270Mn). Top index gainer was JGS (+7.43%) while top index decliner was MONDE (-3.50%).

The Bank of Thailand (BOT) expects Thailand’s GDP 3Q22 will grow more than 3% from the reopening of the country and lower inflation. The economic outlook is still inline with Bank of Thailand (BOT) expectations despite concerns about the global economic slowdown.

Retail borrowers are struggling to pay interest on bank loans, which has jumped by o.5-1.2 percentage points this month alone to 11.5- 13%

Gross domestic product rose 7.6%, beating expectations of 6.3%, due to the increase in household spending as people get back to “pre-pandemic life”.