Economy NEWS/Discussions

[Admin]

Foreign investors still keen to invest in Thailand but waiting for clarification

12 Sep 2008
Most foreign investors still keen to invest in Thailand

BANGKOK, Sept 12 (TNA) – Most foreign investors are still keen on investing in Thailand, but want to wait and see how political developments unfold for a time following the imposition of the State of Emergency Decree in the capital, according to a top securities executive.

Vorapak Tanyawong, president of J.P. Morgan (Thailand) Co, said he met with investors in the United States in a road show organised after the decree was declared and found most continued to view Thailand as an attractive investment spot.

However, they indicated that they would wait to see what actually takes place on the political situation for a while based on two reasons.

Firstly, the US economic conditions remain adversely affected by that country's sub-prime lending crisis. Recently the US government has financially assisted mortgage giants Fannie Mae and Freddie Mac. The move helped ease financial problems both ailing institutions are facing, but only to a limited extent.

Secondly, the ongoing political turmoil in Thailand, especially the imposition of the decree, has been closely monitored by foreign investors, who see the current political situation in Thailand as an unusual phenomenon.

Mr. Vorapak said the imposition of the decree in no way helped to curb the gathering of the People's Alliance for Democracy (PAD)-led protesters, nor did it boost public confidence.

He viewed the sooner the decree is lifted, the better the situation will be, and ventured that the new government must have clear-cut policies, especially regarding fiscal and monetary matters, if it wanted to boost foreign investor confidence.

Mr. Vorapak said the Stock Exchange of Thailand (SET) composite index had already dropped to a very low level.

Thai stock prices are considered quite low when compared with returns, which are higher than those of many countries in the region, so he advised investors to gradually accumulate stocks and hold them until their prices rise again. (TNA)

[Admin]

2009 exports likely to outpace forecast
Bangkok Post: 13/9/2008

Exports next year are set to expand beyond their original 10% target, as shipments have been only affected marginally by political uncertainty, the Department of Export Promotion reported.

Importers from the US and Japan have also switched some orders to Thailand from China and Vietnam where costs are rising, said Piramol Charoenpao, the department's deputy director-general.

''Some items like leather goods have seen costs go up in China to comply with environmental requirements, thus US and Japanese importers are switching orders to Thailand,'' said Ms Piramol, adding that Vietnam's high inflation also pushed up the costs of its goods.

Demand from new markets, including the Middle East, South Africa and Western Europe has been strong, she added.

''We checked the data every month and found exports had grown in almost every item this year,'' she said. ''The political stalemate has had some psychological impacts on business confidence but there has been no drastic impact.''

Rail workers went on strike recently as part of the anti-government protests, while services at the Bangkok Port in Klong Toey were suspended for three days because of port's labour strike.

''We have assigned overseas trade representatives to explain to our trade partners that their orders will not be affected by the current situation,'' said Ms Piramol. ''Rail and short-term port strikes have yet to delay shipment delivery but made costs for exporters rise.''

Ms Piramol said the department would meet next week to possibly hike the 2009 target. This year, exports are projected to rise 12.5% to $171.1 billion.

''Absolutely, this year's target will be achieved. Now next year's target growth of 10% is considered too low,'' she said.Techa Boonyachai, vice-chairman of the Thai National Shippers' Council, said exporters had stayed in close touch with their foreign buyers regarding political uncertainties and the strikes.

The port strike cost 4,500 baht to move each container to Laem Chabang, 120 km southeast of the capital, he said.

''Those who import materials or parts to assemble here for exports would possibly see their shipments delayed. Businesses have to better address risks for the time being,'' he said.

[Admin]

Lehman Brothers collapse to have low impact on Thai banks  
The Nation: 16/9/2008
Lehman fiasco to have low impact on Thai banks: BOT

US investment bank Lehman Brothers' move yesterday to file for bankruptcy will have only a limited effect on Thai banks, due to the low volume of mutual transactions, says a Bank of Thailand official said.

Deputy governor Bandid Nijathaworn said losses could top Bt4.5 billion on top of a Bt4.3-billion exposure to financial papers issued by Lehman.

As of July, Thai banks' foreign investments totalled Bt102 billion, only 1.3 per cent of the banking sector's assets.

Even though some banks have had off-balance sheet transactions with Lehman, with a face value of Bt5.3 billion, any potential loss is expected to be less than Bt100 million.

Thai banks have been advised to monitor the situation closely in the next few months to be able to take prompt action. Bandid said it was not clear if all transactions with Lehman and its subsidiaries and affiliates would be subject to asset devaluation. If so, Thai banks would need to set aside additional capital.

Another risk factor lies in capital moving out of the Kingdom, because US banks are mobilising funds. However, Bandid said the Thai banking system was strong enough to withstand the negative impact, with a 15.2-per-cent capital-adequacy ratio and excess liquidity.

"The direct impact is quite limited and does not affect performance and stability of the banking system," he said, declining to name the Thai banks that have exposure to Lehman.

Bandid also believes the Lehman fiasco would not bring about systematic effect as feared, given the Federal Reserve Board's financial window to investment banks. Yet, if the turmoil is prolonged, it could lead to a credit crunch and the global economy could be affected.

He believed that Thai banks would withstand the negative impact, as 70 per cent of their funds are from domestic deposits.

Santi Vilassakdanont, chairman of the Federation of Thai Industries, expected the Lehman collapse to lead to more sell-offs of Thai shares. There has been no impact yet on Thailand's exports, he noted.

"This will definitely hit investment sentiment in Thailand. While the US is injecting money to address the problem, Thailand must also quickly address the political problems to restore investor confidence," Prasert Bunsumpun, president of the Federation of Thai Capital Market Organisations.

In the past 3-4 months, foreign sell-offs have exceeded Bt100 billion while market capitalisation has plunged 20 per cent. Though listed companies showed higher profits and are cheap, foreign investors could remain on the sidelines if political problems persisted.

[Admin]

Bank of Thailand satisfied on liquidity 
Bangkok Post: 24 Sep 2008
BoT satisfied with liquidity

There is still ample liquidity in local money markets to support the Thai economy, Bank of Thailand governor Tarisa Watanagase said yesterday.

"There is no need to inject added liquidity into the markets," she said.

Dr Tarisa added that turmoil on Wall Street over the past month would have a negligible impact on the Thai financial system and that capital outflows were low compared with other countries in the region.

Major central banks around the world have been injecting hundreds of billions of dollars into the international money markets to stave off a complete seizure of credit markets in the wake of the Lehman Brothers' bankruptcy and the near-collapse of insurance giant AIG.

Dr Tarisa stressed that the exposure of Thai banks to Lehman Brothers was insignificant compared with their total balance sheets.

The central bank has estimated that Thai banks hold just seven billion baht worth of Lehman Brothers investments or forward exchange contracts.

Total outstanding foreign assets held by Thai banks are also quite small, at just US$7 billion. Dr Tarisa said that a number of banks were in the process of unwinding their overseas positions to reduce risk.

Meanwhile, the appreciation of the Thai baht is being driven by weakness in the US dollar, which has fallen against most currencies over recent days as investors forecast prolonged difficulties for the US economy as the costs of the financial crisis increase.

The baht yesterday was quoted at 33.74/80 baht to the US dollar, a one-month high. Last week the currency was among the best performers in the region against the dollar.

"The fact that the baht appreciated stronger than other regional currencies may reflect the fact that foreign capital outflows from Thailand have been less than from other countries in the region," Dr Tarisa said.

She brushed off concerns that the central bank may have difficulties working with Suchart Thadathamrongvej, the presumed successor to Surapong Suebwonglee as Finance Minister.

Dr Suchart, an economist and academic, was a strong critic of the central bank's move to raise interest rates earlier this year to help curb inflation.

But Dr Tarisa said she did not expect any problems. "The central bank is confident that it can work with anyone. There are no conflicts," she said.

Meanwhile, Vachira Aromdee, director of international economics for the Bank of Thailand, said regional central bankers were in agreement that the US financial crisis would have a modest impact on the region.

Last weekend in Bangkok, the Bank of Thailand hosted the 27th Seanza Governors' symposium, which brought together central bankers from 20 countries in the Asia Pacific, Australia and New Zealand.

Mrs Vachira said while the fallout from the US crisis was expected to be mild for the region, central bankers agreed that more aggressive policies were required to help accommodate the rise in volatility in financial markets.

[TBWG]

Crisis what crisis

TBWG




[attachment deleted by admin]

[Admin]

Crisis what crisis

TBWG

If only the dollar could talk...    Now the US government's $700bn emergency bail-out of the banking industry collapsed in disarray as Congress voted against the plan, sending Wall Street stocks plummeting and spreading ripples of shock through the global financial markets.

Thats not gonna be easy..thats for sure .

and to our local thai economy news:

Thai stocks rebound regaining much of earlier losses 
: 30 Sep 2008
Thai Cabinet acts to boost stock market investment incentives

BANGKOK, Sept 30 (TNA) - In an attempt to calm jittery investors after the US House of Representatives rejected a US$700 billion Wall Street bailout, the Thai cabinet on Tuesday approved several measures to encourage investment in the Stock Exchange of Thailand (SET).

Deputy Prime Minister Olarn Chaipravat told the weekly cabinet meeting that short-term measures would be issued to address the impact on the Thai financial system from the US financial crisis.

On the capital market, the SET, which plunged 33.11 points to 568.18 on opening Tuesday following a huge loss on Wall Street after US lawmakers rejected the US administration's emergency bailout plan, will urge investors not to panic because the Thai bourse still has strong fundamentals.

Thai share prices rebounded steeply before closing 0.79 percent lower on Tuesday as investors cautiously awaited further news of the US plan to curb its financial crisis, dealers said.

The SET composite index lost 4.75 points to close at 569.54 points, while the blue-chip SET-50 index slid 3.34 points to 417.23.

The government and SET-backed mutual funds such as energy and government pensions will lead in buying strong fundamentals and lower-priced stocks to prevent their prices from retreating too much.

The finance ministry will consider expanding as well as exempting taxes for investments in the retirement mutual fund and the long-term equity fund during the last quarter of 2008 with the objective to encourage investors to venture in them as well as in the stock market.

Regarding the possible problem of capital outflows in terms of foreign currencies after stock sales by foreign investors, there should be no problem because Thailand has more than US$100 billion in foreign reserves.

If a crisis does occur, the finance ministry still can borrow money from neighbouring countries on a government-to-government basis, while the Bank of Thailand (BoT) will monitor to see that Thai financial institutions have sufficient liquidity.

The finance ministry will ensure that government-run financial institutions to extend credits to general borrowers and small- and medium-sized enterprises.

In the long-term, Thailand will cooperate with its fellow members in the Association of Southeast Asian Nations (ASEAN) to borrow money on long-term basis.

Reiterating that Thailand has no liquidity problem, BoT governor Tarisa Watanagase said lending by financial institutions in August grew 13 per cent while non-performing loans stood at only 3 per cent.

Local commercial banks have borrowed only 1.3 per cent of their total borrowings from overseas which, according to Mrs. Tarisa, is not much.

Regarding financial woes being faced by Belgium's Fortis, she said the group had extended only Bt167 million in credits to Thai financial institutions, while its business commitments totaled Bt2.5 billion which is still low.

Meanwhile, Atchana Waiquamdee, deputy BoT governor, said the central bank would inject cash into its financial market to help financial institutions in case it is hit badly by the global credit crisis. (TNA)

[Lourens]

The GOOD News:

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[Admin]

Special thanks to Mr.Obama,Billions will be just enough for Buriram Expats.. 


AIG to sell its stakes in Thai insurance 
Bangkok Post: 6 Oct 2008
AIG to sell its stakes in Thai insurance, bank businesses

Succumbing to the US financial crisis, American International Group Inc (AIG), one of the region's leading life insurers, yesterday acknowledged it is preparing to sell its stake in its regional life insurance and consumer finance banking arms.

The company is looking for a strategic investor to hold a minority stake in Hong Kong-based AIA Holding, which owns the Thai life insurance unit American International Assurance (AIA), the country's largest life insurer, through AIA Hong Kong.

AIG is also considering selling its consumer finance businesses as part of efforts to raise funds to repay a US$85 billion government bailout.

"We anticipate it will be sold on a regional level," said Thomas White, executive vice-president and general manager of AIA Thailand.

"We are looking for a partner to support our growth in Asia. For the non-life business, we will not take any strategic partner."

AIG Retail Bank president and CEO Charly Madan said the new partner for the consumer finance business will possibly buy stakes from the group's parent firm (AIG Consumer Finance Group) and take over all the Asian operations, or it could buy the Thai unit individually.

Percentage of stakes to be sold are not yet available, but for AIA, Mr White said minority stakes could range from 1% to as much as 49%.

In Asia, AIA operates in China, Australia, Brunei, Guam, Hong Kong, India, Indonesia, Japan, Macau, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

Despite the anticipated shareholder restructuring, Mr White insisted the change would not affect the operations of AIA Thailand, adding that a new strategic partner would instead bring value to AIA Thailand.

"We confirm that AIA Thailand's assets will remain in Thailand," said Mr White. "What we are selling only is just a minority stake of the holding firm of the regional operations of AIA in Hong Kong, not assets [of AIA in particular countries].

"On top of that, AIA Thailand has no authority to sell assets or transfer any funds to help its parent without the approval of the industry's regulatory body.

"We can't sell assets, transfer any funds or even remit profits to foreign parent firms on our own," said senior vice-president and deputy general manager Anucha Laokwansatit. "They first need the approval of the regulatory body - the Office of Insurance Commission (OIC) - even for foreign investments."

Chantra Purnariksha, secretary-general of the OIC, noted yesterday the regional shareholder restructuring is unlikely to affect AIA's financial status or its policyholders.

[Admin]

Bank of Thailand holds rates steady 
Bangkok Post: 8 Oct 2008
Central bank holds rates as growth slows

The monetary policy committee of the Bank of Thailand announced on Wednesday it had decided to maintain the key policy interest rate at 3.75 per cent per annum.

The MPC cited persisting inflationary pressures and risks to economic growth.

However, the central bank committee said it expects a notable increase in farm income and lower inflation in coming months that could improve consumers' purchasing power and support a continued economic growth.

In a statement accompanying the monetary policy announcement, the central bank said the latest economic data up to August pointed towards a slowdown in the Thai economy, due to both domestic and external demand.

Economic growth in the second quarter eased to 5.3 per cent year-on-year from 6.1 per cent in the first quarter. On a seasonally adjusted basis, gross domestic product climbed just 0.7 per cent in the second quarter, compared with 1.3 per cent growth in the first quarter.

[Lourens]

I read in the news and see on television all the trouble and strive in the world financial markets. It's terrible and frightening at the same time. What will become of us all? I only want to know one thing: Why? Why are we is such trouble now? What happened to all the money that is needed to bail out financial giants? Where did it go? Who has it now? Not the bail-out money but the money that was there in the first place and seemed to have dissapeared. Why? I turn on the BBC or watch CNN and all I hear is that stock markets fell through the floor. Nobody explains where the money went. Can someone here tell me?

[Lourens]

No answers so far.

Let me put the figure of 700 Billion dollars in perspective:

With that money you can:

Give the entire population of earth appox. $108 each or
the entire population of Europe $965 each or how about this…

$10,688 for every person in Thailand or
$455,515 for every person in Buriram!

Buy 2,058,823 2008 Rolls-Royce Phantom Sedan, enough to give every person in the metropolitan area of Stockholm each a Roller

It will buy 952,380,952 tonnes of rice at current prices. Thailand consumes 10 million tonnes of rice per year. You can buy enough rice to feed Thailand for 95 years at current population figures.

Buy a fleet of 2,140 Airbus A380’s.

Or build:
70,000 small hospitals at 10 million a piece or
7,000 large city office building at 100 million a piece
700,000 Huge houses in the suburbs at a million dollars a piece or (that's in the U.S.A.) or 1,400,000 medium sized houses

That's a huge sum of money and would be noticed if it got lost. Who is to blame? And why didn't I get my share?

[TBWG]

I think there has been no reply because nobody really knows. The money is still there it is just not flowing, after all, lets take Shell for instance it is still the same company it was 3 months ago, it still has the same infrastructure, still has the same oil deposits but the company value is now less due to the reduced share price. So was the additional value ever there in the first place!   The additional value was in confidence not actual assets.

So if a lot all savers cash was invested in stocks .. Poof!  jumping3 half of it has gone overnight!

It will come back but it will take time .. for me I am all for the 700 billion dollars Buriram option and I am on my way back now to collect the family share, used notes please!

All of the above might be absolute drivel but that is how I understand it.

TBWG

[Lourens]

So if a lot all savers cash was invested in stocks .. Poof!  jumping3 half of it has gone overnight!

Gone where? It wasn't destroyed. It must be somewhere in someone's bank account = earning interest. Just let them give it back. I must be ignorant, but it makes no sence to me. Someone is making a lot of money somewhere..... 

[Admin]

So if a lot all savers cash was invested in stocks .. Poof!  jumping3 half of it has gone overnight!

Gone where? It wasn't destroyed. It must be somewhere in someone's bank account = earning interest. Just let them give it back. I must be ignorant, but it makes no sence to me. Someone is making a lot of money somewhere..... 

All this situation is so funny,its just show how all the system built , speculants and gambling games on the people's money.. well,maybe not so funny after all........

In the mean time... 

Bank of Thailand affirms liquidity in the system plentiful 
Bangkok Post: 11 Oct 2008
Liquidity ample despite sharp falls in SET: BoT

The ongoing sharp declines of the Stock Exchange of Thailand (SET) do not pose a significant threat to liquidity in the market, short-term interest rates, the baht currency or to domestic financial institutions, Bank of Thailand (BoT) deputy governor Bandid Nijathaworn said Saturday.

His remarks were made after the SET composite index fell heavily this week by 138.09 points or 23.4 per cent from Friday last week on investor concerns over global financial crisis and Thailand's persisting political problems.

Stricter lending controls by local commercial banks should be considered as normal as banks do not want to see non-performing loans, he said.

However, liquidity in the system is still plentiful while lending growth is still at a double-digit which is satisfactory, he noted.

The BoT will, however, monitor the liquidity situation to ensure that lending by financial institutions is not affected, Mr. Bandid said.

As several sectors want the BoT to lower its one-day policy rate currently at 3.75 per cent by between 50 or 100 basis points in line with recent rate reductions imposed by central banks in oversea, he said the decision by the central bank to maintain its rate was resulted from retreating inflation risks while local financial institutions did not encounter much financial problems. (TNA)

[Admin]

Thai banks to benefit from global turmoil 
Bangkok Post: 14 Oct 2008
Thai banks to benefit from turmoil


Companies likely to look locally for loans

Local banks could be beneficiaries from the global financial turmoil in early 2009 as foreign banks are likely to scale back operations due to constraints in their home markets.

Kannikar Chalitaporn, the president of Siam Commercial Bank, said the bank would increase corporate loan activity in 2009.

Funding demand in the domestic market was expected to increase in 2009 as the international markets remain uncertain, she said.

"Large companies will turn to raising funds locally rather than going abroad. Under this assumption, SCB will focus more on wholesale and corporate banking in 2009," Mrs Kannikar said.

Small and medium-sized business loans and retail banking will likely slow in 2009 due to the global economic slowdown, she said. Falling export growth and tourism arrivals would also hurt the Thai economy and potential growth for consumer banking.

Mrs Kannikar said given the volatility in the global market, SCB had tightened its credit lending practices and risk management.

"Liquidity in the market has tightened, and the loan market will not be open for everyone. Businesses should plan for this in setting their funding plans for 2009," she cautioned.

Krung Thai Bank president Apisak Tantivorawong agreed that local banks would have greater growth opportunities in the corporate and syndicate loan market as a result of the crisis.

"Only Krung Thai Bank can provide loans of up to 30 billion baht per corporate customer," he said.

But Mr Apisak agreed that the trend towards tighter market liquidity and higher funding costs would act as a constraint on businesses.

TMB Bank president Boontuck Wungcharoen said local banks would limit term loans for large financial projects more than foreign institutions.

Local banks typically set terms for up to five years, compared with 10 to 20 years for overseas banks, he said.

"Funding mismatches will remain a constraint for local banks in lending services," Mr Boontuck said, adding he expected more syndicated loans with other Asian financial institutions in 2009.