thailand 2016: growing under the new normal · thailand 2016: growing under the new normal ... thb...

Thailand 2016:Growing under the new normal

May 2016

I. Thailand’s engines of growth

II. Thai corporates target for sustainable growth

III. Thai capital markets: connectivity to regional opportunities

Growing under the new normal

Source: Office of the National Economic and Social Development Board (NESDB), Department of Tourism, Bank of Thailand, IMF’s World Economic Outlook, April 2016

% to GDP(2014)

%YoY

2014 2015 1Q2016 2016f

GDP Growth 0.7 2.8 3.2 3.0 – 3.5

- Private consumption 54% 0.3 2.1 2.3 2.7

- Private investment 25% -1.9 -2.0 2.1 3.2

- Public consumption14%

2.8 2.2 8.0 3.7

- Public investment -6.1 29.8 12.4 11.2

- Export value* 74% -0.3 0.2 5.1 1.2

- Import value* 66% -8.5 -0.4 -4.8 1.3

- Number of international tourists (%YoY) 9% -6.7 20.4 15.5 8.7

(million people) 24.8 29.9 9.0 32.5

• The economy grew by 3.2 percent in 1Q2016. For the whole 2016, growth is expected to be in the range of 3.0-3.5 percent.

Thailand: Medium-term GDP growth forecast

0.1

6.4

2.9

0.7

2.8 3.0 3.2 3.0

2016f 2017f 2018f

(%)

3

I. Thailand's engines of growth

ActualForecast*

Note: 2016 onward forecast by IMF

Note: Exports and Import value of goods and services

60708090

100110120

Jan-

13

May-1

3

Sep-

13

Jan-

14

May-1

4

Sep-

14

Jan-

15

May-1

5

Sep-

15

Jan-

16

Average wage in non-farm sector Farm income

Private consumption index

80

100

120

140

160

180

Jan-

13Ap

r-13

Jul-1

3Oc

t-13

Jan-

14Ap

r-14

Jul-1

4Oc

t-14

Jan-

15Ap

r-15

Jul-1

5Oc

t-15

Jan-

16

Private consumption index Non-durable index

Durable index Services index

Source: Bank of Thailand

4


• Private consumption increased slightly while household income remain unchanged YoY.

Household real income index

(rebased Y2010 = 100 ,data as of Mar 2016) (rebased Jan 2013 = 100 ,data as of Mar 2016)

Non-farm Farm

% of total labor force 71% 29%

Mar 16%YoY+5.1%

+2.4%-7.7%

+0.3%

020406080

100120140160180

Jan-

13

May-1

3

Sep-

13

Jan-

14

May-1

4

Sep-

14

Jan-

15

May-1

5

Sep-

15

Jan-

16

Current expenditure Capital expenditure


5


• Government spending increased YoY and will increase continuously by government stimulus measures.

Government current and capital expenditure(billion THB ,data as of Mar 2016) THB 136 billion to rural household

1. The Village Fund program, THB 60 billion. 2. New infrastructure investment in each district, THB 36 billion.3. Accelerate government spending for current small investment

projects, THB 40 billion

Economic stimulus measures

SME stimulus package

1. 7 years soft loan, THB 100 billion. 2. THB 6 billion venture capital fund.3. THB 100 billion credit guarantee.4. SME corporate income tax cut to 10% from 15-20% for 2 years.5. 5 years tax exemption for start-ups.

THB 1.6 trillion infrastructure development in 2016-2022(2016 disbursement to contribute 1% GDP growth)

1. Bangkok public transportation, THB 620 billion.2. Railway network, THB 420 billion.3. Regional connectivity motorway, THB 430 billion.4. Air and water transportation, THB 130 billion.


6


• Capacity utilization and private investment quite flat according to low growth in exports and domestic consumption.

50

100

150

200

250

100

110

120

130

140

Jan-

13Ap

r-13

Jul-1

3Oc

t-13

Jan-

14Ap

r-14

Jul-1

4Oc

t-14

Jan-

15Ap

r-15

Jul-1

5Oc

t-15

Jan-

16

Private investment index (LHS)

Construction Material Sales Index (LHS)

Domestic Car Sales for investment Index (RHS)

Private investment index(rebased Y2010 = 100 , data as of Mar 2015)

Capacity Utilization

%Weight (2011)

2015 2016

Q4 Q1 Feb Mar

Food & Beverages 18.1 53.4 54.2 55.1 54.3

Vehicles 17.8 86.9 81.1 81.1 83.6

Rubbers & Plastics 11.2 62.7 63.2 64.7 63.0

IC & Semiconductors 7.3 84.2 83.9 84.7 88.1

Textiles & Apparels 6.2 48.7 45.4 44.1 44.4

Chemicals 6.1 73.9 77.2 77.7 79.2

Cement & Construction 5.1 66.3 66.9 68.1 67.1

Electrical Appliances 4.7 37.6 44.6 44.5 46.1

Petroleum 3.5 88.6 84.7 84.2 86.2

HDD 1.3 45.0 39.9 40.8 34.8

CAPU 100.0 65.1 64.3 64.6 65.1

Dec 15 %YoY

-0.5%+1.6%

-4.7%

Note: *exports value exclude refinery oil and gold exports **CLMV= Cambodia, Laos, Myanmar and Vietnam.

Source: The customs of Thailand7


• The robust growth in ASEAN and the Japanese economic recovery would be the key drivers for Thai exports in 2016.

26.1

9.616.5

11.2 10.3 10.1 9.7

22.0

4.3

17.7 15.3 13.6 13.68.3

22.9

6.4

16.510.5 11.3 10.5 11.1

ASEAN (9) CLMV ASEAN (5) US EU (27) Japan China

3M2016

Thailand’s export growth by destination (value in term of USD)*

Thailand’s exports by destination to total exports

(%YoY)

(%)

5.7 3.57.0

-3.2-0.1

6.0

-6.1

2.38.0

-0.4

4.4 4.1

-2.3-6.2-5.0

5.7

-10.6

0.7

-5.5 -7.8-3.9

ASEAN (9) CLMV ASEAN (5) US EU (27) Japan China

3M2016

Source: Ministry of Tourism and Sports

8


• International tourist arrivals and receipts quickly rebounded once political stability resumes.

Number of international tourist arrivals

-20%

-10%

0%

10%

20%

30%

40%

-1,000

1,000

3,000

5,000

7,000

9,000

11,000

1Q20

132Q

2013

3Q20

134Q

2013

1Q20

142Q

2014

3Q20

144Q

2014

1Q20

152Q

2015

3Q20

154Q

2015

1Q20

16

No.of international tourists (LHS) %YoY (RHS)

(thousand) (%YoY)

Tourism receipts

(billion THB) (% YoY)

-20%

-10%

0%

10%

20%

30%

40%

050

100150200250300350400450500

1Q20

132Q

2013

3Q20

134Q

2013

1Q20

142Q

2014

3Q20

144Q

2014

1Q20

152Q

2015

3Q20

154Q

2015

1Q20

16

Tourism receipts (LHS) %YoY (RHS)

464

+18%9,0

39+15%

Tourism accounts for around 10% of GDP

0

10

20

30

40

50

60

-10

-5

0

5

10

15

1Q20

16

Fiscal balance/ GDP (LHS) 2/

Current account/ GDP (LHS) 2/

Public debt/ GDP (RHS) 2/Source: Bank of Thailand, Public debt management office , Fiscal Policy Office1/ International reserves and net forward positions2/ Calculate base on fiscal year basis

External debt and international reserves (billion USD)

• External vulnerability is manageable with strong foreign reserves, current account surplus, and sound fiscal positions.

9

Public debt and fiscal balance (percent of GDP)

0

50

100

150

200

250

1Q20

16

Short-term external debt

Gross external debt

Net international reserves 1/

203

133

54

(%) (%)

4.2

44.1

Public debt to stay below fiscal sustainability framework, 60%


-0.7

0

10

20

30

40

50

0

5

10

15

20

Mar-1

6

Tier1 (LHS) CAR (LHS) Gross NPLs to total loan (RHS)

Source: Bank of Thailand, Bloomberg

Capital adequacy and Non-performing loans(%) (%)

17.1

14.0

2.6

• Financial sector resilience is strong. Banks are well-capitalized and asset quality has been quite stable.

10

Commercial Bank Loan Growth (%YoY)


0

200

400

600

800

1,000

Total Oil companies Total exc. Oilcompanies

2012 2013 2014 2015

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Total Oil companies Total exc. Oilcompanies

2012 2013 2014 2015

Source: Stock Exchange of Thailand

Net profits of listed companies

• Non-oil firms grew robustly, supported by economic upturn and falling oil prices.

12

II. Thai listed companies

Sales revenue of listed companies (billion THB) (billion THB)

-9.4%

-22%

-1.7%

-1.4%

-56.7%

+3.7%

40.8 30.1

22.4 20.5 12.9

32.9 24.5

19.3 18.3 12.9

Singapore Malaysia Thailand Indonesia Phillippines

2014 2015

Source: Bloomberg, The Stock Exchange of ThailandRemark: (1) nominal value base on USD currency

(2) percent change base on local currency

Net profits of listed companies on ASEAN exchanges

• Earnings of the Thai listed companies slightly decreased in 2015 but still competitive to peers

13


(billion USD)

-1.4%

-13.7%

-7.2%

-6.2%

+0.1%

-18.2 -17.7-4.6 -8.3 -20.3

21.1

-19.7

4.3

54.426.1

-9.6 -7.1 -4.9 -4.4

11.4 19.324.0 24.7

65.586.1

Singapore Taiwan Hong Kong Korea Malaysia China Indonesia Thailand Philippines Japan

USD Local currency

5-year (end of 2010- end of 2015) index performance (%); as of Dec 30, 2015

• SET ranks among the best performers in Asia over the past 5 years.

Source : Bloomberg, The Stock Exchange of Thailand

14

-3.9

-14.1

-5.2

3.2 7.7 1.6 4.8 1.610.7 12.6

-15.2 -14.2-5.1 -2.4 -1.9 -0.5

1.2 1.8 5.1 9.1

Japan China Hong Kong Singapore Malaysia Taiwan Korea Philippines Indonesia Thailand

USD Local currency

YTD index performance and movement(%); as of Apr 30, 2016


1.21.8 1.5

1.91.5

3.1 2.93.9

3.03.2 3.2

1.7 1.8 1.9 2.0 2.13.1 3.4

3.9 4.0 4.0 4.0

Korea Philippines Japan Indonesia China Malaysia Thailand Vietnam Taiwan Hong Kong Singapore

Apr 2015 Apr 2016

11.7 13.5 14.4 13.717.8

13.0 15.3 15.518.7 16.6 19.5

11.3 11.3 12.8 12.9 13.2 13.9 15.0 15.2 15.8 16.1 18.2

Korea Hong Kong Singapore Taiwan China Vietnam Thailand Indonesia Japan Malaysia Philippines

Apr 2015 Apr 2016

(%)Market Dividend Yield

Forward P/E ratio

Source : Bloomberg, The Stock Exchange of Thailand

15

(times)

• SET’s valuation and dividend yield are competitive with those of regional peers.


9 9 10 13 209 9 9 10167 7 8 1013

16 17 20 2124

9 11 1221

27

10 11 1314

19

14 1720

27

40

11 1111

13

14

2010 2011 2012 2013 2014

Technology

Services

Resources

Property &ConstructionIndustrial

Financials

ConsumerproductAgro & FoodIndustry

16


• Thai listed companies gear toward sustainable growth strategies and international expansion.

Number of Thai listed companies invested abroad

Source : The Stock Exchange of Thailand

78%

59%

43%

22% 19%13% 11% 9% 8%

Proportion of investment target region (data as of 2014)

17

2225

29 2932

2011 2012 2013 2014 2015 2016

12

34 44

10

13

DJSI World Index

DJSI Emerging Market IndexSource : MSCI, DJSINote: DJSI Emerging Market Index has been calculated since 2013

• Thai listed companies continued to expand their presence on the leading global indices - MSCI and DJSI, reflecting the strong potential and world-class quality of Thai listed companies.

Number of Thai listed companies in MSCI Standard index

17


Number of Thai listed companies in DJSI Index

2016 MSCI member:

ADVANCAOTBANPUBBLBECBHBGHBTSCPALLCPFCPNDELTAEAGLOWHMPROEGCO*

IVLIRPCKBANKKTBMINTPTTPTTGCPTTEPSCBSCCTMBTOPTRUETUBEM*ROBINS*

*3 new members in 2016

2015 DJSI member:

DJSI World: PTT, PTTEP, PTTGC, SCC

DJSI EM: ADVANC*, AOT*, BANPU, CPF* CPN, IRPC, MINT, PTT, PTTEP, PTTGC, SCC, TOP, TU*3 new members in 2015


19

III. Thai capital market landscape

• Various schemes to facilitate foreign listing are available to suit different capital requirements and business structures.

HoldingCompany

1PrimaryListing

2Secondary

Listing

3Infrastructure

Trust

4Real Estate

Investment Trust (REIT)

5

Foreign Company

Listed company in Home Exchange

(e.g. JPX)

Listed company on SET

Infrastructure Asset(or)

Infrastructure company

Infrastructure trust

Real estate property

Real estate Investment trust

(REIT)

Ordinary Share Unit Trust

Holding Company(Thai incorporated)

Core Company(Foreign subsidiary)

Hold > 50%

Listing of the Thai holding companywith core companies operating overseas

Listing of a company incorporated abroad on the SET as a primary exchange

Allow a foreign listed company to list on SET as the Secondary Listing

Listing of Foreign Infrastructure Projects

Listing of Foreign Real Estate

20


• Fund raising activities on SET have been the most active in ASEAN since 2013.

6,447

2,669

1,536

5,183

947

3,447

1,685

274

2,614

328

4,241

1,337 878 341 114

Thailand Malaysia Indonesia Singapore Philipphines

2013 2014 2015

IPO fund raising in ASEAN(million USD, data as of Dec 2015)

Source: Bloomberg

15 16

24

38

45 41

40

200

400

600

800

1,000

1,200

1,400

1,600

0

10

20

30

40

50

2010 2011 2012 2013 2014 2015 2016(YTD)

Newly listed securities (LHS)

SET index (RHS)


Breakdown of number of listed companiesNo. of newly listed

securitiesTotal

outstanding Companies in pipeline

2015 2016 2016 (YTD)Stocks: SET 20 1 518 10Stocks: mai 13 2 124 7Property funds & REIT 6 1 61 0Infrastructure funds 2 0 5 0

Total 41 4 708 17Source: The Stock Exchange of Thailand* Listed companies in SET and mai and property funds & REIT and Infrastructure funds

• The number of new IPOs has consistently increased.

21

Number of newly listed securities*data as of Apr 2016

Property funds & REIT

55%

mai16%

SET29%

Market capitalization of newly IPOs (YTD)data as of Apr 2016

YTD market capitalization of new IPOs THB 14,772 million

Source : World Federation of Exchanges (WFE), The Stock Exchange of Thailand*Share turnover velocity is calculated by {Monthly EOB Domestic Share Turnover / Month-end Domestic Market Capitalization) *12

22

• The Thai stock market has been the most liquid market in ASEAN for the last four consecutive years.

Daily average turnover(million USD, data as of Mar 2016)

0200400600800

1,0001,2001,4001,6001,800

2010 2011 2012 2013 2014 2015 2016(YTD)

Thailand Singapore MalaysiaIndonesia Philippines

1,192

880

482

134326

Transactions by investor type(Daily average trading value: million THB)data as of Apr 2016

(3,495) (3,886) (4,198) (6,347) (4,283)

24% 22% 20% 22% 26%

8% 9% 9% 9% 10%13% 13% 9% 9%

11%

55% 57% 63%59% 53%

2012 2013 2014 2015 2016 (YTD)

Foreign investors Local institutes

Proprietary trading Local retail investors

(18,018) (16,287) (17,765) (28,742) (24, )

(3,495) (3,886)(4,198) (6,347)

(5, )

(2,205) (2,586) (2,512) (4,294) (4, )

(5,347) (6,713) (7,830) (10,940) (11, )



23

(billion THB)

Foreign holding value, proportion and SET Index


• Foreign investors holding in Thai stocks have been quite stable despite international and domestic uncertainties.

1,8802,669

3,066

4,6654,159 4,453

35.3

34.0

36.335.9

34.5

32.7

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

30

31

32

33

34

35

36

37

38

2010( Apr)

2011(May)

2012(Apr)

2013(Apr)

2014(Apr)

2015(May)

Foreign Holding Value % Foreign Holding

(% of Thai stock market capitalization)

Holding value proportion by investor types

SET Index 763.51 1,073.83 1,228.49 1,597.86 1,414.94 1,496.05

36.8% 35.9% 34.5% 32.7%

14.8% 24.6% 24.8% 23.5%

48.4%39.5% 40.6% 43.8%

2012 2013 2014 2015

Foreign investors Local institutes

Local retail investors

(% of Thai stock market capitalization)

661

421 389 390

226142

10447

Singapore Malaysia Thailand Indonesia

Market cap. Size (billion USD) % Market cap. to GDP*

Number of listed companies having market capitalization >= $1 billion and daily average trading value** >= $10 milliondata as of Mar 2016

Source : World Federation of Exchanges (WFE), Bloomberg * GDP 2015**Average daily trading value during Sep 2015 - Feb 2016

21 20

10

6

Thailand Singapore Malaysia Indonesia

24

• SET has a relatively larger number of liquid large-cap listed companies.


Market capitalizationdata as of Mar 2016

Source: Asian Corporate Governance Association* Remark on Thailand: ACGA sees Thailand is moving ahead with pre-existing national CG policies and plans. Enforcement is also better. However, political / regulatory falls in Thailand remain a drag, though this could be improved as political blockage is solved and institutional framework is enhanced.

ACGA ’s CG Watch market scores: 2007 to 2014*

23

11

86

2

Thailand Philippines Singapore Malaysia Indonesia

Number of top 50 companies in ASEAN were awarded 2015 ASEAN CG scorecard*

Source : ASEAN CG Scorecard is a program initiated by the ASEAN Capital Markets Forum (ACMF) and supported by the Asian Development Bank (ADB).

For more information http://www.aseancorpgov.com/

2007 2010 2012 2014

1.Hong Kong (67) 1.Singapore (67) 1.Singapore (69) 1.Hong Kong (65)

2.Singapore (65) 2.Hong Kong (65) 2.Hong Kong (66) 1.Singapore (64)

3.India (56) 3.Japan (57) 3.Thailand (58) 3.Japan (60)

4.Taiwan (54) 4.Thailand (55) 4.Japan (55) 4.Thailand (58) *

5.Japan (52) 4.Taiwan (55) 4.Malaysia (55) 4.Malaysia (58)

6. Korea (49) 6.Malaysia (52) 6.Taiwan (53) 6.Taiwan (56)

6. Malaysia (49) 7.India (49) 7.India (51) 7.India (54)

8.Thailand (47) 7.China (49) 8.Korea (49) 8.Korea (49)

9.China (45) 9.Korea (45) 9.China (45) 9.China (45)

10.Philippines (41) 10.Indonesia (40) 10.Philippines(41) 10.Philippines(40)

11.Indonesia (37) 11.Philippines(37) 11.Indonesia (37) 10.Indonesia (39)

25


• Thailand is internationally recognized as a leader in capital market corporate governance.

http://www.aseancorpgov.com/

10,212 17,690 16,467 23,218 58,790

110,142 131,179

8,849 34,351

80,100

81,103 69,581

14,927

9,009

6,293

6,015 12,867

2010 2011 2012 2013 2014 2015 2016 (YTD)

Others*

Currency futures

Gold futures

Single stock futures

SET50 index futures

Source: The Stock Exchange of Thailand* Others comprise of Oil futures, SET50 Index options, Silver futures, Interest rate futures, Sector futures and Agricultural futuresNote: TFEX has modified its SET50 futures contract to have a smaller contract size on May 6, 2014. The new SET50 futures, or mini-SET50 futures, have a contract size that is one-fifth that of the previous one. The contract multiplier was reduced from THB 1,000 per index point to THB 200 per index point, resulting in a drop in size to about THB 200,000. 26

• Thai derivatives market is growing rapidly, expanding multi-asset-class investment capability.

Daily average trading volume in TFEX(number of contracts per day)

CAGR 2010-2015 49%

Total 18,676 41,145 147,025


43,823 68,017 215,880

data as of Apr 2016

16,479

199,749

Disclaimer

This document was prepared by The Stock Exchange of Thailand in good faith upon sources believed to

be reliable but no representation or warranty expressed or implied is made to their accuracy or correctness.

The Stock Exchange of Thailand accepts no liability for any direct or consequential loss or damage arising

from any use of this document or its contents. All information and opinion expressed here is subject to

change without notice. The copyright belongs to The Stock Exchange of Thailand. No part of this document

may be published or copied in any form or by any means without the written permission of The Stock

Exchange of Thailand.

27

Post-Trade Services Clearing & settlement Central Depository Securities registration

Derivatives SET50 index futures Single stock futures Gold futures Interest rate futures Oil futures Currency futures Sector Index Futures SET50 index options Rubber futures

Equities Domestic common shares Dual listings State enterprise listings SME listings Warrants Property funds / REITs / Infrastructure Fund Domestic mutual funds / ETFs Domestic indices / FTSE indices Shariah index Derivative warrants

Fixed Income Corporate bonds Government and state

enterprises bonds

SET Information Services SET listed companies &

product information database

Exchangeand

Trading

Post-Trade Services

Data, System and Other Services

Integrated

Model

Appendix: Trading at SET

28

NVDR

43.83%Local

Shares46.60%

Foreign

Shares9.59%

Proportion of trading value by type of stocks by foreign investors

Trade stock-F

Most SET-listed Thai companies have foreign ownership restriction. Check out foreign ownership restriction of each stock via www.set.or.th >> company/securities info >> equity >> then select your preferred company.

2 options to get all benefits from investing in Thai stocks.

Option 1: Mostly for strategic shareholders

Trade NVDR stock or stock-R

•Another option is to trade NVDRs. (Non-Voting Depository Receipts) •Obtain all financial benefits with the exception of voting rights.•Gain greater efficiency, flexibility and convenience as if you are local investors.

Option 2: General option

Appendix: Trading at SET

Remarks: Trading stocks on local board is applicable. However, to get all benefits, stocks should be transferred to stock-F or stock-R. NVDRs traded on local board, no price different from local stocks.

Source: SET, May2013 - Apr2014

29

http://www.set.or.th/

Appendix: Foreign investor information center

• Follow the updates on the Thai economy and capital market developments on SET website.

30

http://www.set.or.th/en/news/econ_mkt_dev/overview_p1.html

Appendix: GMS Exchanges information center

• SET and GMS exchanges agree to exchange market information to be shown on GMS Exchanges’ information. The website will be an integrated single-window view into the GMS capital market.

31

http://www.set.or.th/en/gms_exchanges

thailand 2016: growing under the new normal · thailand 2016: growing under the new normal ... thb...

Documents