KBank Capital Market Perspectives                                                                                         ...
-    Impact on USD/THB after the release of the trade figures is difficult to determine                but the pair did tr...
Table 1. Monthly Key Economic Indicators                        Mar 11       Apr 11     May 11     Jun 11      Jul 11    A...
Disclaimer    For private circulation only. The foregoing is for informational purposes only and not to be considered as a...
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KBank capital market perspectives dec 20 trade

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KBank capital market perspectives dec 20 trade

  1. 1. KBank Capital Market Perspectives Market Updates Macro / FX / Rates Exports and imports fell in November, trade deficit rose 20 December 2011 Overview: Nalin Chutchotitham - The Ministry of Commerce reported November’s custom-cleared trade data nalin.c@kasikornbank.com today. Exports fell by 12.4% yoy, worse than the expected 9.0% fall expected by the market based on Bloomberg’s survey and when compared to October’s slight increase of 0.3% yoy. Imports also fell by more-than-expected at -2.4% yoy compared to previous month’s 21.5% gain. - Total exports for the month totaled USD15,498mn, the lowest level since April 2010 while imports totaled USD17,192mn, lowest since February this year. Meanwhile, the trade balance registered a larger deficit of USD1,373mn compared to October’s deficit of USD1,009mn. Total trade surplus for the first half of the year had been USD3,447mn but the slowdown in global economy and production disruption caused by the floods resulted in a trade balance deficit of USD549mn in the second half so far. - Exports volume remained low for a second month as manufacturing production and logistics were disrupted by severe floods during most of the quarter. To highlight on the impact on the auto industry, domestic auto sales in November extended decline from October to 25,664 units or a 40% mom fall. This is drastically low compared to the average monthly sales of 71,384 units during the first 10 months of the year. In any case, we do expect that auto sales would see robustness in the year 2012 as households and businesses replaced damaged vehicles and after the auto industry is able to return to full production by, hopefully, the second quarter. Tourism industry faced negative impacts from the floods as well. Tourist arrivals for November fell to the lowest level this year at 1.21 million compared to the average of 1.58 million during the first 10 months. - In particular, exports of industrial goods extended its fall to 26.7% yoy compared to October’s decline of 11.8% yoy. The major export items such as electronics (-47.4% yoy), electrical equipment (-21.9% yoy), and vehicles and parts (-54.7% yoy) fell by a larger extent in November compared to October (by USD value), indicating the severity of supply chain disruption and stagnation of activities in several industrial parks in the Central region. Exports of agricultural products continued to gain but at a slower pace of 11.3% yoy compared to October’s growth of 35.8%. In particular, exports of rubber and rubber products remained strong at 24.1% yoy and 20.1% yoy growth. Overall, exports of food products continued to grow at 11.3% yoy.Exports and imports value (Customs-cleared data) Trade balance (Customs data) $ mn Trade balance USD mn 25,000 4,000 $ 11.6bn $ 2.9bn 22,500 3,000 20,000 2,000 17,500 15,000 1,000 12,500 0 10,000 -1,000 7,500 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 -2,000 Exports Imports Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11Source: Bloomberg, KBank Source: Bloomberg, KBank 11 1
  2. 2. - Impact on USD/THB after the release of the trade figures is difficult to determine but the pair did trade higher to above 31.30 vs. this morning’s level near 31.25. However, the weak exports performance is likely to warrant a more dismal outlook for the overall economy going forward. Should indicators of domestic demand continued to reflect weakness in the economy, the Bank of Thailand is likely to consider further policy rate cut. We continue to expect a 25bp rate cut in January’s monetary policy decision to further support a speedy recovery. - We expect the USD/THB to face upward pressure during the first quarter of 2012 based on weaker exports and low appetite for emerging market assets in the near-term. However, balance of payments numbers should improve towards the second half of the year and we remain comfortable with our target of 29.50 for the USD/THB at year-end 2012. For the first half, we expect some volatility and sees the USD/THB range at 30.50-32.50.Exports and imports growth (Customs-cleared data) Domestic auto sales in October fell drastically 000 000 % yoy 80 60 100 60 50 80 40 20 40 60 0 30 40 -20 20 20 -40 -60 10 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Export (% YoY) Import (% YoY) Passenger car Commercial car Total car sales (right axis)Source: Bloomberg, KBank Source: Bloomberg, KBankSET index sees support from LTF and RMF purchases Tourist arrivals fell for the 3rd monthcompared to the fall in MSCI Asia ex Japan index 000 M onthly tourist arriv als 1200 650 2,000 600 1100 1,800 550 1,600 1000 1,400 500 1,200 900 450 1,000 800 400 800 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec SET Index (left) MSCI Asia ex Japan Index (right) 2008 2009 2010 2011Source: Bloomberg, KBank Source: CEIC, KBankAsian currency performance 3-month period Asian currency performance year-to-date CNY 0.6% CNY Change against USD, year-to-date 4.1% Change against USD, 3-month JPY PHP -0.9% 4.1% KRW -1.1% PHP -0.1% TWD -1.4% IDR -1.7% JPY -1.9% SGD -1.8% MYR -2.0% KRW -3.1% IDR -2.8% TWD -3.4% THB -2.9% MYR -3.9% SGD -3.6% THB -4.0% INR -9.4% INR -15.7% -12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0%Source: Bloomberg, KBank Source: Bloomberg, KBank 22 2
  3. 3. Table 1. Monthly Key Economic Indicators Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11Manufacturing index 186.7 180.3 182.9 194.4 186.4 197.0 188.9 122.1 % YoY -6.7 -8.1 -3.7 3.8 -0.7 6.8 -0.3 -35.8Industrial capacity utilization rate (%) 66.1 54.4 58.8 64.1 63.1 65.0 65.5 46.4Retail sales (% YoY) 6.1 6.0 6.0 13.5 16.9 n.a.Total vehicle sales (units) 93,008 67,283 55,851 70,259 72,902 79,043 87,012 42,873Motorcycle sales (units) 191,437 174,244 163,411 205,392 169,320 194,691 170,954 123,584Unemployed labor force (000 persons) 276 285 204 163 206 270 295Unemployment rate 0.7 0.8 0.5 0.4 0.5 0.7 0.8Consumer prices (% YoY) 3.14 4.04 4.19 4.06 4.08 4.29 4.03 4.19 core 1.62 2.07 2.48 2.55 2.59 2.85 2.92 2.89Producer prices (% YoY) 5.9 6.6 6.2 4.5 5.2 6.0 5.6 4.2External Accounts (USD mn, unless specified otherwise, BOP basis)Exports 21,072.0 17,243.0 19,284.0 20,816.0 21,098.0 20,940.0 21,259.0 17,019.0 % YoY 30.7 25.0 17.3 16.4 36.4 28.5 18.4 -0.1Imports 17,325.0 15,932.0 17,098.0 17,017.0 16,546.0 20,235.0 18,840.0 16,006.0 % YoY 27.6 26.2 34.5 23.6 13.2 45.9 42.6 20.6Trade balance 3,747.0 1,311.0 2,186.0 3,799.0 4,552.0 705.0 2,419.0 1,013.0Tourist arrivals (000) 1,765 1,506 1,376 1,490 1,550 1,725 1,500 1,500 % YoY 22.7 35.9 68.8 56.3 23.2 36.0 23.0 10.3Current account balance 1,692.0 -350.0 -656.0 2,402.0 3,438.0 -697.0 404.0 39.0Balance of payments 1,365 3,570 -2,600 -972 541 -556 -1,674 -1,886FX reserves (USD bn) 181.5 189.9 186.2 184.3 187.6 189.4 180.1 183.9Forward position (USD bn) 20.8 21.4 23.5 24.4 26.4 26.3 27.3 28.9Monetary conditions (THB bn, unless specified otherwise)M1 1,345.6 1,347.0 1,395.8 1,336.6 1,336.3 1,345.2 1,328.0 1,360.2 % YoY 13.8 13.9 10.6 13.3 13.9 13.9 13.0 13.0M2 12,284.4 12,497.9 12,577.2 12,614.4 12,799.5 12,875.3 12,913.9 13,149.1 % YoY 13.2 15.4 14.3 16.3 17.6 17.4 16.2 16.1Bank deposits 10,891.6 10,980.6 11,092.8 10,993.2 11,077.8 11,153.5 11,082.3 11,359.7 % YoY 9.0 10.1 8.4 10.1 11.1 11.4 9.8 11.3Bank loans 10,308.2 10,376.2 10,517.7 10,679.1 10,718.9 10,899.7 11,071.9 11,207.8 % YoY 15.0 15.4 15.6 16.1 16.3 17.2 17.4 17.0Interest rates (% month end)BOT 1 day repo (target) 2.50 2.75 2.75 3.00 3.25 3.50 3.50 3.50Average large banks minimum lending rate 6.62 6.75 6.75 6.87 7.13 7.19 7.25 7.25Average large banks 1 year deposit rate 1.67 1.86 1.86 2.03 2.16 2.28 2.41 2.41Govt bond yield 1yr 2.83 3.00 3.15 3.50 3.64 3.48 3.57 3.32Govt bond yield 5yr 3.41 3.38 3.50 3.78 3.86 3.42 3.60 3.23Govt bond yield 10yr 3.75 3.70 3.79 3.91 4.02 3.51 3.75 3.38Key FX (month end)DXY US dollar index 75.86 72.93 74.64 74.30 73.90 74.12 78.55 76.17USD/THB 30.28 29.88 30.32 30.73 29.76 29.93 31.19 30.71JPY/THB 36.42 36.80 37.17 38.13 38.76 39.06 40.50 39.29EUR/THB 42.86 44.24 43.64 44.56 42.84 43.01 41.76 42.56Source: Bloomberg333
  4. 4. Disclaimer 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.444

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