*** Trial presentation file only **

1. ECONOMIC
UPDATE Capital Markets Research
2 December 2010
Thai Economic Update
October Economic Data
Nalin Chutchotitham
• Economy in Q3 recorded a second quarter of nalin.c@kasikornbank.com
q-o-q contraction
• October indicators some weaker growth in the
domestic economy as high growth rates of
indicators began to come off
• Business sentiment continued to fall to
“neutral stance” while outlook from the
business sector showed concerns for global
economic recovery
• Exports and imports growth decelerated further
but external balance surplus remained high,
supporting the baht’s appreciation
• Tourism sector continued to see up trend at the
start of holiday season
• Local yield curve steepened significantly
before flattening slightly after surprised policy
rate hike
• Monetary indicators continued to accelerate
November Inflation Data
• Headline inflation still rather soft at 2.8% but up
side risks remain for 2011
• Core inflation steadied at 1.1% for the third
month
• Producer price inflation decelerated for the fifth
month to 5.9%
• BoT raised policy rate to 2.00% on Dec 1st while
we expect that it has 2 more hikes to go in the
first two quarters of next year
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was obtained
from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 1 of 5

2. Economic Update
Monthly Economic Data
GDP in Q3 recorded a “technical recession” High growth rates in domestic demand
while domestic indicators weakened in indicators began to come off
October % mom
% y oy Contribution to growth 5 140
15.0
4
3 135
10.0 2 130
5.0
1
0 125
0.0 -1
-2 120
-5.0
-3 115
-10.0 -4
-15.0 -5 110
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
Priv ate consumption Gov ernment consumption Gross fix ed capital
PCI sa MoM (left axis) Private consumption index sa (right axis)
Change in inv entories Net ex ports GDP
Private consumption index (PCI), after seasonal
Gross domestic product – Thailand’s economy expanded adjustment, declined for the fourth straight month to the
by 6.7% yoy in the third quarter, indicating a slowdown lowest level since March this year. The PCI fell by 1.2%
compared to the 9.2% growth in the previous quarter. mom (sa) and rose by 2.3% yoy. Most of its components
With seasonal adjustments, the economy had contracted also showed a slowdown, after seeing strong growth in
for the second straight quarter: -0.6% qoq in the second the second quarter, including vehicle purchase, the oil
quarter and -0.2% qoq in the third quarter. Some would index, real VAT, and real imports of consumer goods.
consider this a recession but this contraction should be
short-lived, as indicated by the GDP growth estimates sa % YoY PCI components
from both the authorities and other research houses that 90
Car Index
expect the economy to expand by 3-5% next year. In any 70
Oil Index
Real import of consumer goods
case, we should continue to observe the “level” of real VAT
50
activities, as indicated by the seasonally-adjusted gross
domestic product in the next few quarters in order to 30
assess if economic expansion is truly robust.
10
Gross Domestic Product (seasonally adjusted and unadjusted level) -10
Millions of Baht
1,200,000 -30
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
1,100,000
1,000,000
900,000
800,000 At the same time, the private investment index (PII)
700,000 declined for the second consecutive month (Sep -0.1%
600,000 mom, Oct -0.9% mom) but remained in a much better
500,000 performance compared to the past couple of years’ level.
1Q93 1Q95 1Q97 1Q99 1Q01 1Q03 1Q05 1Q07 1Q09
GDP GDP sa
Private Investment I ndex % YoY
200 25
Overall, the month of October showed that economic 190 20
15
activities remained relatively at the same level as of 180
10
September, except for slight declines in private 170 5
consumption, production and investment. Exports is still 160 0
growing from previous year’s level but at a declining pace -5
150
-10
compared to the first three quarters of the year. 140 -15
130 -20
Inflation rates remain under control in the near term but Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
up side risks are expected next year as income rises and PII % YoY (RHS) PII level
world commodity prices climbed. Local interest rates
showed clearer signs of increase going forward and
short-term rates rose in response to three policy rate
hikes this year. Unemployment rate stayed low while Business sentiment index declined to the lowest level in 5
external account balances remain in a surplus, months’ time but held at the level of 50 (division line
supporting the value of the baht. between positive and negative business outlook).
Meanwhile, the business sector also holds a somewhat
Going forward, there remained policy challenges and less positive outlook for the next 3 months. The forward-
down side risks to exporters’ earnings. The central bank looking index declined for the second month to its lowest
has continues to see difficulties in balancing between the level this year. We suspect a waning effect from the
curbing of local inflationary risks and managing economic global inventory rebuilding during the past few quarters.
impact from baht’s appreciation. From the fiscal side, Furthermore, the continued appreciation of the baht has
there remain uncertainties in politics and future continued to be one of the key concerns for business
government’s investment direction. activities going forward.
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was obtained
from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 2 of 5

3. Economic Update
50 = neutral Thai Business Sentiment Indices month’s 15.7%. Total imports value was at $14,603mn,
60 slightly lower than the previous 9 months’ average of
55
$14,641mn. There was a decline in imports of capital
goods and equipment after previous months’ surge.
50
Capital goods import grew at 12.6% yoy vs. third
45
quarter’s growth of 28.2%. At the same time, the Bank of
40 Thailand’s (BoT) reported also that petroleum industry
35 reduced their fuel imports prior to plant maintenance
30
closures.
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
USD bn Thailand's annual exports by destination
BSI BSI 3m forward expectations
40 41%
35 39% 39% 43%
30
Manufacturing production slowed while 31%
25 22% 29%
utilization rate steadied 20 14%
21% 23%
15
10 18%
Manufacturing production (ISIC basis) slowed down more
5
significantly in October, recording a 6.2% yoy growth 0
compared to the average of 9.8% in Q3 and 8.2% in ASEAN Australia C hina EU 15 EU 27 India Japan South Taiw an U AE U SA
September. Production fell by 0.7% mom after seasonal Korea
adjustments but the capacity utilization rate remained Jan-Oct 2009 Jan-Oct 2010 Growth rate % YoY
relatively unchanged at 64.1% (62.6% sa). Some of the
slowdown was attributed to the exporting sector, Trade balance recorded a surplus of $2.4bn, somewhat
indicated by smaller growth rates in the I.C., hard disk lower than $3.2bn observed in the previous month. The
drive, and electrical appliances production. services, income and transfers account saw reverted to a
% yoy %
surplus of $0.47bn after 6 months of deficit, primarily due
40 75
to higher revenue in the tourism sector. This helped to
30
70 contribute to a substantial surplus in the current accounts
20 at $2.9bn.
10 65
0 60 Meanwhile, Thailand’s balance of payments recorded a
-10 high surplus of $5.8bn in October as a result of the
55
-20 current account surplus and capital inflows in the banking
-30 50 sector as short-term loans.
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Manufacturing production index ISIC % yoy Capacity Utilization % (right axis) US$, mn Current account (Trade balance + Services and transfers)
6000
Note: Starting from August 2010, the BoT uses the MPI series 5000
from the Industry Ministry’s Office of Industrial Economics (OIE) 4000
3000
2000
Exports and imports growth decelerated 1000
0
further but external balance surplus remained -1000
high -2000
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10
Exports totaled $ 17,046mn in October, expanding by Trade balance Services and transfers Balance of Payments
16.6% from the same period last year but contracted by
3.9% from the previous month on a seasonally-adjusted Tourism sector continued to see up trend at
basis. The deceleration was in similar fashion with the
the start of holiday season
other economies in Asia, both as a consequence of
substantial appreciation of regional currencies and
waning effects of global inventory re-building. 1,800 80
% yoy 1,600 75
70
80 1,400
65
60 1,200 60
1,000 55
40
800 50
20 45
600
40
0 400 35
-20 200 30
-40 04 05 06 07 08 09 10
-60 Tourist arrival ('000 left axis) Hotel occupany rate (right axis)
05 06 07 08 09 10
Exports Imports Tourism sector performed relatively better at the
Imports continued to decelerate for the second month, beginning of the holiday season. The number of tourist
recording a 13.0% yoy growth compared the the previous arrivals in October was at 1.36 million, about 8.8% higher
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was
obtained from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 3 of 5

4. Economic Update
than the average monthly arrivals in the third quarter at separated into a 5.8% yoy contribution from the
1.25 million. Hotel occupancy rate rose to 48.9% from specialized financial institutions and a 6.4% yoy
45.7% in September. contribution from the commercial banks.
Inflation rates steadied in November but risks % yoy
14 12.1%
of higher prices next year remained
12
10 11.1%
Headline inflation remained unchanged at 2.8% in
8
November while core inflation also steadied at 1.1%. 8.5%
6
For the first ten months of the year, inflation rate stood at 4
3.4%, still within the Ministry of Commerce’s forecast 2
between 3.0-3.5%. However, there remained up-side 0
-2
risks to growth as world commodity prices continue to
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
rise while Thailand’s domestic spending remains on an
Private credit Private Deposits M2
up trend. The government had also announced minimum
wage increase of about 10-11 baht on average,
beginning January 2011. Coupled this with the earlier At the same time, the BoT’s report showed that
increase in government officials’ salaries, we expect household credit growth continued to expand strongly at
increased income to exert pressure on price levels as 8.6% (in yoy contribution to total loan growth) while
th
well. corporate sector’s loan growth continued to record its 6
month of consecutive positive contribution to total loan
growth.
110
105
Local yield curve steepened significantly
before flattening slightly after surprised policy
100
rate hike
95
Thai sovereign yield curve steepened significantly in
90 November, led by profit-taking of both local and foreign
investors who saw that there was little room for long-term
85
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
yields to continue falling. At the same time, short-term
CPI 12m moving average Consumer price index
rates remained capped in range trade as the market was
expecting the BoT to delay policy rate hike till the year
Meanwhile, the producer price index (PPI) continued to 2011. During most of November, foreigners’ selling of
climb but at a decelerating pace. In November, PPI was local bonds was also led by the stagnating USD/THB
at 5.9%, recording the fifth month of decline and also movement and concerns for Asian capital control
contributing to the narrowing of gap between the growth measures.
rates of costs bore by the consumers and producers (PPI % Government bond yield curve
inflation – CPI inflation). 3.8
3.6
25% 3.4
3.2
20%
3.0
15% 2.8
10% 2.6
5% 2.4
0% 2.2 TTM
2.0
-5%
1y 2y 3y 4y 5y 6y 7y 8y 9y 10y
-10%
-15% 02-Dec-10 16-Nov-10 01-Nov-10
01 02 03 04 05 06 07 08 09 10
In any case, the yield curve flattened again as short-end
Consumer price inflation Producer price inflation
rates rose more strongly in response to the BoT’s
surprise policy rate hike on Dec 1st. The central bank’s
Monetary indicators continued to accelerate
policy statement did note the presence of global
Broad money (M2) continued to expand in accordance to economic risks going forward but sees more price
the economic activities. The measure accelerated in pressure stemming from higher private consumption and
October, growing by 11.1% yoy compared to the previous investment next year, while costs of production are also
month’s 9.9%. Meanwhile, deposits at depository expected to remain on the rise. At the same time, it also
institutions (other than the central bank) accelerated from noted the risks of imbalance build-up in the economy
7.9% yoy to 8.5%. These growth rates continued to stemming from holding real interest rates negative for too
reflect efforts of commercial banks to amass deposits in long. The real fixed 12m deposit rate had been negative
anticipation of increased loan demand going forward. since November 2009 while real policy rate remained at
-0.8% after the rate hike.
Private credit growth continued to post an accelerated
growth at 12.1% yoy. This was the fastest pace of growth We expect that the BoT still has 2 more hikes to go in the
since the year 2004 while pre-crisis loan growth during first two quarters of next year, which would bring the
September 2008 saw a growth rate of 11.1%. This was policy rate to 2.50%.
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was
obtained from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 4 of 5

5. Economic Update
Bank of Thailand Economic Data
2010
Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10
The Real Sector (%yoy , unless specified otherwise)
Manufacturing Production Index, seasonally adjusted (level) 196.5 187.5 191.9 188.7 182.5 189.1 187.7
Manufacturing Production Index, without seasonal adjustment (level) 180.0 185.0 194.2 190.1 183.7 201.5 191.6
Manufacturing Production Index, without seasonal adjustment 23.4 15.9 14.2 13.1 8.4 8.1 6.2
Industrial Capacity Utilization (%) 58.3 64.3 65.4 64.8 63.6 64.4 64.1
Private Consumption Indicators
Retail Sales (at 2002 prices) 12.0 7.7 11.6 12.4 8.2 8.6 n.a.
Passenger Car Sales (units) 72.2 68.1 86.2 74.3 59.4 45.8 43.2
Motorcycle Sales (units) 19.9 26.5 43.2 34.2 20.0 9.3 2.0
Imports of Consumer Goods (at 2000 prices) 23.0 45.2 37.4 13.5 27.4 9.2 11.3
Private Investment Indicators
Commercial Car Sales (units) 24.8 42.5 44.6 37.0 46.4 35.6 28.9
Imports of Capital Goods (at 2000 prices) 25.1 37.0 42.9 27.9 32.0 21.7 11.6
Cement Sales (tons) 10.4 19.4 6.4 3.5 -4.5 3.7 -7.4
Government Cash Balance (billions of baht) 28.6 -15.4 122.6 -56.3 -0.1 67.4 -76.0
Consumer Price Index 3.0 3.5 3.3 3.4 3.3 3.0 2.8
Food 3.7 4.6 6.1 6.9 7.5 6.6 5.5
Non-Food 2.5 2.8 1.5 1.4 1.0 0.9 1.3
Core Inflation (excluding raw food and energy) 0.5 1.2 1.1 1.2 1.2 1.1 1.1
External Accounts (Millions of US$, unless specified otherwise)
Exports 13,832 16,436 17,878 15,475 16,292 17,955 17,046.0
( %) (34.7) (42.5) (47.1) (21.2) (23.6) (21.8) (16.6)
Imports 14,022 14,137 15,342 16,266 15,440 14,712 14,604.0
( %) (44.0) (53.5) (38.3) (36.5) (41.8) (15.7) (13.0)
Trade Balance -190 2,299 2,536 -791 852 3,243 2,442.0
Current Account Balance -289 1,172 814 -1,001 280 2,767 2,909.0
Net Capital Flow 3,002 -2,410 808 3,123 3,935 732 3,877
Monetary authorities -251 62 173 261 149 457 765
Government 459 -170 102 434 903 620 434
Bank 1,245 -1,703 2,554 527 1,860 460 4,155
Others 1,549 -599 -2,020 1,902 1,024 -804 -1,478
Balance of Payments 3,749 -989 2,166 1,412 3,589 4,270 5,822
Official Reserves (billions of US$) 147.6 143.5 146.8 151.5 155.2 163.2 171.1
Monetary Statistics (End of period) (Billions of baht)
Monetary Base 1,099.7 1,088.8 1,072.0 1,066.9 1,045.6 1,118.1 1,072.2
( %) (10.7) (14.3) (9.3) (11.3) (8.0) (13.7) (9.6)
Narrow Money (M1) 1,182.5 1,261.9 1,180.2 1,173.0 1,181.4 1,175.5 1,202.3
( %) 11.5 14.4 15.1 15.8 11.4 11.7 11.4
Broad Money (M2) 10,831.8 11,001.5 10,846.4 10,887.1 10,968.1 11,116.1 11,321.4
( %) 5.4 6.7 6.9 8.7 8.4 9.8 11.1
Other Depository Corporations Deposits 9,975.6 10,229.1 9,983.3 9,974.5 10,015.9 10,091.6 10,204.1
( %) 4.6 7.0 6.2 7.6 6.6 7.8 8.5
Other Depository Corporations Private Credits 8,995.4 9,101.2 9,196.7 9,219.7 9,299.8 9,432.7 9,580.5
( %) 6.0 7.3 8.5 9.1 9.8 10.8 12.1
Interest Rates (% p.a.)
Repurchase Rate, 1 day (closing rate daily average) 1.25 1.25 1.25 1.40 1.56 1.75 1.75
Overnight Interbank Rate (mode daily average) 1.15 1.16 1.13 1.27 1.43 1.62 1.62
Fixed Deposit Rate (1 year) 0.65-0.75 0.65-0.75 0.65-0.75 1.00-1.25 1.00-1.25 1.10-1.43 1.10-1.50
Prime Rate (MLR) 5.85-6.25 5.85-6.25 5.85-6.25 6.00-6.38 6.00-6.38 6.00-6.38 6.00-6.38
Exchange Rate (Baht : US$) 32.29 32.39 32.47 32.33 31.74 30.83 29.97
Source: Bank of Thailand
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was
obtained from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 5 of 5