1997 all over again? Nope.

There have been several articles going around that Emerging markets are in the beginning stages of 1997 Asian Financial Crisis part deux and how Thailand is going to yet again be affected.

We’ve gone through each data point thrown our way but in the end we disagree for Thailand. Quite simply:

  • I don’t see high debt levels on a corporate level, nor the country level, and the majority of loans are THB denominated.
  • The currency isn’t pegged like it was pre’97,
  • The Bank of Thailand has done a decent job thus far in accumulating reserves and managing rates and so forth.

Although one should never and say never and when looking around I think the best thinking to apply here is George Soros’ thoughts on reflexivity, see below for an exercept where he links his thinking to stock prices, one can simply replace stock prices with countries/currencies etc etc…

What should now be clear is that the so-called fundamentals that supposedly determine stock prices are not independently given. Instead, they are contingent on the behavior of financial markets. There are, indeed, myriad ways in which stock prices affect the fortunes of companies: they determine the cost of equity capital; they decide whether a company will be taken over or acquire other companies; stock prices influence a company’s capacity to borrow and its ability to attract and reward management through stock options; stock prices serve as an advertising and marketing tool. In other words, when financial markets believe a company is doing well, its “fundamentals” improve; when markets change their mind, the actual fortunes of the company change with them. Moreover, changes in financial markets also have far reaching macroeconomic consequences.

Source: http://www.project-syndicate.org/commentary/when-internet-boom-went-bust

Article thinking its 1997: The Economist

Article arguing against the above: Fortune

Stock in the news 29.01.14 (AGE, AIT, AOT, CPF, EA, SENA, TRC)

AGE

AGE to invest in a 9MW biomass power plant, a new line for its business. It is confident the biomass plant will bring in revenues of no less than Bt200mn per year. Coal sales for 2014 are to exceed 3mn tons this year, driven by strong demand from clients abroad. (Khao Hoon, 29/01/14)

Comment: AGE has been suffering for the past few years and this biomass plant won’t have much of an impact on the bottom line.

AIT 2013 best in 20 years — AIT says 2013 performance was its best in 20 years, with revenue of ~Bt6bn supported by more work delivered. It expects 2014 revenue of Bt6.2bn; current backlog is Bt4bn. It is preparing to bid for a Bt10bn project. (Khao Hoon, 29/1/14)

Comment: A wonderful growing dividend payer up until last year when the stock price appreciation wiped out the yield. The other issue is, they’ve recently raised equity (doubled it) in the hopes of pitching for bigger projects, but they didn’t inform shareholders what exactly yet.

AOT

AOT expects 2mn travelers to come to Thailand during Chinese new year over 13 days, -0.64% YoY, while airlines request 700 more flights. (Khao Hoon, 29/1/14)

Comment: Friends are saying that immigration queues are nonexistent at the moment Continue reading Stock in the news 29.01.14 (AGE, AIT, AOT, CPF, EA, SENA, TRC)