Thailand Microeconomic Weekly Update #55

THAILAND MACROECONOMICS WEEKLY UPDATE

Thailand’s economic landscape appears to be marked by a combination of positive and challenging indicators. The International Monetary Fund (IMF) projects a robust 4.4% GDP growth for the country in 2024, driven by short-term financial stimuli. However, there are concerns as the IMF anticipates a significant slowdown, with the GDP growth dropping to 2% by 2025.

One positive aspect is the continuous growth in Thailand’s exports. According to the commerce ministry, exports rose for the fifth consecutive month in December, showing a 4.7% increase compared to the previous year. Despite a contraction of 1% in full-year 2023 exports, the ministry aims for a 1.99% export growth this year. Notably, rice exports witnessed a substantial increase of 13.7% throughout 2023.

The country’s overall economic performance in 2023 fell short of expectations, with an expansion of only 1.8%. The Finance Ministry attributes this to contractions in the manufacturing and export sectors. However, they express optimism for the upcoming year, anticipating a recovery driven by increased exports and tourism arrivals.

In the political arena, the Constitutional Court ruled in favor of Pita Limjaroenrat in the media shareholding case, allowing him to return as a Member of Parliament after a six-month hiatus. This development could have implications for the political landscape and dynamics in Thailand.

On the domestic front, there are concerns about the rising household debt in Thailand. Projections indicate that household debt is expected to reach 16.9 trillion baht, equivalent to 91.4% of the GDP, by the end of the current year. Additionally, the banking system faces challenges, with an estimated 152 billion baht in non-performing loans (NPLs).

These economic and political developments suggest a mixed outlook for Thailand, with both opportunities for growth and challenges that need careful attention and management

INDUSTRY 

This week Thailand will follow up with industrial production numbers which are expected to contract

BANKING 

In 2023, Thailand’s banking sector witnessed a remarkable surge in profits. Ten leading commercial banks listed on the Stock Exchange of Thailand collectively amassed a net profit of 232 billion baht (USD 6.49 billion), marking a significant 15.6% increase from the previous year. This financial upturn is primarily attributed to a substantial rise in interest income, driven by the central bank’s policy rate hikes. The banking sector recorded total net interest income of approximately 727 million baht (USD 20.34 million) in 2023, increasing by 17.8% YoY from 617 billion baht (USD 17.27) in 2022. Key players in the industry like Bangkok Bank, Kasikorn Bank, and others experienced a notable improvement in net interest margins, underscoring the impact of monetary policy adjustments on the banking sector’s overall performance. However, the banking sector continued to set aside a higher expected credit loss (ECL).

MEDIA 

JKN Global Group Public Company Limited (JKN) 

JKN Global Group Plc, a local media company, is in the process of selling a 50% stake in its Miss Universe business for about 570 million baht (USD16 million). This decision comes after JKN acquired the Miss Universe Organization for USD20 million in 2022. The stake will be bought by Legacy Holding Group USA Inc, controlled by Mexican businessman Raul Rocha Cantu. JKN has faced financial challenges, leading to delayed bond payments and a business rehabilitation petition in 2023. The sale aims to enhance the financial stability of the Miss Universe Organization and support JKN’s restructuring plans. The transaction is expected to conclude by September, with JKN retaining a 50% stake in the venture. The transaction is expected to be completed by September.

DATA CENTER

The State Enterprise Policy Office (Sepo) has selected National Telecom (NT) to spearhead the development of two new data centers in Thailand. This initiative is part of a broader strategy to support the country’s digital transformation and align with the government’s “Cloud First” policy. The project involves an initial investment in 1,000 combined racks with foreign partners, located at NT’s Ngam Wong Wan Road office. These new facilities are expected to enhance NT’s existing business model, generating new revenue streams. The development of these data centers is critical, considering the high demand for cloud data servers in government offices and the ongoing digital transformation process. The project aims to be completed within 20 months and involves collaboration with foreign companies, potentially including Amazon Web Services, Microsoft, and Huawei Technologies.

SECTORAL UPDATE 

 Last week the SET closed at 1,368.15 points, a decrease of  7.94 points ( -0.58%), trading value end at  48,277.69  million baht ($US 1.356.50 million.)

The Set index is currently finding support within the range of 1360 to 1390 points, while encountering resistance at 1426 points, buoyed by a rebound in regional markets. The Relative Strength Index (RSI) has exited the oversold region, indicating a potential shift in market sentiment. Meanwhile, the USD/THB currency pair is trading within a range of 35.40 to 35.80.

 

The SET index is currently finding support at 1,360 points and has been unable to surpass the resistance level of 1,390 points, while the Relative Strength Index (RSI) is concluding the week at 38.11.

 

 

 

 

 

The past  week  investors have been net seller for the week, in contrast with local investor with net local investor with heavily net buyer .

 

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