Thailand 2015: Re-engaging engines of growth. July 2015

Transcription

1 Thailand 2015: Re-engaging engines of growth July 2015

2 Re-engaging engines of growth I. Thailand s engines of growth II. Thai corporates target for sustainable growth III. Thai capital markets: connectivity to regional opportunities

3 I. Re-engaging engines of growth Thailand s economic recovery is gaining momentum. The economy grew by 3 percent in 1Q2015. In 2015, growth will likely expand at a healthy pace of 3-4 percent. (%YoY) Q GDP Growth (f) - Private consumption (f) - Private investment (f) - Public consumption (f) - Public investment (f) - Export value of goods (f) - Import value of goods (f) - Number of international tourists (%YoY) (f) (million) (f) Thailand: Medium-term GDP growth forecast (%) Actual Forecast* f 2016f 2017f 2018f Source: Office of the National Economic and Social Development Board (NESDB), Department of Tourism, Bank of Thailand, IMF s World Economic Outlook, April 2015 Note: 2015 forecast by NESDB, 2016 onward forecast by IMF 3

4 May-15 May-15 I. Re-engaging engines of growth Unlike the run-up to the Asian financial crisis of 1997, Thailand s economic stability is currently sound. External vulnerability appears manageable with strong foreign reserves and a current account surplus. Strong commitment to fiscal discipline is reflected in sound fiscal positions and well-managed public debt. External debt and international reserves (billion USD) 250 Short-term external debt 200 Gross external debt Net international reserves 1/ Public debt and fiscal balance (percent of GDP) (%) (%) Public debt to stay below fiscal sustainability framework, 60% Source: Bank of Thailand, Public debt management office, Fiscal Policy Office 1/ International reserves and net forward positions 2/ Calculate base on fiscal year basis Fiscal balance/ GDP (LHS) 2/ Current account/ GDP (LHS) 2/ Public debt/ GDP (RHS) 2/ 4

5 May-15 Apr-15 I. Re-engaging engines of growth Falling oil prices will likely benefit the Thai economy: boosting purchasing power while lowering production and transportation costs. Financial sector resilience is strengthening. Banks are well-capitalized and asset quality has been stable. Inflation (%YoY) (USD per barrel) Capital adequacy and Non-performing loans (%) (%) headline inflation (LHS) oil price (RHS) policy interest rate (LHS) Tier1 (LHS) CAR (LHS) Gross NPLs to total loan (RHS) Source: Bank of Thailand, Bloomberg 5

6 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 I. Re-engaging engines of growth International tourist arrivals and receipts quickly rebounded as political stability returned. Number of international tourist arrivals (thousand) (%) Tourism receipts per head (baht) (% YoY) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, % 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% 52,000 7,876 50,050 50,000 48,000 46,000 44,000 42,000 40,000 38,000 10% 8% 6% 4% 2% 0% -2% -4% -6% No.of international tourists (LHS) %YoY (RHS) Tourism receipts (LHS) %YoY (RHS) Source: Ministry of Tourism and Sports * 2014 tourism receipts contributed 9.5% in GDP 6

7 I. Re-engaging engines of growth Infrastructure investments in the pipeline will boost the country s potential, support regional connectivity, and enhance logistic efficiency. Transportation Infrastructure Development (Total of USD 58 Billion in ) Airport capacity expansion 3% Bangkok public transport 39% Water freight 5% Railway network 26% Regional connectivity road and motorway 27% Source: Office of Transport and Traffic Policy and Planning 7

8 I. Re-engaging engines of growth Bangkok public transport progresses as planned. Bangkok public transport, 8 new lines (USD 23 billion) 1.Under construction (start operation in Dec 2015) Operating 2.Under construction (start operation in 2016) 8.Bidding in Under construction* 5.Bidding 2H15* Operating 6.Bidding 2H15* 7.Bidding 2H15* 4.Under construction* Source: Office of Transport and Traffic Policy and Planning Note: * construction complete in

9 I. Re-engaging engines of growth Railway network has been developed in partnership with China and Japan. Railway network (USD 15 billion) 1. Upper East West Corridor feasibility study 2. Bangkok-Chiang mai high speed train MOC Thai-Japan within 2Q2015 construction start Jan 2016 speed: 200 km/h 4. North South Corridor linkage to Khunming MOU Thai-China, Dec 2014 construction starts Jan 2016 operating within 2019 double track, standard gauge speed: 180 km/h 3. Lower East West Corridor linkage to Myanmar MOC Thai-Japan within 2Q2015 feasibility study Source: Office of Transport and Traffic Policy and Planning 9

10 I. Re-engaging engines of growth The US economic recovery and robust growth in CLMV will be the key drivers for Thai exports in (%) Thailand s exports by destination to total exports M ASEAN (9) CLMV CLMM US China EU (27) Japan Thailand s export growth by destination (value in term of USD) (%YoY) M ASEAN (9) CLMV CLMM US China EU (27) Japan Upturning industries: exports value growth (%YoY) 5M2014 5M2015 % to total exports 1. Auto and parts Agro-industrial products Integrated circuits Steel Radio, television Total Source: The customs of Thailand *CLMV= Cambodia, Laos, Myanmar and Vietnam.. **CLMM= Cambodia, Laos, Myanmar and Malaysia (border trade). 10

12 II. Thai listed companies Non-oil firms grew robustly, supported by economic upturn and falling oil prices. Net profit growth by sector (billion THB) +4.1% -51.8% 2014 total net profit decreased 11% YoY Non-oil sectors net profit increased 5.7% YoY Finance % % % % -44.4% % Resources* Property and construction material Technology Service** Agricultural industry Industrials* Consumer products 5 Source: Stock Exchange of Thailand * Resources and Industrials (oil sectors) s profit directly effected by oil price ** Air transportation s profit directly effected by tourism slow down 12

13 II. Thai listed companies Earnings of the Thai listed companies remain resilient in 1Q/2015 despite the slowdown. Net profits of listed companies on ASEAN exchanges in 1Q of (billion USD) -23.3% -5.1% +2.9% -33.3% 1Q/2014 1Q/ % Malaysia Thailand Singapore Indonesia Phillippines Source: Bloomberg 13

14 II. Thai listed companies SET ranks among the best performers in Asia over the past 5 years. 5-year ( ) index performance (%); as of Dec 30, 2014 USD Local currency China Hong Kong Taiwan Korea Singapore Malaysia Japan Indonesia Thailand Philippines YTD index performance and movement (%); as of Jun 2015 USD Local currency Indonesia Malaysia Singapore Thailand Taiwan Philippines Korea Hong Kong Japan China Source : Bloomberg, The Stock Exchange of Thailand 14

15 II. Thai listed companies SET s valuation and dividend yield are comparable with those of regional peers. Forward P/E ratio (times) Jun 2014 Jun Korea Hong Kong Taiwan Singapore Thailand Indonesia Japan Malaysia China Philippines Market Dividend Yield (%) Jun 2014 Jun Korea China Japan Philippines Indonesia Thailand Hong Kong Malaysia Taiwan Singapore Source : Bloomberg, The Stock Exchange of Thailand 15

16 II. Thai listed companies Thai corporates gear toward sustainable growth strategies and international expansion. Number of Thai listed companies invested abroad Technology Services Resources Property & Construction Industrial Financials Consumer product Agro & Food Industry Proportion of investment target region (data as of 2014) 78% 59% 43% 22% 19% 13% 11% 9% 8% Source : The Stock Exchange of Thailand 16

17 II. Thai listed companies Thai stocks continued to expand their presence on the leading global indices - MSCI and DJSI, reflecting the strong potential and world-class quality of Thai listed companies. Number of Thai stocks in MSCI Standard index Number of Thai stocks in DJSI Index Source : MSCI, DJSI Note: DJSI Emerging Market Index has been calculated since 2013 DJSI World Index DJSI Emerging Market Index 17

19 III. Thai capital market landscape Various schemes to facilitate foreign listing are available to suit different capital requirements and business structures. 1 Holding Company 2 Ordinary Share Primary Listing 3 Secondary Listing 4 Infrastructure Trust Unit Trust 5 Real Estate Investment Trust (REIT) Listing of the Thai holding company with core companies operating overseas Listing of a company incorporated abroad on the SET as a primary exchange Allow a foreign listed company to list on SET as the Secondary Listing Listing of Foreign Infrastructure Projects Listing of Foreign Real Estate Holding Company (Thai incorporated) Hold > 50% Core Company (Foreign subsidiary) Foreign Company Listed company in Home Exchange (e.g. JPX) Listed company on SET Infrastructure Asset (or) Infrastructure company Infrastructure trust Real estate property Real estate Investment trust (REIT) Source : The Stock Exchange of Thailand 19

20 III. Thai capital market landscape Fund raising for IPO on SET has been the most active in ASEAN since IPO fund raising in ASEAN (million USD, data as of Jun 2015) 6,447 5,183 3,447 2,594 2,669 1,685 1, , Thailand Malaysia Indonesia Singapore Philipphines 2015 (YTD) Source: Bloomberg 20

21 III. Thai capital market landscape The Thai capital market has grown significantly during the past 10 years. Market capitalization composition (trillion THB) Technology Service Agricultural industry Consumer products Q2015 Finance Resources Industrials Source: Stock Exchange of Thailand Property and construction material 21

22 III. Thai capital market landscape The number of listed companies and securities has consistently increased due to new IPOs. Number of newly listed securities* data as of June Newly listed securities (LHS) Total listed securities (RHS) (YTD) Breakdown of number of listed companies No. of newly listed securities Total outstanding Companies under listing (YTD) 2015 (YTD) application consideration Stocks: SET Stocks: mai Property funds & REIT Infrastructure funds Total Source: The Stock Exchange of Thailand * Listed companies in SET and mai and property funds & REIT and Infrastructure funds Market capitalization of newly IPOs (YTD) data as of June 2015 YTD market capitalization of new IPOs THB 151,631 million SET 54% Infrastructure funds 36% Property funds & REIT 5% mai 5% 22

23 III. Thai capital market landscape The Thai stock market has been the most liquid market in ASEAN for three consecutive years. Daily average turnover (million USD, data as of April 2015) 1,800 1,600 1,400 1,200 1, , Thailand Singapore (YTD) Malaysia Indonesia Philippines Transactions by investor type (Daily average trading value: million THB) data as of Jun 2015 (3,495) (3,886) (4,198) Source : World Federation of Exchanges (WFE), The Stock Exchange of Thailand *Share turnover velocity is calculated by {Monthly EOB Domestic Share Turnover / Month-end Domestic Market Capitalization) *12 (6,347) (4,283) 55% 55% 57% 63% 60% (18,018) (16,287) (17,765) (28,742) (28,818) (3,495) 13% (3,886) 13% (4,198) 13% 9% 9% 9% 8% 9% 9% 9% (2,205) (2,586) (2,512) 23% 24% 22% 20% 21% Foreign investors Proprietary trading (6,347) (4,210) (4,294) (4,471) (5,347) (6,713) (7,830) (10,940) (10,199) Local institutes Local retail investors 2015 YTD 23

24 III. Thai capital market landscape Foreign investors holding in Thai stocks have been quite stable despite international and domestic uncertainties. Foreign holding value, proportion and SET Index (% of Thai stock market capitalization) , ( Apr) , , (May) (Apr) Foreign Holding Value , (Apr) 4,159 Source : The Stock Exchange of Thailand 34.5 (billion THB) , (Apr) (May) % Foreign Holding SET Index , , , , , ,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Holding value proportion by investor types (% of Thai stock market capitalization) 48.4% 39.5% 40.6% 43.8% 14.8% 24.6% 24.8% 23.5% 36.8% 35.9% 34.5% 32.7% Foreign investors Local institutes Local retail investors 24

25 III. Thai capital market landscape SET has a relatively larger number of liquid large-cap listed companies, compared to peers. Market capitalization data as of April Number of listed companies having market capitalization >= $1 billion and daily average trading value** >= $10 million data as of Jun Singapore Malaysia Thailand Indonesia Thailand Singapore Malaysia Indonesia Market cap. Size (billion USD) % Market cap. to GDP* Source : World Federation of Exchanges (WFE), Bloomberg * GDP 2014 **Average daily trading value during Dec Jun

26 III. Thai capital market landscape Thailand is internationally recognized as a leader in capital market corporate governance. ACGA s CG Watch market scores: 2007 to 2014* ASEAN corporate governance scorecard ** Hong Kong (67) 1.Singapore (67) 1.Singapore (69) 1.Hong Kong (65) 2.Singapore (65) 2.Hong Kong (65) 2.Hong Kong (66) 1.Singapore (64) 3.India (56) 3.Japan (57) 3.Thailand (58) 3.Japan (60) 4.Taiwan (54) 4.Thailand (55) 4.Japan (55) 4.Thailand (58) * 5.Japan (52) 4.Taiwan (55) 4.Malaysia (55) 4.Malaysia (58) 6. Korea (49) 6.Malaysia (52) 6.Taiwan (53) 6.Taiwan (56) 6. Malaysia (49) 7.India (49) 7.India (51) 7.India (54) 8.Thailand (47) 7.China (49) 8.Korea (49) 8.Korea (49) 9.China (45) 9.Korea (45) 9.China (45) 9.China (45) 10.Philippines (41) 10.Indonesia (40) 10.Philippines(41) 10.Philippines(40) 11.Indonesia (37) 11.Philippines(37) 11.Indonesia (37) 10.Indonesia (39) 75.4% 71.7% 71.7% 67.7% 62.3% 55.7% 58.0% 54.6% 48.9% 43.3% 33.9% 28.4% Thailand Malaysia Singapore Philippines Indonesia Vietnam Source : Joint Initiative of the ASEAN Capital Markets Forum and the Asian Development Bank ** average total corporate governance score of the country s largest listed companies based on market capitalization Source: Asian Corporate Governance Association * Remark on Thailand: ACGA sees Thailand is moving ahead with pre-existing national CG policies and plans. Enforcement is also better. However, political / regulatory falls in Thailand remain a drag, though this could be improved as political blockage is solved and institutional framework is enhanced. 26

27 III. Thai capital market landscape Thai derivatives market is growing rapidly, expanding multi-asset-class investment capability Daily average trading volume in TFEX (number of contracts per day) data as of Jun ,527 CAGR % 9,009 34,351 16,479 14,927 6,468 8,849 10,381 10,212 17,690 16,467 23,218 6,293 80,100 58,790 85,471 99, (YTD) Total 12,771 18,676 41,145 43,823 68, , ,076 Others* Currency futures Gold futures Single stock futures SET50 index futures Source: The Stock Exchange of Thailand * Others comprise of Oil futures, SET50 Index options, Silver futures, Interest rate futures and Sector futures Note: TFEX has modified its SET50 futures contract to have a smaller contract size on May 6, The new SET50 futures, or mini-set50 futures, have a contract size that is one-fifth that of the previous one. The contract multiplier was reduced from THB 1,000 per index point to THB 200 per index point, resulting in a drop in size to about THB 200,

28 Disclaimer This document was prepared by The Stock Exchange of Thailand in good faith upon sources believed to be reliable but no representation or warranty expressed or implied is made to their accuracy or correctness. The Stock Exchange of Thailand accepts no liability for any direct or consequential loss or damage arising from any use of this document or its contents. All information and opinion expressed here is subject to change without notice. The copyright belongs to The Stock Exchange of Thailand. No part of this document may be published or copied in any form or by any means without the written permission of The Stock Exchange of Thailand. 28

29 Appendix: Trading at SET Exchange and Trading Integrated Equities Domestic common shares Dual listings State enterprise listings SME listings Warrants Property funds / REITs / Infrastructure Fund Domestic mutual funds / ETFs Domestic indices / FTSE indices Shariah index Derivative warrants Data, System and Other Services Model Post-Trade Services Derivatives SET50 index futures Single stock futures Gold futures Interest rate futures Oil futures Currency futures Sector Index Futures Fixed Income Corporate bonds Government and state enterprises bonds Post-Trade Services Clearing & settlement Central Depository Securities registration SET Information Services SET listed companies & product information database 29

30 Appendix: Trading at SET REIT: first listing in October 2014 Important Codes Regarding REIT The paid-up capital after units offering must be THB 500 million; Main Investment: - All kinds of real estates, with the objective of seeking benefits in the form of rental income; - Investment in real estates abroad; - Real estates already generating income must be 75% of the total value of units offered plus loans (if any); Leverage limit: 35% of the total assets; in the case of assets with an investment grade, 60% of the total assets. Foreign investment limited 49% of units holding. 3 REITs listed on SET in 2014 Impact Growth Real Estate Investment Trust (IMPACT) Investing in freehold right of Building Exhibition and Conference of Project IMPACT, Muang Thong Thani, on 4 buildings including utilities and equipment. LH Shopping Centers Leasehold Real Estate Investment Trust (LHSC) Investing in the leasehold right in immovable properties and the ownership in movable properties in Terminal 21 Shopping Center. WHA Premium Growth Freehold and Leasehold Real Estate Investment Trust (WHART) Investing in the freehold and leasehold rights of properties in distribution and logistic center in Ladkrabang and Bangna zone. 1 REITs listed on SET in 2015 TICON Freehold and Leasehold Real Estate Investment Trust (TREIT) Investing in freehold and leasehold rights of land together with factories and warehouses of TICON Industrial Connection PCL. and TICON Logistics Park Co.,Ltd. Source : The Stock Exchange of Thailand 30

31 Appendix: Trading at SET 4 infrastructure funds listed on SET BTS rail mass transit growth infrastructure fund (BTSGIF) 60 billion baht IPO size : the largest IPO in Thailand Revenue from the operation of the original BTS sky train system. Infrastructure fund listing: first listing in April 2013 Amata B.Grimm power plant infrastructure fund (ABPIF) 6 billion baht IPO size Revenue from the operation of power plants for industrial sectors in Thailand and Vietnam True Telecommunications Growth Infrastructure Fund (TRUEIF) 58 billion baht IPO size: the first telecom infrastructure fund Revenue from the rental of 5,845 telecommunication towers, core fiber-optic cable grids and related transmission equipment. Jasmine Broadband Internet Infrastructure Fund (JASIF) 55 billion baht IPO size Revenue from the rental of fiber-optic network for broadband internet. 1 infrastructure fund to listed on SET in 2015 North Bangkok Power Plant Block 1 Infrastructure Fund, Electricity Generating Authority of Thailand (EGATIF) 20 billion baht IPO size The Right to availability payments (AP1) of EGAT's North Bangkok Power Plant Block 1 for 20 years period, with a contracted power generation capacity of 670 megawatts. Source : The Stock Exchange of Thailand 31

32 Appendix: Trading at SET 2 options to get all benefits from investing in Thai stocks. Option 1: Mostly for strategic shareholders Option 2: General option Proportion of trading value by type of stocks by foreign investors Trade stock-f Most SET-listed Thai companies have foreign ownership restriction. Check out foreign ownership restriction of each stock via >> company/securities info >> equity >> then select your preferred company. Trade NVDR stock or stock-r Another option is to trade NVDRs. (Non-Voting Depository Receipts) Obtain all financial benefits with the exception of voting rights. Gain greater efficiency, flexibility and convenience as if you are local investors. Foreign Shares 9.59% Local Shares 46.60% NVDR 43.83% Source: SET, May Apr2014 Remarks: Trading stocks on local board is applicable. However, to get all benefits, stocks should be transferred to stock-f or stock-r. NVDRs traded on local board, no price different from local stocks. 32

33 Appendix: Foreign investor information center Follow the updates on the Thai economy and capital market developments on SET website. 33

34 Appendix: GMS Exchanges information center SET and GMS exchanges agree to exchange market information to be shown on GMS Exchanges information. The website will be an integrated single-window view into the GMS capital market. 34

35 Save the date Opportunity Growth and Reform August 2015 Bangkok, Thailand By Invitation Only By Invitation Only The largest forum ever in Thailand where investors can learn about Thailand s economic, investment and policy environment from a range of experts, including senior government officials and business leaders. Upgrading the international profile of the Stock Exchange of Thailand (SET) and regional capital markets by bringing together the lesson learned from the key stakeholders around the world. For more information, please visit us at 35

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