KBank
Multi Asset
Strategies
February 2020
Kobsidthi Silpachai, CFA [email protected]
KResearch [email protected]
KSecurities [email protected]
FX market monitor page 1
Fixed income monitor page 7
Economic monitor page 12
Equity market monitor page 16
“KBank Multi Asset
Strategies” can now be
accessed on
Bloomberg: KBCM
<GO>
Disclaimer: This report
must be read with the
Disclaimer on page 23
that forms part of it
1
The coronavirus originated in Wuhan, China, causing the
outbreaks all over the province of Hubei, as well as across the
world. The number of infected people from the virus increased
significantly over the past weeks, given the type of the virus and
the fact the outbreak occurred during the period when Chinese
people travel around as it was the long holiday.
We estimate the impact of coronavirus Thai tourism industry is to
be affected by a falling number of tourists and how the disruption
in the Chinese supply chain and Chinese economy slow down
causing drag to Thai exports and imports.
Given that the large current account surplus in Thailand has
been the major driver on Thai baht strength over the past few
years, the narrowing current account surplus from the impact of
coronavirus is likely to cause Thai baht to weaken, over the
panic period.
An unprecedented outbreak of coronavirus, how do we
estimate the impact?
The coronavirus originated in Wuhan, China, causing the outbreaks all over the province
of Hubei, as well as across the world. The number of infected people from the virus
Fig 1: USD/THB VS Thai current account
30.6
30.0
31.0
32.0
33.0
34.0
35.0
36.0
37.0
-10,000
-5,000
0
5,000
10,000
15,000
20,000
2013 2014 2015 2016 2017 2018 2019 2,020.0
TH: Current account USD/THB, RHS
USD Million USD/THB
Source: Bloomberg, CEIC, KBank
FX market monitor: Factor for USDTHB, impact of
coronavirus on Thai current account
Peerapan Suwannarat [email protected] Warunthorn Puthong [email protected] San Attarangsan [email protected]
2
increased significantly over the past weeks, given the type of the virus and the fact the
outbreak occurred during the period when Chinese people travel around as it was the
long holiday for Chinese New Year. Therefore, we estimate the impact of coronavirus on
the Thai tourism industry is to be affected by a falling number of tourists and how the
disruption in the Chinese supply chain and Chinese economy slow down causing drag to
Thai exports and imports. These factors will have an important impact on the current
account balance of Thailand. Given that the large current account surplus in Thailand has
been the major driver on Thai baht strength over the past few years, the narrowing
current account surplus from the impact of coronavirus is likely to cause Thai baht to
weaken, over the panic period.
How the large surplus current account affects Thai baht?
The country’s current account balance is explained mainly by the value of net exports of goods and services plus income transfer reflected the inflows of income and outflows of spending in a country. Thai current account has been constantly showing the imbalances on the surplus side since late 2014 when exports have been outpacing the imports and the Thai tourism industry has been important to the Thai economy. This suggested that the demand for Thai baht from exporters and foreign tourists has been outpacing the selling of Thai baht, hence indicating structural support for Thai baht. Meanwhile, the capital outflows from outward direct investment and portfolio investment were not strong as well, causing limited pressure for Thai baht to weaken, unlike in Korea, Japan, and Taiwan.
In effect, we expect the unprecedented outbreak of the coronavirus to affect Thai baht through the narrowing current account surplus.
Fig 2: Balance of Payment of the countries in Asia with the high current account balance.
3.4 4.0
10.4 9.3
-1.6-4.5
-0.9 -1.3-1.9
-3.5 -10.0
-1.7
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
Korea Japan Taiwan Thailand
Current Account Balance Foreign Direct Investment
Portfolio Investment
Balance of Payment (% of GDP) in Q1-Q3 2019
Source: CEIC, KBank
3
Falling tourist revenue receipt is likely to have a large
impact on Thai current account
The Chinese government attempts to contain the outbreak of coronavirus is expected to have a detrimental impact on Chinese economic activity and outbound tourists. In late January (Just before Chinese New Year), the Chinese government announced measures to place quarantine in Wuhan and most of the other cities in Hubei province. The lockdowns including the ban on transportation and all outbound travels, affecting more than 50 million people (4% of the total Chinese population). Fear of the spread of the virus across the country had halted the global tourism industry. On economic activity, by comparing to the similar virus outbreak in 2003 where Chinese citizens suffered from the SARS virus, the Chinese slowed from 11.1% to 9.1%. Markets expect the GDP growth to fall from expected 6% to 4.5% in Q1 this year, bringing 2020 GDP down to 5.4%.
The falling number of tourists from China and other countries would have a damaging impact on the Thai economy. The revenue receipts from foreign tourists in Thailand are accounted for around 10% of GDP. Based on data from World Travel & Tourism Council’s report (WTTC), the direct and indirect effect of the Thai tourism industry on GDP was at 21.6% of GDP in 2018 and taking 15.9% of Thai employment. Thai tourism industry relies on income from the spending of Chinese tourist visitors of 28% of GDP in 2019 and the income has been especially high in Q1 of the year, given high travel season for Thailand and long Chinese holiday in china. In 2019, the number of visitors from China in Thailand recorded at 3.1 million persons, 14% higher than the average number in 2019. This has been supporting the Thai current account to reach double-digit surplus as a percentage of GDP in every Q1 since 2016.
Fig 3: Timeline of Wuhan coronavirus
Dates Days Development
01-Dec 0 First case
31-Dec 30 China alerted WHO to several cases of pneumonia in Wuhan
01-Jan 31 43 number of infections was first reported
11-Jan 41 China announced first death
13-Jan 43 First case in Thailand reported
23-Jan 53Wuhan and two more cities in Hubei province were placed under effective quarantine
( bus, metro and ferry lines, all outbound trains and flights suspended)
24-Jan 54 number of cities under lockdown in Hubei rose to 15, affecting 52 million people
30-Jan 60 WHO declared coronavirus a global emergency
02-Feb 63 First death outside China in the Philippines
07-Feb 68 No. of cases reached 31,481 and death tolls rose to 638 Source: CEIC, KBank
4
We estimated that the outbreak of coronavirus could last for 6 months, based on the case of the SARS virus in 2003, while large impact will be felt in the first 3 months. During the outbreak of the SARS virus, the number of infected persons grew over the first 3 months from the first report of the infected case (Fig. 4). Then the number became quite stable in the next 3 months. On the number of tourist visitors in Thailand in 2003, the number of tourist visitors contacted for 6 months (March-August 2003). The largest contraction was at 45-50%YoY for 2 months, with a major drag from falling visitors from China at 70-90%YoY (Fig. 5).
The impact of 2019 Wuhan coronavirus could cut tourism receipts by half in the first quarter of 2020 in extreme cases.
Quarter 1: We estimated that if all tourist visitors from China are wiped out (by 2.3 million persons) in February and March from restriction of travel and fear of the outbreak, and tourist visitors from other countries also but at a lesser extent (decrease by 50% or by 2.5 million persons), the income receipt
Fig 4: Accumulated confirmed cases during the SARS outbreak in 2003
0
4,000
8,000
12,000
120
126
132
138
144
150
156
162
168
174
180
186
192
198
204
210
216
222
228
234
240
246
252
258
No of days from firstly identified
Accumulated confirmed cases: SARS 2003
Max = Day 230, 8465 infected
8,422
Source: CEIC, KBank
Fig 5: Tourist Visitors in Thailand during the SARS outbreak in 2003
-1.0
-19.2
-1.0
-71.1
-90.1
-75.9
-51.7
-16.3
-4.1
7.4
17.7
10.46.5
2.7
-11.7
-42.5-47.0
-21.2
-2.1
4.3 4.9 3.6
11.36.7
-100.0
-80.0
-60.0
-40.0
-20.0
0.0
20.0
Jan-03 Apr-03 Jul-03 Oct-03
Tourist Visitors during sars 2003 Tourist Visitors : from China
Tourist Visitors : ROW (Non chinese)
%YoY
Source: CEIC, KBank
5
from tourism sector will decline by USD 8.5 billion. Our model estimation suggests that the estimated loss in the current account balance of USD 8.5 billion would cut the current account balance to around 1.8% of GDP in Q1. As a result, by considering the impact of the falling number of tourists only, Thai baht could weaken by 1.10 -2.20 baht on the dollar, compared to the previous quarter.
Quarter 2: Given that the spread of the virus becomes more contained, we expect the number of Chinese tourists to fall by 50%YoY (by 1.3 million persons) and the tourists from other countries return to normal. This would lower the income receipt from tourist visitors by USD 2.1 billion in the second quarter.
Trade between Thailand and China is likely to be affected
by the virus through supply chain disruption
We expect the economic impact from the coronavirus on Asian trade to be large, given the strong linkages between exports and imports of each economy with China. For example, in 2019, Thailand imports from China accounted for 21% of total Thai imports and 14% of its exports go to China (Fig. 6). The halt in business operation in China to February 9 or later in 14 provinces and cities would have a significant impact on trade, given that they accounted for almost 69% of China’s GDP. As key manufacturing provinces such as the tech producing city in Guangdong, the largest china’s port in Shanghai, and the iPhone production plant (Foxconn) in Henan would cause disruption to the supply chain in Asia and the disrupted logistics system.
We expect the impact will be felt on the Thai manufacturing sector from the month of February as the sectors rely heavily on production input imported from China. We expect the Thai industry to have sufficient supply for production in January since producers need to stock up prior to long Chinese holidays. However, the breakdown of input-output analysis by the OECD suggested that the overall Thai economy relies on input from China at 6.89% of total domestic final demand. The second-largest share of content used besides domestic content. In the manufacturing sector, Thailand depends on imports of input from China at 13.6% of the total. The sectors with the highest degree of reliant are Basic metals and fabricated metal products, computers, electronic and electrical equipment, as well as Machinery and equipment (Fig. 7).
Fig 6: Asian countries’ trade exposure to China in 2019
47%
30%26%
24%21% 21% 20%
14%
55%
23%
17% 17%
25%
12%
30%
5%
0%
10%
20%
30%
40%
50%
60%
Hong Kong Vietnam Indonesia Malaysia SouthKorea
Thailand Taiwan Singapore
Imports from China (%of total imports) Exports to China (%of total exports)
Source: CEIC, KBank
6
Fig 7: Thai industry usage of input by source of input (% of total)
2015, % of
total industry
Total
Economy
Food
products,
beverages
and
tobacco
Textiles,
wearing
apparel,
leather
and
related
products
Wood
and paper
products;
printing
Chemicals
and non-
metallic
mineral
products
Basic
metals
and
fabricated
metal
products
Computers
,
electronic
and
electrical
equipment
Machinery
and
equipment
, nec
Transport
equipment
Thailand 62.7 75.3 68.7 51.9 39.4 9.5 9.0 9.6 23.7
China 6.9 3.8 10.8 10.8 9.5 31.7 33.4 27.3 14.4
Japan 4.3 1.4 2.0 4.0 5.0 11.3 11.9 18.9 15.7
United States 3.9 2.6 1.7 4.8 4.9 7.3 7.0 6.0 12.0
Germany 1.3 0.6 0.6 1.5 2.1 3.2 2.8 5.8 3.5
Korea 1.2 0.5 0.9 1.1 1.7 3.9 4.5 3.2 2.2
Singapore 1.1 0.6 0.6 1.5 1.2 1.1 3.7 1.2 1.4
Malaysia 1.1 0.7 0.7 3.2 2.2 2.9 3.4 1.7 1.0
India 1.0 0.6 0.9 1.3 1.6 2.1 0.8 1.8 3.6
United Kingdom 1.0 0.5 0.4 0.8 1.2 1.7 1.1 1.5 3.0
Indonesia 1.0 0.9 0.9 1.5 2.0 1.9 1.1 2.2 2.3
Australia 0.9 0.8 0.4 1.1 1.0 3.2 1.1 1.5 1.1 Source: OECD TiVA, KBank
7
The Bank of Thailand (BOT) trimmed its interest rate to a historic low,
similar to other central banks’ decisions. And the BOT governor
commented a day after a rate-cut decision that “the bank still has
monetary policy space to support the country's economic growth if
necessary”.
We also foresee a probability that the BOT will deliver the second cut if
the impact of the coronavirus lasts for long. Flight cancellation and a
city lockdown in China will reduce the number of Chinese tourists and
will have a spillover effect on global fuel demands. This will
disincentivize tourists from other countries to come to Thailand due to
the fears of the outbreak. We expect that the BOT will be more data-
dependent in determining the monetary policy going
forward.
BOT cut rate in February
The Bank of Thailand (BOT) trimmed its interest rate to a historic low. On February
5, the Monetary Policy Committee unanimously voted to cut the policy rate by 25 bps to
1.00%. The decision is to encounter recent shocks, which are a coronavirus outbreak, a
further delayed FY2020 budget act, and a drought. Nevertheless, the Thai government
bond yields have little response as bond investors had priced the move since mid-
December.
The decision was similar to other Asian central banks. Surprisingly, the Bank Negara
Malaysia (BNM) was the first mover to cut rate by 25 bps to 2.75%. Even though the
bank did not take into account the impact of the virus as the decision came in before an
official outbreak. Following the BOT decision, the Bangko Sentral ng Pilipinas (BSP) also
trimmed its overnight reverse repurchase rate to 3.75% as described as a pre-emptive
move as well. The People Bank of China (PBOC) reduced the 7-day and 14-day reverse
repo rates by 10 bps to relieve the pressure of the outbreak on the economy.
We foresee a probability that the BOT will deliver the second cut if the impact of
the coronavirus lasts for long. The economic growth is expected to be the most priority
until the situation resumes normally. Inflation will be also affected by global fuel prices.
Besides, a further delayed FY2020 budget prevents the government to implement a full
scale of the fiscal relief measures for the shock. In the meantime, monetary easing is the
only hope for the Thai economy despite a small policy space left on hand.
Fixed Income Monitor: BOT delivered rate cut with an
easing bias
Kobsidthi Silpachai, CFA [email protected] Peerapan Suwannarat [email protected] Warunthorn Puthong [email protected] San Attarangsan [email protected]
8
The Coronavirus outbreak will drag growth
To estimate the impact of the coronavirus, we studied a situation in the case of Severe
Acute Respiratory Syndrome (SARS) in 2003. We saw that these two situations shared
some similarities of the disease country origin and the type of disease. In the case of
SARS, the WHO began recording the death tolls and patients in late March 2003 or 143
days after the disease originated. And the situation is under control in terms of stabilized
headcounts of deaths and patients 6 months later the disease declaration.
Fortunately, Chinese officials quickly responded to contain the virus outbreak. More than
15 cities in China were locked down and the citizens were suggested to stay at home.
Lunar New Year holiday period was extended from January 30 to February 2 while some
factories decided to shut their productions even further. All domestic and international
tour agent activities were forced to cancel. Meanwhile, many countries reduced or
suspended flights from and to China. However, the number of infections and the death
tolls still grew.
The cancellation of flights and tour activities will definitely hurt the Thai tourism
sector as the sector shared 10% of GDP. Putting together what happened in a case of
SARS and the Chinese government’s measures, we projected that not only all Chinese
tourists who come with tour agents but independent travelers could be also gone in the
coming months. So we expected no additional Chinese tourists to come to Thailand from
last January until the end of Q1. And fears of the virus outbreak would cut down inbound
tourists from other countries by half as well. A total loss of inbound tourists by 54%YoY
will reduce the Thai GDP growth in Q1 by 0.6ppt.
The SARS lasted for 6 months but the severity in terms of economic activities declined.
At the time, Chinese travelers came back by half and the tourists from other countries
returned to normal. If the situation happens in the same pattern with the
coronavirus, the total number of tourists from overseas will fall by 10%YoY. This
will cut the Thai GDP growth in Q2/2020 by 0.1ppt.
Fig 1. Global flight restrictions to and From China as of February 5
Source: foreignpolicy.com
9
Fig 2. The number of infection and deaths from coronavirus and SARS
0
8,000
16,000
24,000
32,000
40,000
42
47
52
57
62
67
72
77
82
87
92
97
10
2
10
7
11
2
11
7
12
2
12
7
13
2
13
7
14
2
14
7
15
2
15
7
16
2
16
7
17
2
17
7
18
2
18
7
19
2
19
7
20
2
20
7
21
2
21
7
22
2
22
7
23
2
23
7
24
2
24
7
25
2
25
7
26
2
26
7
27
2
27
7
No of days from firstly identified
Accumulated numbers of confirmed cases
SARS_Patients
Wuhan_Patients
Max = Day 230, 8465 infected 8,422
31,481
0
200
400
600
800
1,000
42
47
52
57
62
67
72
77
82
87
92
97
10
2
10
7
11
2
11
7
12
2
12
7
13
2
13
7
14
2
14
7
15
2
15
7
16
2
16
7
17
2
17
7
18
2
18
7
19
2
19
7
20
2
20
7
21
2
21
7
22
2
22
7
23
2
23
7
24
2
24
7
25
2
25
7
26
2
26
7
27
2
27
7
No of days from firstly identified
Accumulated numbers of deaths
SARS_Deaths
Wuhan_Deaths
916
638
Source: WHO, CEIC, KBank as of February 7, 2020
Muted inflation below the BOT target
Flight cancellation and a city lockdown will have a spillover effect on global fuel
demands, which will drag down the price. What happens in the case of SARS also
gives a hint on a global crude price reaction. We projected that the Dubai crude price
could dip 1.9ppt in Q1/2020 and 2.2ppt in Q2/2020. Based on our estimation, an
additional USD 1 per barrel fall in a Dubai crude price will trim a retail diesel price by THB
0.17 per litter. Energy weighs almost 12% in the Thai consumer price basket and a drop
in energy price will reduce the cost or other goods production. Thus, the Thai headline
inflation is forecasted to decline 0.05ppt in Q1 and 0.06ppt in Q2 if the virus lasts until the
end of June.
The impact on other pharmaceutical goods prices might partly discount a
downward impact from fuel prices. Experience from a case of SARS in 2003
suggested retail sales at the time grew normally. However, high personal health
awareness caused a current supply shortage of surgical masks and hand sanitizers,
jumping the prices. Despite the government efforts to control the prices and sell these
goods by owns at a reasonable price, we expect the scarcity to still lift the price higher.
The weight of the medical cares and pharmaceuticals is half of whose energy. And only
surgical masks and hand sanitizers, not all goods in the sector, climb due to the
coronavirus fears. We expect the fuel price to bring down overall inflation far below a
lower bound of the BOT target. This will support the monetary easing bias in the near
future.
10
Fig 3. Dubai crude and Thai Diesel prices
8.00
13.00
18.00
23.00
28.00
33.00
38.00
43.00
48.00
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Dubai crude price, USD per barrel Retail Diesel price, THB per litter, RHS
Source: Bloomberg, KBank
Stagnant fiscal support
Apart from an international health shock, a further delay in the FY2020 budget act is
another key drag for the economic growth in H1. The Constitutional Court judged on
February 7 that the current budget act is valid but required the House of Representatives
to vote for the second time. This will bring the budget act in effect as fast as by Q1.
A capital budget disbursement pattern during FY2015-2019 indicates that an
accumulated disbursement rate in the first two months after the implementation of the
new budget act is as low as 7.2% of total budget appropriation. The disbursement will
accelerate in the 3rd and 6th months of the budget year. Therefore, we expect huge
fiscal capital spending to come in by mid-May. This would spare the monetary
policy tools for some time until needed.
Fig 4. Accumulated capital budget disbursement rate (%)
47
1317
22
3034
3946
5055
64
4651
60
2 3 40.0
20.0
40.0
60.0
80.0
100.0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
%
Avg 5yr
FY19
FY20
Source: CEIC, KBank
11
A rate cut is not a magic tool
The BOT governor Veerathai Santiprabhob commented a day after a rate-cut decision
that “a policy rate cut might provide only little support for growth amid a low-interest-rate
environment and liquidity in a financial system”. This is in line with our finding on the
relationship between the lending rate and its implication on the business loan growth.
Historical data shows the Thai business loan growth is one determinant of the policy rate
decision. A minimum lending rate (MLR), which is actively responded with a change in a
policy rate, moves in the same direction as the business loan growth. On the other hand,
it indicates that MLR is not a key factor to incentivize business borrowing. Our estimation
shows that a combination of a business sentiment index and exports instead can be a
proxy of the business loan growth. Thus, it might conclude that a policy rate cut is not a
direct indication of growth. Instead, it could indirectly strengthen business confidence or
facilitate lending once needed. The BOT governor added that “the bank still has monetary
policy space to support the country's economic growth if necessary”.
Fig 5. Business loan growth and MRL (%)
5.8
6.2
6.6
7.0
7.4
7.8
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
07 08 09 10 11 12 13 14 15 16 17 18 19
Business loan growth and MLR
Business loan growth, %YoY
Combination of BSI and Exports, (%YoY)
MLR, %, RHS
Source: CEIC, KBank’s estimation
12
Economic Update
December indicators suggested that economic recovery could
experience further delays
Thai economy may fall short of our lower bound forecast of 2.5-3.0%
as perfect storm is brewing
The outbreak of novel coronavirus pose risk toward global economy
Units: %YoY, or indicated otherwise 2018 3Q-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 YTD- 2019
Private Consumption Index (PCI) 3.1 1.1 2.0 1.8 2.2 2.1
2.5
· Non-durables Index 1.4 1.7 1.2 3.2 1.4 -0.8
2.2
· Durables Index 8.4 -3.1 -8.8 -4.8 -9.1 -12.0
-2.0
· Service Index 5.2 2.0 3.4 4.5 3.2 3.6
2.8
· Passenger Car Sales 19.2 -6.4 -16.0 -10.4 -17.1 -20.2
-2.5
· Motorcycle Sales -1.3 -0.3 -7.5 1.5 -2.8 -20.7
-3.3
Private Investment Index (PII) 3.5 -3.0 -5.1 -4.6 -6.8 -3.7
-3.1
· Construction Material Sales Index 4.5 -3.9 -1.9 -4.0 -3.1 1.5
-0.7
· Domestic Machinery Sales at constant prices 5.9 -5.6 -8.7 -8.1 -9.6 -8.3
-5.5
· Imports of Capital Goods at constant prices 3.7 -1.0 -2.9 -4.2 -7.6 3.8
-1.0
· Newly Registered Motor Vehicles for Investment
5.7 -2.5 -15.4 -6.0 -15.5 -26.4
-3.0
Manufacturing Production Index 3.6 -4.3 -6.9 -8.1 -8.1 -4.3
-3.7
· Capacity Utilization 68.8 65.9 63.4 63.0 63.3 64.0
66.3
Agriculture Production Index 7.5 2.6 -1.5 2.0 -2.5 -2.5
0.2
· Agriculture Price Index -5.4 2.5 3.8 1.0 4.7 5.7
1.9
No. of Tourists 7.5 7.4 6.9 12.5 5.9 2.5
4.2
Exports (Custom basis) 6.9 -0.5 -4.5 -4.5 -7.4 -1.3
-2.7
Price 3.4 0.4 0.4 -0.2 0.3 1.1
0.3
Volume 3.4 -0.9 -4.9 -4.3 -7.7 -2.4
-3.0
Imports (Custom basis) 12.0 -6.1 -6.8 -7.6 -13.8 2.5
-4.7
Price 5.6 -0.2 0.8 -1.4 1.3 2.5
0.2
Volume 6.1 -5.9 -7.5 -6.3 -14.9 0.0
-4.8
Trade Balance ($ millions) (Custom basis) 3.25 3.44 1.76 0.51 0.55 0.60
9.6
Current Account ($ millions) 28.46 9.24 10.39 2.91 3.38 4.11 37.3
Broad Money 5.1 4.3 4.2 4.4 4.4 3.7
4.1
Headline CPI 0.66 0.61 0.40 0.11 0.21 0.87 1.05 0.71
USD/THB (Reference Rate) 32.3 30.7 30.3 30.4 30.2 30.2 30.4 31.0
Sources: BOT, MOC, OAE, and OIE
Macro Department, KResearch [email protected]
13
Thailand Economic Update
The Thai economy looks like it finished the final month of 2019 with slight
improvements. This suggested that economic recovery could experience further delays.
Consumption overall was buoyed by government stimuli. Some investment gauges
managed to return to positive territory. Exports declined at a slower pace amid
optimism about the US-China trade deal. Also, tourism remained in the linchpin of
growth.
Fig 1. Key economic indicators
Source: BOT, OAE, KResearch
The Private Consumption Index (PCI) declined slightly to 2.1% YoY in December
2019 against 2.2% YoY in November. Consumption in services was the main driver of
overall consumption, thanked to a high season for tourist, as well as the effect from
government stimuli. Also, a rise in farm income helped sustain consumption growth in
overall. However, consumption of durable goods contracted further to -12.0% YoY due to
double-digit slump in motorcycle and vehicle amid economic slowdown and tightening
credit standards of financial institutions.
The Private Investment Index (PII) contracted at a slower pace to 3.7% YoY in
December. Import of equipment and the number of registered motor vehicles for
investment remained in the deep red. However, there were some positive signs seen in
imports of capital goods and sales of construction materials.
The number of foreign tourist arrivals to Thailand cooled down to 2.5% YoY after
the low-base effect ran-off. The number of Chinese visitors rose only 1.5% YoY due the
high-base in the previous year. On positive side, growth in the number of Russian and
Indian tourist arrivals remained strong.
Government spending contracted at a slower pace of 7.4% YoY in December
thanked to a rise in SOE disbursement. Disbursement of regular budget rose 1.7%
after the government speeded up the process. Meanwhile, the delay in the enactment of
the FY2020 Budget Act restricted investment spending, especially for new and unsigned
contracts. As a result, only Bt10bn of budget was disbursed during this period, a 69.0%
YoY decline.
On the external front, December saw a slight recovery in export figures after
concerns over the escalating trade spat dissipated somewhat. Exports declined at
the slower pace of 1.3% in December, against the contraction of 7.4% in November. PMIs
were more stable in many regions, igniting hope over demand recovery. Exports of
14
electronics saw a positive sign due to strong demand ahead of Chinese New Year as well
as production relocation of key exports especially, HDD. In terms of export destinations,
exports to China and the US saw solid demand. However, demand from ASEAN and
Japan was rather weak.
Headline inflation rose 1.05% YoY in January 2020 due to a rise in oil prices.
However, core CPI showed a contract picture. It remained subdued, growing only 0.47%
in January 2020. The benign core inflation was consistent with a slowdown in overall
economy.Going forward, the outbreak of coronavirus could reduce the oil demand and
pull the price down. Therefore, the rise in headline inflation could be short-lived.
Thai economy may fall short of our lower bound forecast of 2.5-3.0% as perfect
storm is brewing
Thailand is on the verge of a perfect economic storm. The economic growth has
exhausted from multiple challenges from sapping export demand to off-season drought.
Unfortunately, the arising of coronavirus outbreak will hit the heart of tourism sector. The
impact from the loss of tourism revenue to Thai GDP would be rather severe and may be
larger than 0.5% of GDP. What’s more, the technical issue in FY2020 budget act could
make the situation worse. Without the resolution over the budget act, unsigned
investment contracts cannot not be disbursed. Also, this could inhibit the government to
use fiscal stimulus to prevent economy from the downside risks.
KResearch anticipates that the coronavirus could cost Thai exports to China up to
USD1.5 bn depends on the length of the outbreak. Exports of consumer goods and
intermediate goods are among the main losers. In case of quick containment within the
end of 1Q19, the damage would be minimized to USD 0.4-0.8 bn. However, if the
outbreak prolongs another 3 months, the damage could reach USD 0.9-1.5 bn.
Global Economic Update
The outbreak of novel coronavirus outbreak poses risk toward global
economy
After a brief respite from the US-China trade deal, global economy is facing material risk.
China is experiencing the severe naval coronavirus (nCoV) outbreak during the weakest
economic growth in the history. Owing to rising share of service sector in the Chinese
economy and China’s growing influence on the world GDP, the impact from the
coronavirus outbreak could pose risk to China growth as well as the global economy.
Coronavirus outbreak in China has a knock-on effect on the commodity and tourism
sector worldwide. China is the largest oil and natural gas importer, consuming around
15% of global consumption. A dramatically drop in transportation demand as well as
factory shutdown due to travel restrictions and quarantine measures have caused a slump
in global oil price by almost 20% since the beginning of 2020. The decline in oil price, if
prolonged, would bring oil producers’ economy into abyss. Apart from oil producers,
international tourism is feeling the pinch of such impact, too. Restrictions imposed by the
Chinese government on its citizens and officer warnings to avoid all non-essential travel
to China will cause massacre across industries.
In addition, it is worth to mention that the economic consequences of the corona virus
could snowball. The prolonged outbreak could bring serious negative consequences and
cause a domino effect of disruptions in the supply chain. Hebei province is a hub for car
assembly, construction material electronics equipment as well as the logistic centers. The
disruption in the supply chain, if happens, could accelerate the pace of companies moving
15
production out of China amid the US-China trade war. Also, the outbreak pose risk that
China could fail to fulfill its targets in 'Phase-One' of the US trade deal due to severe
economic hardship. This will lead to US threat of additional tariffs’ genie out of the bottle.
Novel coronavirus outbreak could also amplify the impact on China
growth in both short and long term
China economy is bracing for the impact as the coronavirus outbreak hit the main engine
of growth, namely the consumption sector. Chinese economy has a greater reliance on
the service sector since that past decade and uncertainties over trade helps accelerate
this process. The service sector contributes more than 50% of GDP nowadays and
became the main driver of the Chinese economy in recent years.
The retail sector was hit the hardest by the coronavirus outbreak. An imposition of
stringent travel restrictions to virus-stricken areas has led to massive closures of shops,
restaurants that derailed commerce in China. China retail sales may report a double-digit
decline, albeit growing e-Commerce orders and medical equipment demand.
In addition, the coronavirus outbreak could aggravate a fragility of Chinese consumers.
The consumer sector has already been hit by higher food prices due to the African swine
fever (ASF) that has pushed up inflation and eroded purchasing power. The outbreak will
double-down the purchasing power of Chinese consumers as China's lockdown of cities
will affect their incomes due to suspension in business operations. As a result, balance
sheets of Chinese consumers could sharply deteriorate, especially those with hefty debt.
All in all, KResearch anticipates that the damage from the coronavirus outbrake may
reach RMB300bn during the first month of the outbreak or equivalent to 0.3% of China’s
annual GDP. If the outbreak continues beyond 3 months, China’s GDP growth could fall
short of 5.0% in 2020.
16
While we maintain our positive market view we lower our 12-month
forward SET Index target to 1,700 from 1,725 previously to reflect
the impact of the outbreak of 2019-nCoV virus in China. We see the
potential delay in the FY2020 Thai budget as noise and thus we still
expect the economy to improve in 2020 on more aggressive
government intervention.
We see three scenarios in regards to the 2019-nCov outbreak: 1)
base case (prefer AOT) with the SET to hover around a +0.25SD
earnings yield gap (1,521) and then rebound to +0.125SD (1,566)
should the outbreak follow the pattern set by SARS; 2) best case
(prefer AOT/ERW/CPN; SET to trade between 1,566-1,610), which
assumes a fast improvement in the outbreak or a significantly
positive development such as the discovery of a vaccine; and 3)
worst case (avoid Tourism sector; SET to trade between 1,440-
1,521), which assumes the Chinese outbreak gets out of hand
and/or a lethal outbreak in Thailand.
If the actual 2019-nCoV Chinese outbreak numbers from here start
to track our hypothetical scenario analysis, we see the week of
Valentine’s Day (Feb. 14) being crucial. Negative reaction to the
rising number of new confirmed cases during that week will serve
as a good opportunity as the scenario assumes the number of new
cases will stabilize shortly after. This coincides with the end of the
extended Chinese New Year holiday, the purpose of which is to
control the outbreak before the resumption of business as usual.
12-mth forward SET Index target of 1,700
While we maintain our positive market view we lower our 12-month forward SET Index
target to 1,700 from 1,725 previously to reflect the recent 2019-nCoV outbreak in China
and the ongoing impacts on the Thai economy, especially the tourism sector. We see the
potential delay of the FY2020 Thai budget to be noise and thus we still expect the
economy to improve from 2019, for which GDP is expected to end at 2.5-2.6% (KS
estimate of 2.6%). We expect the government to launch measures that are more
aggressive than in the past, more targeted at weak areas of the economy and more
investment/business-focused.
We see three scenarios in regards to the 2019-nCov outbreak and the SET Index:
1: Base case: We expect the SET to hover around a +0.25SD earnings yield gap/EYG
(1,521) and then to rebound to +0.125SD (1,566) if the outbreak follows the pattern set by
SARS, which saw an improvement by the fourth month after the start of the outbreak. We
like AOT the most under this scenario.
Equity market monitor: Week of Valentine’s Day to be
crucial
Equity Research Team
17
2: Best case: This case assumes a fast improvement in the outbreak or a significantly
positive development such as the discovery of a vaccine. These positive developments
could ignite a rebound and push the SET index to trade between +0.125SD (1,566) and
mean for EYG (1610). Recommend buying AOT, ERW, and CPN.
3: Worst case: This scenario could arise from: 1) the Chinese outbreak getting out of
hand even with the extended Chinese new year holiday; and/or 2) an outbreak in
Thailand with deaths caused by the 2019-nCoV. This scenario, in our opinion, will lead to
a further decline in the SET Index to trade at a lower bound of 1,440 (+0.5SD EYG) and
1,521 (+0.25SD EYG). It would likely lead to an EPS downgrade as well. Avoid Tourism
sector.
Week of Valentine’s Day looks crucial. We have performed a scenario analysis on how
this outbreak will pan out over the next month. If the actual progression of 2019-nCoV
tracks our analysis, the week of Valentine’s Day will be crucial as it may be the best time
to buy. The market’s negative reaction to the rising number of new confirmed cases
during the week, in our opinion, will serve as a good opportunity as the scenario assumes
the number of new cases will stabilize after that week. Feb. 8 is 14 days from Jan. 30
which coincides with the 14-day maximum incubation period of 2019-nCoV. The Chinese
government, in our opinion, will make every effort to contain the spread by the week of
Valentine’s Day when the extended Chinese New Year holiday ends.
Our strategist-recommended sector and stock picks are based on the following
investment themes:
► Turnaround plays from the coronavirus outbreak (AOT and CPN) as short-term
worries about the spread of the virus offer a buying opportunity. China’s decisive
reaction to the health crisis should help contain the outbreak. Note that AOT and
CPN’s share prices have fallen by 5-7% since the coronavirus outbreak was first
reported in mid-January.
► Key beneficiaries from weak THB (KCE and TU) as the THB 3% retreat against the
USD YTD will contribute about 16% to the 2020E earnings of KCE and TU.
► Key beneficiaries of IMO 2020 (BGC and DCC) on lower HSFO price due to a
change in global shipping fuel usage.
► Oil plays (PTTEP and TOP) on expectations that OPEC will extend its oil output cuts
through June 2020 to protect the downside of the global oil price at USD60/bbl. Oil
demand should recover later if the Chinese government can contain the coronavirus
outbreak and issue stimulus packages to boost its economy.
► Infrastructure play (STEC) on Bt600bn of infrastructure projects to be put up for bid
in 2020 after the Thai parliament passes the delayed 2020 budget bill.
► Key beneficiary from rising NPLs in Thailand (CHAYO) as the company should
benefit from higher demand for its debt-collection services and more debt to buy for its
debt-acquisition business. A shift to the accrual basis of accounting under TFRS9 will
help AMC to recognize income faster than the previous method based on cash flow.
While we like BAM, the biggest listed AMC, it provides limited upside at its current
price.
► Growth play (RBF) as we expect RBF’s 2020E earnings to grow 24% YoY driven by
strong revenue growth from new plants in Indonesia and Vietnam scheduled to COD in
18
1Q20, and better operating margins from interest savings and lower SG&A expense to
sales.
Fig 1 SET Index and major sectors: Bloomberg consensus forecasts & valuations
Index ROE (%) Div yld (%)
(24 Jan) % YTD 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2019E
SET 1,570 0.4 93.3 100.3 108.7 16.8 15.7 14.4 -3.0 7.5 8.4 -19.2 -19.6 -16.4 9.8 3.2
Energy 25,658 11.5 1,551.6 1,780.0 1,864.6 16.5 14.4 13.8 -10.6 14.7 4.8 -27.1 -18.7 -16.0 10.6 3.3
Petrochem 841 -34.5 63.4 82.7 95.0 13.3 10.2 8.9 -52.2 30.6 14.9 -57.2 -47.1 -39.4 8.2 4.4
Banks 411 -19.7 52.8 49.4 52.1 7.8 8.3 7.9 9.8 -6.5 5.4 -1.1 -17.4 -15.9 8.6 4.7
Telcos 163 14.9 9.0 9.2 9.5 18.1 17.7 17.1 23.0 2.1 3.7 -2.3 -1.7 4.2 6.7 4.8
Commerce 38,903 -0.5 1,434.9 1,598.3 1,794.8 27.1 24.3 21.7 3.2 11.4 12.3 -5.6 -7.3 -2.0 20.1 2.3
Property 248 -11.3 17.1 18.2 19.0 14.4 13.6 13.0 -7.6 6.2 4.2 -25.6 -30.6 -30.8 10.2 3.4
ConMat 9,458 -11.5 654.3 670.3 737.0 14.5 14.1 12.8 -9.7 2.5 10.0 -22.1 -25.2 -28.6 6.6 3.7
Transport 397 9.2 8.7 10.0 14.5 45.7 39.6 27.4 35.4 15.3 44.6 -30.4 -28.0 -6.8 12.5 2.0
Food 12,956 20.4 553.6 671.9 731.7 23.4 19.3 17.7 -3.6 21.4 8.9 -6.3 2.8 5.3 10.2 2.7
Healthcare 5,581 -1.0 161.7 165.2 180.9 34.5 33.8 30.9 3.7 2.2 9.5 -3.9 -14.3 -11.5 13.1 1.7
Hotel 427 -31.6 20.6 25.8 26.3 20.8 16.6 16.2 -17.2 25.6 2.0 -22.2 -12.1 -21.6 5.5 N/A
EPS growth (%) YTD EPS revision (%)EPS PER (x)
Source: Bloomberg, KS Research
Fig. 2 SET Index 12-month forward consensus PER
Fig. 3 SET Index 12-month forward consensus PBV
-2SD = 10.16
-1SD = 11.80
MEAN = 13.44
+1SD = 15.08
+2SD = 16.72
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
Dec-
09
Sep-1
0
Jun-1
1
Mar-
12
Dec-
12
Sep-1
3
Jun-1
4
Mar-
15
Dec-
15
Sep-1
6
Jun-1
7
Mar-
18
Dec-
18
Sep-1
9
(x)
-2SD = 1.50
-1SD = 1.68
MEAN = 1.86
+1SD = 2.04
+2SD = 2.22
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6D
ec-
09
Sep-1
0
Jun-1
1
Mar-
12
Dec-
12
Sep-1
3
Jun-1
4
Mar-
15
Dec-
15
Sep-1
6
Jun-1
7
Mar-
18
Dec-
18
Sep-1
9
(x)
Source: Bloomberg, KS Research Source: Bloomberg, KS Research
Key risks to our positive call
The key risks to our call in 2020 are 1) the 2019-nCoV outbreak in China getting out of
hand; 2) a coronavirus outbreak in Thailand with travel restrictions announced on
Thailand; 3) deterioration of the US-China trade war; 4) Trump losing the upcoming
presidential election; and 5) a further weakening of the Thai economy.
SET Index target setting
We base our SET Index target on the target prices of the stocks in the KS Universe and
adjust the base-line target by -10% (bearish) to +10% (bullish), depending on several key
factors, i.e., the economic outlook, broad market valuation, corporate earnings
momentum, etc. We still apply a “modestly bearish” adjustment (0 to -5%) with the key
negative factors being the continued weak Thai economy and market earnings outlook.
Fig. 4 SET Index target setting
Unit: Btmn Base-line Bearish (-5% to
-10%)
Modestly bearish (0 to -
5%)
Neutral (0%) Modestly bullish (0% to
+5%)
Bullish (+5% to
+10%)
KS Coverage: Total market cap based on current share price 13,246,673
KS Coverage: Total market cap based on target price 15,409,881
- Upside/(downside) 16.3%
SET Index (27 January) 1,524
SET Index target (-5% adjustment = Modestly bearish) 1,773 1,700
Implied 12-months forward PER based on 2020 BB EPS consensus 17.0
Total return (based on 3% dividend yield) 14.5%
Strategist adjustment vs base-line SET Index target
Source: Bloomberg, KS Research
19
Near-term trading range of 1,521-1,613
Given the 2019-nCoV virus outbreak, we lower our near-term trading range for the SET
Index to 1,521–1,613, which is pegged between “+0.25SD and mean” of the long-term
earnings yield gap. With the heightened concern about the rising number of confirmed
cases of 2019-nCoV, we see the SET Index hovering around the lower end of the range
until the outbreak situation improves, which would support the SET Index testing the
upper part of the range.
Fig. 5 Near-term trading range of SET Index
As at 24 Jan 2020 As at 24 Jan 2020
Earnings yield gap 10-yr bond yield Earnings yield 12mth forward market EPS Implied SET Index
-SD1 3.36% 1.38% 4.74% 101 2,124
-SD0.875 3.55% 1.38% 4.93% 101 2,043
-SD0.75 3.74% 1.38% 5.12% 101 1,968
-SD0.625 3.93% 1.38% 5.31% 101 1,898
-SD0.5 4.11% 1.38% 5.50% 101 1,833
-SD0.375 4.30% 1.38% 5.68% 101 1,773
-SD0.25 4.49% 1.38% 5.87% 101 1,716
-SD0.125 4.68% 1.38% 6.06% 101 1,663
mean 4.87% 1.38% 6.25% 101 1,613
+SD0.125 5.05% 1.38% 6.44% 101 1,566
+SD0.25 5.24% 1.38% 6.62% 101 1,521
+SD0.375 5.43% 1.38% 6.81% 101 1,479
+SD0.5 5.62% 1.38% 7.00% 101 1,440
+SD0.625 5.81% 1.38% 7.19% 101 1,402
+SD0.75 5.99% 1.38% 7.37% 101 1,366
+SD0.875 6.18% 1.38% 7.56% 101 1,332
+SD1 6.37% 1.38% 7.75% 101 1,300
Source: Bloomberg, KS Research
Fig. 6 Previous near-term trading range of SET Index
As at 22 Nov 2019 As at 22 Nov 2019
Earnings yield gap 10-yr bond yield Earnings yield 12mth forward market EPS Implied SET Index
-SD1 3.36% 1.70% 5.06% 102 2,020
-SD0.875 3.55% 1.70% 5.25% 102 1,948
-SD0.75 3.74% 1.70% 5.44% 102 1,880
-SD0.625 3.93% 1.70% 5.62% 102 1,817
-SD0.5 4.11% 1.70% 5.81% 102 1,759
-SD0.375 4.30% 1.70% 6.00% 102 1,704
-SD0.25 4.49% 1.70% 6.19% 102 1,652
-SD0.125 4.68% 1.70% 6.38% 102 1,603
mean 4.87% 1.70% 6.56% 102 1,557
+SD0.125 5.05% 1.70% 6.75% 102 1,514
+SD0.25 5.24% 1.70% 6.94% 102 1,473
+SD0.375 5.43% 1.70% 7.13% 102 1,434
+SD0.5 5.62% 1.70% 7.31% 102 1,397
+SD0.625 5.81% 1.70% 7.50% 102 1,362
+SD0.75 5.99% 1.70% 7.69% 102 1,329
+SD0.875 6.18% 1.70% 7.88% 102 1,297
+SD1 6.37% 1.70% 8.07% 102 1,267
Source: Bloomberg, KS Research
20
Fig. 7 Market yield gap (net of 10-year GBY)
Fig. 8 Market yield gap (net of 10-year GBY) — cont.
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20
STD-2 STD-1 Mean= 4.9% STD+1 STD+2
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
STD-2 STD-1 Mean= 4.9% STD+1 STD+2
Source: Bloomberg, KS Research Source: Bloomberg, KS Research
21
KBank THB NEER Index
USD/THB vs DXY Index
88
90
92
94
96
98
100
102
104
29
30
31
32
33
34
35
36
37
Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20
USD/THB DXY Index, RHS
Source: Bloomberg, KBank Source: Bloomberg, KBank
Thailand’s GDP
Thai inflation parameters
4.24.5
4.0
5.04.7
3.23.6
2.8
2.3 2.4
1.3 1.3
0.4
1.9
1.0
0.0
0.81.0
0.40.1
0
1
2
3
4
5
6
2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
GDP (%YoY) GDP (%QoQ sa)
-2
-1
0
1
2
3
4
5
11 12 13 14 15 16 17 18 19 20 21
Headline Inflation Core Inflation
Upper Bound Policy Target Lower Bound Policy Target
Source: NESDB, KBank Source: Bloomberg, KBank
Implied forward curve: TGBs
Implied forward curve: USTs
1.041.04 1.04
1.041.07 1.08
1.10
1.151.19
1.231.27 1.29
0.950.94
0.98
1.051.08
1.10
1.16
1.22
1.321.29 1.30
1.39
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
0 1 2 3 4 5 6 7 8 9 10
05/02/2020
next 3 months
next 6 months
next 12 months
tenor, yrs
1.46 1.451.48
1.59
1.66
1.421.43
1.55
1.64
1.77
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
2.00
0 1 2 3 4 5 6 7 8 9 10
6-Feb-20next 3 monthsnext 6 monthsnext 12 months
tenor, yrs
Source: Bloomberg, KBank Source: Bloomberg, KBank
Foreign holding of Thai fixed income and stock
Foreign net buy/sell in Thai markets (USD bn)
603 629
841
72
-412
-600
-400
-200
0
200
400
600
800
1,000
10 11 12 13 14 15 16 17 18 19 20
Thai government bonds, THB bn BOT bonds Thai stocks, est since 1999
-2.7 -5.1
-17.8
18.9
72.5
-25.1-32.1
-10.4
-3.7 -5.8
3.911.4
-3.4
-16.4
3.4 3.7
46.7
20.1
-54.3
-11.7-7.8 -7.7
-24.5-17.3
-60
-40
-20
0
20
40
60
80
Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20
Net buy bond Net buy equity
Source: Bloomberg, ThaiBMA, KBank Source: Bloomberg, KBank
22
Key Parameters & Forecasts at Year-end
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E
GDP, %YoY 0.8 7.2 2.7 1.0 3.1 3.4 4.0 4.1 2.5* 2.7
Consumption, %YoY 1.8 6.7 0.9 0.8 2.3 2.9 3.0 4.6 4.5* 3.9
Government Spending, %YoY 3.7 7.2 1.5 2.8 2.5 2.2 0.1 1.8 2.2* 2.3
Private Investment, %YoY 3.7 7.2 1.5 2.8 2.5 2.2 0.1 2.6 2.9* 3.0
Public Investment, %YoY 14.7 11.6 6.0 -2.0 -2.7 -1.0 0.5 6.6 0.9* 6.9
Export (USD term), %YoY 15.1 2.9 -0.3 -0.5 -5.8 0.5 9.9 6.9 -2.5* -1.0
Import (USD term), %YoY 25.1 8.9 0.5 -9.1 -11.0 -4.2 14.1 12.0 -5* 0.0
Current Account (USD bn) 9.4 -4.9 -8.8 11.6 27.8 43.4 44.1 32.4 34.5* 33.8
CPI, %YoY, average 3.81 3.02 2.19 1.9 -0.9 0.19 0.67 1.06 0.7 0.7
Fed Funds, %year-end 0.0-0.25 0.0-0.25 0.0-0.25 0.0-0.25 0.25-0.50 0.50-0.75 1.25-1.50 2.25-2.50 1.50-1.75 1.25-1.50
BOT Repo, %year-end 3.25 2.75 2.25 2.00 1.50 1.50 1.50 1.75 1.25 1.00
Bond Yields
2yr, % year-end 3.09 2.89 2.56 2.10 1.49 1.60 1.46 1.75 1.16 1.45
5yr, % year-end 3.16 3.15 3.41 2.48 1.95 2.26 1.85 2.14 1.24 1.61
10yr, % year-end 3.29 3.51 3.90 2.72 2.50 2.65 2.32 2.48 1.47 1.79
USD/THB 31.56 30.61 32.87 32.90 36.08 35.80 32.58 32.55 30.15 29.25
USD/JPY 76.91 85.96 105.17 119.48 120.22 116.96 112.69 110.27 109.44 107.00
EUR/USD 1.30 1.32 1.37 1.22 1.09 1.05 1.20 1.14 1.12 1.12
SET Index 1025 1392 1299 1498 1288 1543 1754 1564 1578 1725**
* KBank's Forecast
** denotes 12-month forward
Source: Bloomberg, KSecurities, KResearch, KBank
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Disclaimer
“This document is intended to provide material information relating to investment or product in discussion and for reference during discussion, presentation or seminar only. It does not represent or constitute an advice, offer, contract, recommendation or solicitation and should not be relied on as such. In preparation of this document, KASIKORNBANK Public Company Limited (“KBank”) has made several crucial assumptions and relied heavily on the financial and other information made available from public sources, and thus KBank assumes no responsibility and makes no representations with respect to accuracy and/or completeness of the information described herein. Before making your own independent decision to invest or enter into transaction, the recipient of the information (the "Recipient") shall review information relating to service or products of KBank including economic and market situation and other factors pertaining to the transaction as posted in KBank’s website at URL http://www.kasikornbankgroup.com and in other websites including to review all other information, documents prepared by other institutions and consult financial, legal or tax advisors each time. The Recipient understands and acknowledges that the investment or execution of the transaction is the transaction with low liquidity and that KBank shall assume no liability for any loss or damage incurred by the Recipient arising out of such investment or execution of the transaction. Each Recipient including its employee or officer who receives this document or a copy of the document represents and agrees not to reproduce, distribute or provide it in whole or in part to any other person and agrees to keep confidential all information contained therein. In the case of derivative products, where the Recipient provides incomplete or inaccurate information to KBank, KBank may not be capable of delivering information relating to investment or derivative products appropriate to the genuine need of the Recipient. The Recipient also acknowledges and understands that the information so provided by KBank does not represent the expected yield or consideration to be received by the Recipient arising out of the execution of the transaction. Further the Recipient should be aware that the transaction can be highly risky as the markets are unpredictable and there may be inadequate regulations and safeguards available to the Recipient. The Recipient acknowledges that there may be conflict of interest under the KBank’s services, whether directly or indirectly and should further consider the character, risk and investment return of each KBank’s product by reading details from relevant documents provided by KBank. KBank reserves the rights to amend either in whole or in part of information so provided herein at any time as it deems fit and the Recipient acknowledges and agrees with such amendment. Where there is any inquiry, the Recipient may seek further information from KBank or in case of making complaint; the Recipient can contact KBank at (662) 888-8822.”
