MACROECONOMICS WEEKLY UPDATE

Consumption grew across the board led by services (+29% YoY) on strong restaurant, hotel and automotive sectors. The former benefited from both international arrivals and copayment phase 5 program.

Business Sentiment Index (BSI) expects the index to improve up to 53.8 in December, up from 49.6 in September due to lower cost-push inflation.Public spending -6.2% YoY, capex -10% YoY. Although government expenditure entered its high season, a high base effect kicked in. On another front, stated-owned enterprise capex (+8.3%) on mass transit, energy projects.

MPI +3.4% YoY, -2.3% MoM, CAPU (63.8%). Drivers were auto (+27.5% YoY), commercial (+34%), petro-related (+22%), semiconductors (+11%).

Tourist arrivals 1.3mn. (5.7mn YTD). Drivers were ASEAN excl. Malaysia (350k), Malaysia (332k), Europe (180k) and the Middle East (60k).

The country’s 3Q22 GDP growth should be able to expand more than in 2Q22 in the range of 3.0 – 3.3% YoY, which will result in 2022 GDP growth of only 2.8%. 

The MPC has more confidence that the economy has already started to become significantly stronger, particularly from domestic consumption and tourists.

USD/THB to move in the range of 37.00-38.30 in November.

The USD could remain volatile from late October to November 3 with four major central bank meetings. The exception of BoJ keeping its policy unchanged, the rest are expected to hike rates 75 bps. However, deteriorating US economic data could undermine the strengthening USD and mean a sooner end to the Fed’s tightening cycle.

INDUSTRY   

PROPERTIES 

 Bank of Thailand (BOT) will not extend the loan-to-value (LTV) ratio regulations that will end on Dec 31, 2022, but has plans to resume in 2023.

Borrowers must make a minimum 0- 10% down payment for first homes and buyers can obtain up to 10% of the property value. For homes valued greater than THB10mn, the first contract requires a minimum 10%, second contract requires 20%, and third contract requires 30%.

TOURISIM 

An increase of QoQ from a solid operation in Europe amid the high season and a strong recovery of domestic hotel occupancy. A loss in 3Q21 from Thailand full lockdown and October 22 is to fully reopen the country to tourism so make profit turn to positive.

HEALTHCARE

The COVID-19 situation remains under control with a low hospitalization rate and deaths since it started. Data shows that the demand for treatment exists and a strong rebound in influenza cases bodes well for hospital revenues. Downside risks are an outbreak of a new COVID strain that results in a higher death rate.

UTILITIES

 Thailand expects the conventional power operators to post combined 3Q22 earnings of 3,000 million, down 57% YoY and 26% QoQ. The weaker earnings are expected to come from an expected unrealized FX loss as the US dollar strengthened. BPP should be the top performer as it has seasonally high demand power generated by the Temple I plant in the US.

Thailand SET Index

SET index trade in 1600 – 1630 with PE 15.4X

Foreign investors were net buy in both equities and derivatives market for 10-day in row

Today (Nov 4,22) BoT will announce Thailand inflation rate for October.

Despite higher FED rate, TH still has net fund flow from foreign investor