What happened this past week?

Positives:

  • US Oct Payrolls increase a net 171k (est 125k), 184k (est 123k) of which in the private sector which is the most since Feb helped by an unexpected increase in mfr’g hiring.
  • Thai consumer confidence increases
  • Passenger traffic through Thailand’s 6 major airports hit another all time high
  • Thai Apple fanboys rejoice at the official Iphone 5 release in Thailand
  • Mfr’g PMI’s increase in China, Taiwan, South Korea and India from prior month.
  • If you love money printing, BoJ brings another 11T yen.
  • India cuts RR to help economy.

Negatives:

  • Laos is about to launch 4G will Thailand is still bickering over 3G….
  • BOT downgrades growth expectations from 5% to 4.6% in 2013, keeps 2012 at 5.7%
  • German unemployment rises more than expected.
  • Final euro zone mfr’g PMI 45.4 v 46.1 in Sept, 15th month below 50.
  • UK consumer confidence at 6 mo low and mfr’g PMI falls to 47.5.
  • Euro zone Economic Confidence at lowest since July ’09.

 

Jeremy Grantham latest thought’s

You always learn something by reading his thoughts…here he covers the US election,  resource prices, thoughts on the market and the shift in demographics globally and the impact it has on his thoughts of investing @ the moment. Enjoy!

How do you see the global economy today? 
I’ve been obsessing about the shift in resource prices that started 10 years ago, which is reducing the growth rate of everybody. We calculated the percentage of global GDP that was going to resources, and it declined beautifully, forever, until 2002, when it hit some very low number like 9 percent. The price of pretty well everything has doubled and tripled since then. This has taken a bite of three points out of global GDP.

Source: Businessweek

Comment: BLAND Plc

So BLAND’s owner, K. Anant, came out for his first press interview in Donkey years and here are the key points

  • Plans to spend 2 billion baht to develop new projects at Muang Thong Thani and sell 600 rai on Srinakarin Road worth 7.2 billion baht.
  • Chairman Anant Kanjanapas said the company also aims to invest 600 million baht to develop a mass transit system at Muang Thong Thani linking with the MRT Pink Line (Khae Rai-Pak Kret and Min Buri).
  • Bangkok Land’s aggressive stance comes after the company achieved a deal to buy back 44.82% of shares in Impact Exhibition Management Co from South East Asia Opportunities Fund Ltd for 2.7 billion baht. Five years ago, the fund bought the same amount of shares in Impact Exhibition Management for 7 billion baht.
  • Bangkok Land made an initial payment of 600 million baht from its own cash flow last Friday. It will pay the remaining 2.1 billion baht within 90 days, financed from its own cash flow or borrowing.
  • Impact Exhibition Management runs Impact Arena, Impact Forum, Impact Challenger, Impact Exhibition Center and Novotel Bangkok Impact Hotel.
  • It generates 1 billion baht a year and can help Bangkok Land pay dividends to shareholders once it owns 100%.
  • With 15 million people visiting Impact Muang Thong Thani each year, plus 10 million people living in Muang Thong Thani, Mr Anant has floated the idea of a mass transit system for the township.
  • There are two options, the first being a joint venture with the Mass Rapid Transit Authority of Thailand (MRTA).
  • For this option, Bangkok Land will offer a 20-rai site for the MRTA to build a mass transit depot at Muang Thong Thani connected to the Pink Line.
  • The company is negotiating spending 600 million baht _ half the total investment _ on the depot construction.
  • The 2-billion-baht outlay is to develop three projects in the next few years.
  • One of them is BeeHive, a two-storey neighbourhood shopping centre with a total lettable area of 8,340 square metres on a six-rai plot opposite Sukhothai Thammathirat Open University. The project began construction this month and will finish in late 2013.
  • The other two projects will be shophouses for sale and rent in two locations: Easy Promenade behind Impact Hall, worth 650 million baht; and Festival Walk near Kasikornbank’s Muang Thong Thani branch, worth 300 million baht.
  • Late last year it launched the first phase of the Double Lake condo project with 499 units starting at 1.95 million baht for sizes from 32 square metres. With 80% of those sold, the second and third phases with 499 units each will be launched in mid-2013.
  • Bangkok Land now has 750 rai in Muang Thong Thani, down from 4,500 rai before the 1997 financial crisis. This plot is the firm’s second-largest land bank after a 1,350-rai plot on Srinakarin Road ending at Outer Ring Road.
  • It plans to sell 600 rai from this block at 12 million baht per rai. The plot will have higher potential after Chaturathit Road between Srinakarin and Rom Klao is cut through.

Source: Bangkok Post

What simple story can come out of this?

1. Sale of Muang Thong to a property fund thereby realising potentially up to 1 Baht/share

So look anytime an owner publicly buys billions of baht of his own shares its fairly obvious somethings up :)

Comment: Wage Hikes

We’ve touched on this topic here before, now despite what I hear from a lot of of the public saying that increasing minimum wage is a bad thing, I completely digress. Yes I understand some business margins will drop, yes I understand some companies will make less money, yes i understand that there will be a knock on effect to the other employees within a company (i.e. everyone’s salary has to increase), but oye salaries in Thailand haven’t changed for the past 10 years, while basic food prices and gas prices have gone up, this increase in minimum wage will finally force Thai companies to become more productive, it’ll finally force Thai companies to upgrade themselves, it’ll finally force Thai companies to think “ohhh perhaps yes I should invest in machinery that can replace the work of 20 people.” Is unemployment going to hit the roof? No! Officially the unemployment rate is what .. 1%? And there are still plenty of new businesses popping up here, there are still plenty of foreign investment looking to come into Thailand, stop complaining and just move with the times.

Impact on equities? Quite moot..a lot of the manufacturers have already been paying their employees above minimum wage for the past few years, but in the non-publicly listed equity space, yes perhaps a few low-valued added manufacturers will suffer.

The government’s policy to raise the daily minimum wage to 300 baht in the remaining 70 provinces will definitely take effect on Jan 1, 2013, Labour Minister Phadermchai Sasomsap confirmed on Wednesday afternoon.

Source: Bangkok Post

Thai inflation comes in @ 3.32% for October

Not much to comment on this, it still doesn’t quite help to explain why the BOT flip flopped on its interest decision at the end of last month, but ok here are the quick points:

  • Food and drink prices went up 3.35 per cent on year in October
  • Non-food inflation rose 3.28 per cent – mostly due to the 7.68 per cent increase in prices of tobacco and alcoholic drinks.
  • Non-food category, the transport and communication price index rose 4.22 per cent.
  • Thailand’s inflation averaged at 2.99 per cent during the first 10 months of this year