Thailand Microeconomic Weekly Update #60

  • March 11, 2024
  • Posted by: Julia Garcia
  • Categories: Thailand Weekly Economic Update, Weekly Updates
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THAILAND MACROECONOMICS WEEKLY UPDATE

In February, headline inflation contracted by 0.77% year-on-year, continuing a five-month streak of contraction, while core inflation saw a slight increase of 0.43% YoY, slightly below market expectations. Meanwhile, Energy Minister Pirapan Salirathavibhaga announced that electricity prices for the May-August billing period would remain capped at 4.18 Baht per unit. Household debt slowed to 16.2 trillion Baht, marking a 3.3% YoY increase, accounting for 90.9% of the country’s GDP, with NPLs at 2.79% of total loans. The total employed population rose to 40.3 billion, up 1.7% from the previous year, with notable growth in non-agricultural sectors, particularly in hotels and restaurants driven by foreign tourism. However, manufacturing employment contracted by 2.3%. Additionally, consumer confidence surged to 63.8 in February, its highest level in 48 months, driven by government stimulus and tourism recovery. The ETCO Investor Confidence Index for February soared by 37.8%, reaching the ‘neutral’ zone, with investors citing tourism recovery and government economic measures as key drivers, while concerns lingered about Fed policy, inflation, and capital outflows..

INDUSTRY 

Trading volumes are expected to be thin from the Chinese New Year Holiday season along with anticipation of Thai GDP figures.

Stock Exchange of Thailand (SET)

The Bangkok Post reports that the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (MAI) will extend their trading hours from March 25, starting the afternoon session 30 minutes earlier. This change allows for five hours of trading per day and is aimed at aligning with other regional markets to offer investors more opportunities. In addition, The Thailand Futures Exchange Plc (TFEX) is also extending its afternoon trading hours for equity futures and options, currency futures and interest rate futures, starting the session 30 minutes earlier. The move follows instructions from Prime Minister Srettha Thavisin, intended to attract more foreign trade. However, analysts are mixed on the impact, with some expressing concerns over limited benefits without fundamental market changes.

REAL ESTATE

The Sena Development’s innovative strategies to address the issue of unsold condominiums amid high mortgage rejection rates. Kessara Thanyalakpark, the company’s managing director, introduced rent-to-own plans targeting different generations to enhance sales and revenue. The strategy focuses on allowing potential buyers to rent with the option to buy, aimed primarily at Generation X, facing challenges in securing mortgage loans. The company will give a rent-to-own buyers to rent units for up to three years, during which they will pay rent to Sena. Once they are ready to have units transferred or financial records are sufficiently prepared to secure a mortgage loan, Sena will transfer the units to them and the amount they have paid for rent will be deducted from the unit price.This initiative represents an effort to revitalize sales of their 5,000 unsold units, valued at 10 billion baht (USD 280.83 million), by adapting to the financial realities of potential homeowners.

BANKING

Virtual Bank License

Thailand has announced the application process for virtual bank licenses, aiming to enhance support for SMEs and underserved populations. The process, outlined by the Finance Ministry, will begin shortly, with the Thai central bank and finance ministry reviewing applications over a nine-month period. Currently, three major conglomerates have shown interest in obtaining a virtual banking license. These include Advanced Info Service, Krung Thai, PTT Oil and Retail Business, and Gulf Energy Development, which are collaborating to form a new joint venture for their application. Additionally, the CP Group, leveraging its TrueMoney unit and partnering with a Chinese company, plans to create a subsidiary for this purpose. SCB X Public Company is also entering the fray, partnering with Korea’s KakaoBank to apply for the license. The policy allows the Bank of Thailand to issue a limited number of licenses, with successful applicants required to launch their virtual banks within a year, targeting a June 2026 operational start.

New 1% fee for using Thai credit cards abroad

Starting May 1, Thailand will impose a 1% fee on foreign currency transactions made with Thai credit cards abroad. This fee applies to purchases in baht from foreign merchants and online shops, as well as ATM withdrawals. It’s introduced alongside the existing foreign currency conversion fee, offering cardholders two pricing options based on their currency choices.If they choose to spend in foreign currencies while abroad, they will be charged a maximum of 2.5% based on the prevailing exchange rate calculation. If they choose to spend in baht on their cards while abroad or through a foreign online merchant, they will be charged 1% based on the DCC calculation.Currently local credit card providers charge a foreign currency conversion fee with a maximum rate of 2.5% of total spending for Thai-issued Visa and Mastercard cards for spending in foreign currencies abroad or online with foreign-registered platforms. 

TOURISM

A Tourism Authority of Thailand (TAT) survey of over 30,000 tourists in 2023 revealed a surge in spending, with average expenditure per trip at 50,900 baht, increasing by 5.58% compared with 2019. Notably, spending on accommodation rose significantly, while there was a shift towards street food over fine dining. The survey highlighted the increasing popularity of street food and café hopping among tourists, driven by a desire for local experiences. Middle Eastern tourists were the biggest spenders with an average of 88,512 baht (USD 2,487.24 ) per trip, followed by those from Oceania on average of 64,860 baht (USD 1,822.60) , the US on average of 60,474 baht (USD 1,699.35)  and Europe on average of  59,345 baht (USD 1,667.63). Online bookings dominated travel arrangements, and social media platforms, particularly TikTok, emerged as key channels for travel inspiration and information. 

ENERGY

B.Grimm Power Public Company Limited (BGRIM) has expanded its renewable energy portfolio by investing in two offshore wind power plants in South Korea, naming Nakwol Blueheart Co., Ltd. and Hanbit Wind Power Co., Ltd., boasting a combined capacity of 740 megawatts. This strategic move involves acquiring shares in two companies responsible for these plants, signaling BGRIM’s ongoing commitment to sustainable energy development on a global scale. 

SET closed the week today at 1,386.42 points, an increase of 14.26 points (+1.04%), trading value 40,077.08 million baht. ($US1131.13) million

 

SECTORAL UPDATE 

Lastly, theSET closed at 1,386.42 points, an increase of  14.26 points (+1.05%), trading value 40,077.08 million baht. ($US 1131.13 million.

The current index remains range-bound between 1426 and 1360 points, exhibiting a triple bottom formation since November. Despite this pattern, the Relative Strength Index (RSI) stands above 50, indicating a level of underlying strength within the market.However, a combination of reduced earnings from listed companies and lower inflation continues to exert pressure on the economy. Investors are keenly observing government budget disbursement strategies and awaiting decisions from the central bank regarding policy rat.

The current index remains range-bound between 1426 and 1360 points, exhibiting a triple bottom formation since November. Despite this pattern, the Relative Strength Index (RSI) stands above 50, indicating a level of underlying strength within the market.However, a combination of reduced earnings from listed companies and lower inflation continues to exert pressure on the economy. Investors are keenly observing government budget disbursement strategies and awaiting decisions from the central bank regarding policy rat

The current index remains range-bound between 1426 and 1360 points, exhibiting a triple bottom formation since November. Despite this pattern, the Relative Strength Index (RSI) stands above 50, indicating a level of underlying strength within the market.However, a combination of reduced earnings from listed companies and lower inflation continues to exert pressure on the economy. Investors are keenly observing government budget disbursement strategies and awaiting decisions from the central bank regarding policy rat

     Meanwhile, the manufacturing sector is still struggling to recover, contrasting with the resilience of the tourism industry, which plays a crucial role in keeping the economy afloat. Notably, the USD/THB support and resistance levels are at 35.40 and 35.65 respectively, with attention directed towards monitoring spreads between the US 10-year and TH 10-year bonds.Meanwhile, the manufacturing sector is still struggling to recover, contrasting with the resilience of the tourism industry, which plays a crucial role in keeping the economy afloat. Notably, the USD/THB support and resistance levels are at 35.40 and 35.65 respectively, with attention directed towards monitoring spreads between the US 10-year and TH 10-year bonds.           

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