Where is the growth in Thailand?

UBS put out an extremely good paper demonstrating where the growth areas are in Thailand.

In summary it shows how the provinces have grown far faster than Bangkok city in the past 15 years primarily due to manufacturing becoming a more prominent part of the economy here. This merely proves what a lot of us here thought that Bangkok’s growth has been relatively stagnant and that the provinces are booming, this explains why companies such as Central Pattana (CPN), Robinsons (ROBINS), Dynasty Ceramics (DCC), and BIGC Supercenters (BIGC) have been performing so well with their expansions throughout Thailand. One major caveat for all this is that because the provinces are doing very well, citizens upcountry are less likely to travel to Bangkok or to the Industrial Estate Zones to look for employment as they are able to have a sufficient lifestyle in their home country. So this does beg the question where will Thailand, with unemployment below 2%, be able to find the necessary workforce if the country still plans on a being a manufacturing hub.

See below for a few select charts.

Continue reading Where is the growth in Thailand?

BOT cuts interest rates by 0.25%, believes it will have an impact!

We love to joke that the Bank of Thailand is always reactionary and are never adept at forecasting. A few days ago they cut interest rates from 3.25% to 3.00%, their reasons for doing so are:

1. Fear of a low economic expansion and a slow recovery from the flood crisis last year.

2. A riskier economic downtrend scenario coming from the EU area.

I’m not too sure how much of an impact a 0.25% decrease in the policy rate will impact the Thai economy, but if they seriously believe that the economy is going to perform poorly one would’ve expected a far more dramatic cut in rates. Thus if you are ever trying to figure out what the BOT is going to do regarding policy rates, just look at what their economic projections are (normally released a few days/weeks before each MPC meeting) and its fairly easy to forecast.

Going forward in Thailand we are going to see the minimum wage increase implemented in April, further fiscal stimulus from the government and possibly higher inflationary pressures, thus once the economy starts to show a massive improvement (probably 3Q12) don’t be surprised to see the policy rate increasing faster than previously. In the meantime a weaker Thai baht will likely be the case.

In Thailand, A Rare Peek At His Majesty’s Balance Sheet

Forbes wrote a great article regarding the His Majesty’s finances and investments in Thailand and I thought it would be an interesting read to share. I’ve put below the first paragraph and the source link. Enjoy.

In Thailand, A Rare Peek At His Majesty’s Balance Sheet

Thailand’s King Bhumibol, who turned 84 last December, is the world’s longest serving ruler. He is also the richest – by a comfortable margin. Last year Forbes estimated his net wealth in excess of $30 billion, beating oil-rich Brunei’s Sultan Bolkiah into second place. A gaggle of Gulf potentates and European royals round out our list. Bhumibol’s top ranking is controversial in Thailand, to say the least. Republicans grumble that the monarchy is wasteful and inefficient. Others are horrified that foreigners have the gall to turn a lens on their deified ruler. Royal courtiers insist that Forbes has it all wrong, that the billions on the balance sheet belong to the crown, not the man. They also contest the property valuations on which much of our estimate is based. Yes, they say, the monarchy is sitting on prime tracts of land in Bangkok and central Thailand. But it leases land and rent properties at subsidized rents that no commercial agency would tolerate. So the king isn’t loaded, just landed (and a value investor, as we’ll see).

Source: http://www.forbes.com/sites/simonmontlake/2012/01/20/in-thailand-a-rare-peek-at-his-majestys-balance-sheet/