Thai economic activity muddling along. Crane, a revisit.
I spoke to a SCB bank senior economist and heard a speech by the their top chief economic adviser. We must realize the Thai economy just/keeps muddling along, other than green/renewable energy nothing is booming far from it...and unlike many thought the Thai economy has not picked up much as the year comes to an end. The price of oil is down but so are is consumer spending, consumer loans, car loans and home mortgage loans. As the year is coming to an end Thai economic activity has not picked up, but also not falling off. Just staying at the present stagnant growth level of recent months and only if/when mega infrastructures pick up will this improve. On the other hand, Bangkok Bank still comfortably projects 4%+ GDP growth for 2015.
Time will tell which gets it right, while I am sort safely of in the middle.
We need to downtown our view regarding the length of the bottoming-out, with growth likely to resume next year. But is the 4-5% realistic for 2015? Probable less so today then felt some months ago. Presently I would have to tone the more optimistic view earlier which means we just may see yet one last Thai interest rate cut? All hinges now on the governments infrastructure taking off, still reasonable to conclude but it better get going as all hinges now on that. Thai higher VAT and new gift and land taxes likely next year in the making, are not helping.
The one area still upbeat is the green/renewable energy -with yes DEMCO still leading the way. In a few days I will be visiting Luang Prabang Laos. I hope to see Demco’s new project to build a water plant at Supanuwong University and the 12 KM water pipe to Ban Khoi school. In addition, they plan to get the concession for construction of the underground power cable and underground telecommunication cable in the municipal area. So its still very much happening with Laos despite not much official news on that.
MayBank’s Kim Eng report on this company is a bit lame as it does not consider Laos, nor the likely huge windfall (no punt intended) from their 4% ownership in Wind Energy holding which could fetch 3-5 times or more their cost price of 190 Baht per share. This broker is more and more interested in developing trading platforms and new ETF funds then beefing up their security research. The biggest problem with Thai brokers’ marketing staff is and remains that they just do not see themselves as new wealth creators, only as commissioned salespeople. Some see this as normal and can't blame them, I say hogwash.
The SCB private banker meeting I attended at Sri Pawna, Phuket only confirmed this as they tell me how extremely difficult it is to convince Thai’s with wealth to securitize some of their saving/portfolio’s to higher returns. As they have been burned too many times in the past.