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Thailand

Thailand: End of Government Subsidies in Apr Could Elevate Core Risk

15 March 2010

Inflation would not be spared from rising when these government subsidy measures for the low-income groups are phased out. In our spreadsheet calculations, headline and core inflation would have the potential to rise by at most +1.6ppt in Apr when these subsidies to low-income groups are removed as flagged last month by government. We noted that observable sharp downside breaks of CPI for low-income groups in the segments of fuel, electricity and water, public transport services, and education, would probably reflect the price impact of these government subsidies (that lowered the utility rates and others) back in 2008 or 2009. On the assumption of reversion to pre-subsidy CPI in Apr 2010 and corresponding CPI weights, we obtain a maximum potential impact of +1.6ppt when these measures are removed.

Thailand: Near-term Political Risk Stalls MPC Rate Hike

10 March 2010

In today’s policy rate meeting, the Monetary Policy Committee (MPC) confirmed that downside risk to growth had abated significantly. In its press release, the MPC stated it expects ‘core inflation to rise in the periods ahead in line with economic expansion’. A combination of a higher expected core outlook and easing downside risk to growth would have led to a tightening bias (and rate action) in normal times. But it seems policymakers decided to look beyond fundamental appraisal while overweighting what the MPC referred to as ‘uncertainties surrounding the sustainability of global economic recovery as well as domestic risk factors that could adversely impact consumer and investor confidence’.

Thailand: Benign Core Reduces Risk of March Rate Hike

2 March 2010

Lower than expected core CPI in Feb likely eased the pressure for the MPC to hike overnight policy rates come Mar 10 when policy makers are supposed to review the rate setting. However this still leaves the upside risk from robust recovery prospects flagged by recent economic indicators that can easily stimulate demand-based pressures.

Thailand: Sequencing Exchange Rate Prior to Overnight Rate Normalization

2 March 2010

After last Friday’s event in which the High Court affirmed the political legitimacy and legality of the Asset Examination Committee’s decision to seize Thaksin and his family’s assets (US$1.4bn worth), the Baht appreciated to below 33 against the US$. We don’t believe politics had anything to do with the Baht’s recent sharp gains; nor would the current account surplus be a factor since the latest external trade reading featured imports playing catch up with exports.

Thailand: Fallout from Thaksin’s Court Verdict

1 March 2010

We believe the government will be under public pressure to pursue both civil and criminal cases against AIS and THCOM (THCOM.BK; Bt6.05; Not Rated) to claim all financial damages cited under the verdict by the Supreme Court. In our view the verdict will heighten fears among private operators in concessions on rising regulatory risk premium unless the government improves regulation on Private Public Partnership (PPP) for better clarity, deregulation and privatization. From the public viewpoint, the verdict is fair given supporting details and because only the asset part grown during the period of Thaksin’s premiership was confiscated.

Thailand: Robust Recovery Likely with Better than Expected 4Q09 GDP

22 February 2010

4Q09 GDP surprised on the upside as recovery appears to be turning robust. Seasonally adjusted 4Q GDP yielded growth of 3.6%QoQ, the largest gain recorded in 2009. Full year 2009 posted a GDP decline of 2.3%. GDP’s expansion in 4Q09 was driven mainly by net exports, which posted a higher-than-expected 67.3% YoY growth in 4Q09.

Thailand Banks: ST Working Cap Loan Repayment Hindered Growth in January

21 February 2010

Aggregate loan growth of 11 Thai banks declined by -0.7% mom but rose slightly by +0.8% yoy; At an individual bank level, almost all Thai banks reported normal seasonal decline in loan growth; At the aggregate level, deposit growth declined slightly by -0.8% but increased by 1.5% yoy; we believe domestic consumption will be the main driver for 2010E GDP growth.

Thailand: Mounting Upside Growth and Inflation Risks Heighten Chances of Rate Tightening

18 February 2010

Major Points: A senior monetary official recently flagged the need to hike overnight policy rates as growth conditions normalize; On the back of BoT’s buoyant economic indicators in 4Q09, we reckon GDP growth during the quarter was 4.5%yoy for a seasonally adjusted QoQ of 2.1%; Uptrend in 4Q09 would crossover into 2010; We estimate core inflation of 0.7%yoy in Feb after a 0.6%yoy increase in Jan

Emerging Markets Daily – Asia Edition (03 Feb 2010)

3 February 2010

Singapore — Economic Strategies Committee presented its seven key recommendations in its latest report, targeting GDP growth at 3-5% yoy; Hong Kong — Manufacturing PMI rose to 55.8 in January; Philippines — Upbeat tax revenues may point to faster inflation in Jan; Taiwan — The Taipei City Government will increase the property tax on luxury houses starting in July 2011; Thailand — BoT Deputy Gov. Atchana Waiquamdee downplayed rising core risk; Indonesia — BI is expected to keep policy rates on hold for the sixth consecutive month.

Emerging Markets Daily – Asia Edition (01 Feb 2010)

1 February 2010

China: rate hikes are likely this year; PMI down for the first time since May 2009. Malaysia: the central bank seems to be looking to “normalize” policy rates point to the likelihood of sooner, rather later rate hikes. Hong Kong: December retail sales beat market expectation of 11.7% YoY by increasing 16.0% YoY in value, or up 11.3% YoY in volume. India: Dec trade deficit widens to US$10.1bn. Korea: January trade account turns to deficit for first time in eleven months. Thailand: A faster pace of core in line with headline inflation indicates more oil price pass-through effects.

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