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The military coup is bullish for the Thai Stock Market

Legacy Phuket Gazette

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The military coup is bullish for the Thai Stock Market | The Thaiger
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PHUKET: For those of us from the United States and Western Europe, it is hard to imagine a military coup occurring in our home countries. Matter of fact, I get calls from nervous friends and relatives asking if I’m okay and if there are tanks in the street. Well, for those of us that have lived here for quite some time, we have become like ordinary Thais and view the coup as a non-event. Here in Thailand, coups are part of the ordinary course of business every few years.

What I tell the folks back home is to imagine a general who put the republican and democratic leaders in a room and said “stop this bickering and work together”, and that’s what the general did. When they failed to come up with a deal, he just said “both of you are useless and I’m taking over.”

I view this as a bullish event for the long-term because it provides some stability to the country, which it so desperately needs. In fact, if you have noticed, it’s business as usual. Factories are still humming and goods are being shipped in and out of the country. Thailand, in part due to its location, remains the industrial heart of Southeast Asia.

Both Thai exporters and we expats, with savings and assets abroad, are benefiting from the weak baht. A weak currency is good for tourists as they can buy more with their home currency and it also makes Thai exports more competitive in the global market. In other words, it’s cheaper to buy Thai goods abroad.

This, in turn, has helped the Thai stock market. Here, you can see the long-term picture of how well the market has performed.

The Electronically Traded Fund (ETF) that tracks the Thai Stock Market is iShares MSCI Thailand (THD). Shares have rallied since the lows seen in 2008 of around US$20, to almost $100 last summer. This was before Thailand was hit by protests and it fell to around $62. Shares look to have formed a triple bottom (three equal lows) and gone higher.

As I like to say, “what can’t go lower, must go higher.” Furthermore, when a market is hit with bearish news like a military coup and goes higher, that is one of the hallmarks of a bull market. As a matter of fact, since Thailand has a history of coups, the Thai Stock Market has typically risen 3 per cent in the first month after a coup.

Shares dropped initially when the coup was announced, but have since recovered. Furthermore, shares are about 25% off their highs seen last summer. Compare this to the S&P 500 SPDR (SPY), which is making new all-time highs.

Digging deeper, I see the top 10 holdings of the THD comprise the leading companies in Thailand and account for half of THD’s assets. They include Siam Commercial Bank, PTT, AIS, Kasikorn Bank, PTT Exploration, CP Group, Siam Cement, PTT Global Chemicals and Bangkok Bank. These companies form the backbone of the Thai economy and are unlikely to be affected from the drop in tourism numbers. The companies in the THD rely more on domestic demand and their growth story is still intact.

These stocks are also incredibly cheap compared to their global peers. The holdings of the THD have a price/earnings multiple of 12 and are trading at just 0.8 times book value and 0.8 times sales. If we compare this to the SPY, we see that it has a price/earnings multiple of 16 and shares are trading at 2.2 times book value and 1.6 times sales.

My long-term outlook for Thailand remains intact. As an expat who has been coming to Thailand for many years, I know where Thailand was, where it is and I have a pretty good idea of where it’s heading. Even the World Bank agrees with me. In their assessment of Thailand, they say,

“Thailand became an upper-middle income economy in 2011. Notwithstanding political uncertainty and volatility, Thailand has made great progress in social and economic issues. As such, Thailand is one of the great development success stories, with sustained strong growth and impressive poverty reduction.”

I couldn’t have said it better myself. For those of you interested in more of my writings, give me a call to get a copy of Don Freeman’s Expat Financial Guide. I’m also available to discuss the THD and various other investment options for your portfolio to help build a more secure future.

Don Freeman is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket, Thailand. He has over 15 years experience and provides personal financial planning and wealth management to expatriates. Specializing in UK and US pension transfers. Call 089-970 5795 or email: freemancapital@gmail.com.

— Don Freeman

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Turbulence ahead for Thailand’s aviation industry | VIDEO

The Thaiger

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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Domestic air passenger numbers double those of January

Maya Taylor

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Domestic air passenger numbers double those of January | The Thaiger
PHOTO: Vietjet

Passenger numbers on domestic flights within Thailand have doubled within a month, rising from 4,000 in January to over 10,000 this month. Having nearly recovered to pre-pandemic levels, domestic travel plummeted once more when Covid-19 resurfaced late last year.

Apirat Chaiwongnoi from the Department of Airports says 15 of Thailand’s 29 airports are now operating domestic flights, with more expected to follow. He believes the aviation sector will continue to recover further in the coming 6 months, bolstered by the national vaccine rollout.

Around 120 domestic flights a day are now operating, which is twice the number that were operating at the lowest point in the crisis. Prior to the resurgence of the virus in December, domestic passenger numbers had recovered to 30,000 – 40,000 a day, around 80% of pre-pandemic numbers.

The DoA says airports must continue to adhere to the Covid-19 hygiene measures put in place by the Health Ministry and the Civil Aviation Authority of Thailand.

SOURCE: Bangkok Post

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Coronavirus (Covid-19)

Samut Sakhon’s shrimp market to remain closed until February 15

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Samut Sakhon’s shrimp market to remain closed until February 15 | The Thaiger
PHOTO: Kom Chad Luek

Samut Sakhon’s Central Shrimp Market, the epicentre of Thailand’s recent wave of Covid-19, will remain closed until February 15. The market can reopen once the overall hygiene situation at the market and surrounding area has improved, according to the province’s disease control committee.

Local officials say the shrimp market needs to remain closed until the market structure and nearby residential facilities are inspected. People who violate the order face up to a year in prison and a fine up to 100,000 baht.

More than 12,000 people in the province have tested positive for Covid-19. The increasing number of infections is a result from the active case finding to contain the spread of the virus.

SOURCE: Thai PBS World | Thairath Online

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