Thailand s economic resilience amid global uncertainties March 217
Thailand s economic resilience amid global uncertainties I. Thailand s economic resilience II. Thai corporates target for sustainable growth III. Thai capital markets landscape Appendix
I. Thailand s economic resilience The economy will grow by 3-4 percent in 217, driven by public investment and tourism. % to GDP (215) %YoY 215 3Q216 4Q216 216 217f GDP Growth 2.8 3.2 3. 3.2 3.-4. - Private consumption 49% 2.1 3. 2.5 3.1 2.8 - Private investment 23% -2. -.8 -.4.4 2.5 - Public consumption 2.2-5.2 1.5 1.6 2.6 17% - Public investment 29.8 5.8 8.6 9.9 14.4 - Export value* 66%.2 1.4 1.1 2.1 3. - Number of international tourists (%YoY) 12% 2.4 13.1 5. 11.1 9.8 (million people) 29.9 8.2 7.7 32.5 35.6 - Import value* 55% -.4-1.1 3.4-1.4 3.6 Note: Exports and Import value of goods and services Thailand: Medium-term GDP growth forecast (%).1 6.4 2.9.7 2.8 Note: 217 onward forecast by IMF 3.2 3.3 Actual Forecast* 3. 217f 221f Source: Office of the National Economic and Social Development Board (NESDB), Department of Tourism, Bank of Thailand, IMF s World Economic Outlook, Oct 216 3
1Q213 2Q213 3Q213 4Q213 1Q214 2Q214 3Q214 4Q214 1Q215 2Q215 3Q215 4Q215 1Q216 2Q216 3Q216 4Q216 44 1Q213 2Q213 3Q213 4Q213 1Q214 2Q214 3Q214 4Q214 1Q215 2Q215 3Q215 4Q215 1Q216 2Q216 3Q216 4Q216 7,768 I. Thailand s economic resilience International tourist arrivals and tourism receipts continue to grow steadily. Number of international tourist arrivals (thousand) 1, 5, Tourism receipts (billion THB) 6 4 2 No.of international tourists (LHS) Tourism receipts (LHS) %YoY (RHS) %YoY (RHS) (%YoY) 4% 2% % -2% (%YoY) 4% 2% +4% % -2% Top 1 international tourist arrivals to Thailand, Jan Dec 216 Singapore USA UK Russia India Laos Japan Korea Malaysia China %share 2.97 3.4 2.99 3.8 5.89 3.34 12.35 3.66 11.63 4.33 15.48 4.42 4.19 4.49 6.64 1.84 3.36 1.34 %growth YoY 23.28 26.87 Source: Ministry of Tourism and Sports 4
Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 I. Thailand s economic resilience Government spending increases by disbursement of infrastructure project investments. Government current and capital expenditure (billion THB,data as of Jan 217) 18 16 14 12 1 8 6 4 2 Current expenditure Source: Bank of Thailand, TDRI Capital expenditure Estimated disbursement of infrastructure projects (billion THB) 25 2 15 1 5.6% 1.2% 1.3% 1.3% 1.3%.7%.6%.4%.2% 86 17 19 196 25 119 1 73 38 216 (A) 7 8 9 Disbursement value (LHS) %of GDP (RHS) * 216 estimated disbursement THB 97 billion, actual disbursement THB 86 billion. (% of GDP) 1.4% 1.2% 1.%.8%.6%.4%.2%.% 5
997 998 999 Jan-17 997 998 999 I. Thailand s economic resilience Macro economic condition is well under control by strong foreign reserves, current account surplus, and sound fiscal positions. External debt and international reserves (billion USD) 25 Short-term external debt 2 Gross external debt Net international reserves 1/ 15 1 5 7 89 23 133 53 Public debt and fiscal balance (percent of GDP) (%) (%) 7. Public debt to stay below fiscal 6. sustainability framework, 6% 5. 42.2 4. 3. 2. 1.. -1. 7 89 11.6 6 5 4 3 2 1-2.7-1 -2 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 Current account/ GDP (LHS) 2/ Public debt/ debt/gdp (RHS) (LHS) 2/ 2/ Fiscal balance/gdp (LHS) (RHS) 2/ 2/ 6
997 998 999 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 I. Thailand s economic resilience Banks are well-capitalized and their asset quality has been stable. Capital adequacy and Non-performing loans (%) (%) 2 5 17.8 15 14.5 4 3 1 2 5 1 3. 7 89 Commercial Bank Loan Growth (%YoY) 25 2 15 1 5 3.1 3.8 2.5 Tier1 (LHS) CAR (LHS) Gross NPLs to total loan (RHS) Total Loan Corporate Loan Consumer Loan Source: Bank of Thailand, Bloomberg 7
I. Thailand s economic resilience Household debt remain high but start to remain stable. Household and corporate debt to GDP (% to GDP) Household debt Corporate debt 8% 82% 79% 8% 81% 77% 72% 73% 74% 74% 74% 76% 76% 7% 66% 66% Household and corporate NPL to total loan* (% to total loan) Household NPL Corporate NPL 3.% 3.% 2.6% 2.6% 2.7% 2.8% 2.6% 2.7% 2.4% 2.4% 2.5% 2.2% 2.% 1.9% 2.1% 2.1% 1Q216 2Q216 3Q216 1Q216 2Q216 3Q216 *NPL to total commercial bank loan Source: Bank of Thailand 8
999 7 8 9 997 998 999 I. Thailand s economic resilience Low financing cost encouraged business expansion. Commercial bank interest rates* (%) 18 16 14 12 1 8 6 4 2 7 89 6.3 1.5 1.4 Thai government bond yields (%) 1 8 6 4 2 2.8 2.18 1.54 Policy rate Deposit rate Lending rate *Average fix 12 month deposit rate and MLR of large 5 banks 1Y 5Y 1Y Source: Bank of Thailand, Thai Bond Market Association 9
I. Thailand s economic resilience THB has remained largely stable. Movement in regional currencies per USD (Index end 215 = 1) + = Appreciation against USD 12 115 11 15 1 95 9 JPY IDR THB SGD MYR CNY PHP Source: Bloomberg 1
Y214 Y215 Y216 - Q2/16 Q3/16 Q4/16 -- Dec 16 Jan 17 Feb 17-53.9-35.7-71.8-4.4-155.6-9.5-22.8-75.1-54.7-4.8-1.9 3.7.3 29.7 16.42 46.87 78.5 27.6 28.7 17.6 21.4 19.5 2.5 7.4 25.6 27.2 97.3 I. Thailand s economic resilience Foreign net investment flow into both bond and equity markets in 216 and 217(YTD). Foreign investors net flow into bond and equity markets (Net flow: billion THB) (Exchange rate: THB/USD) 2 15 1 5-5 -1-15 -2 32.48 34.25 35.28 35.29 34.84 35.4 35.79 35.5 35.2 4 35 3 25 2 15 1 5 Government bond (LB+TB) (LHS) Equity (LHS) Central bank bond (CB) (LHS) Average Exchange rate (RHS) Source: Bank of Thailand, The Stock Exchange of Thailand, Thai Bond Market Association 11
Thailand s economic resilience amid global uncertainties I. Thailand s economic resilience II. Thai corporates target for sustainable growth III. Thai capital markets landscape Appendix
II. Thai listed companies Thai listed companies earnings growth and financial leveraging look very positive. Listed companies performance (%YoY) Real GDP Growth Net Profit Growth of Listed companies Debt/ Equity* 214 215 216 3Q216 4Q216 214 215 216 3Q216 4Q216 3Q216 4Q216 Thailand.7% 2.8% 3.2% 3.2% 3.% -11% -1% 26% 194% 37% 1.4 1.8 Indonesia 5.% 4.8% n/a 5.% n/a 1% -4% n/a 7% n/a 1.19 n/a Philippines 6.1% 5.8% n/a 7.1% n/a 5% -1% n/a 36% n/a 1.46 n/a Malaysia 5.8% 5.% 4.2% 4.3% 4.5% 3% -7% -14% 5% 1%.94.98 Singapore 2.1% 2.% 1.8% 1.2% 1.8% -1% -14% -1% -11% 13%.96 1.8 * Debt to equity of listed companies excluded bank and financial services sectors Source: Bloomberg 13
II. Thai listed companies In the long run, SET ranks among the best performers in Asia. 5-years to date (end of 211- end of 216) index performance (%); as of Dec 3, 216 USD Local currency 126.1 41.1 22.3 28.1 32.5 5.5 56.5 49.2 38.6 38.5 7.3 8.9 6.4 11. 19.5 19.3 3.8-24.3-6.4-2.5 Malaysia Indonesia Singapore Korea Hong Kong Taiwan China Thailand Philippines Japan 217 YTD index performance (%); as of Feb 28, 216 USD Local currency 3.2 3.8 4. 5.4 4.2 4.3 5.5 1.7 1.1 3.2 4.3. 7.8 7.9 1.3 11.2 3.2 7.5 Indonesia Thailand Philippines Japan Malaysia China Hong Kong Korea Singapore Source : Bloomberg, The Stock Exchange of Thailand 14
II. Thai listed companies SET s valuation and dividend yield are competitive among regional peers. Forward P/E ratio (times) Feb 216 Feb 217 16.7 11.1 1.1 11.5 12.7 11.9 13.9 14.2 14.6 16. 9.8 11.9 13.7 13.7 14.4 14.5 15.1 15.6 16. 17.3 Korea Hong Kong China Taiwan Singapore Vietnam Thailand Indonesia Malaysia Philippines Market Dividend Yield (%) 1.7 2.1 2.2 2. 1.4 1.5 1.7 1.8 Feb 216 Feb 217 4. 3.5 3.8 3. 3.1 3.1 3.3 3.5 3.5 3.8 Korea Indonesia China Philippines Thailand Malaysia Vietnam Singapore Hong Kong Taiwan Source : Bloomberg, The Stock Exchange of Thailand 15
II. Thai listed companies Thai listed companies in all industries and all sizes continuously expand abroad. Number of Thai listed companies investing abroad classified by industry 173 192 15 14 41 135 4 13 23 29 19 86 92 33 11 11 15 27 17 19 23 24 27 11 11 11 12 2 13 16 13 15 9 9 1 16 14 5 6 1 15 2 23 Technology Services Resources Property & Construction Industrial Financials Consumer product Agro & Food Industry classified by firm size 173 192 41 SET31+ 135 38 39 SET21-3 16 3 24 86 92 SET11-2 33 44 11 4 1 5 37 28 28 3 SET51-1 17 19 22 28 26 3 36 42 4 SET5 * These 192 listed firms accounts for 37% the total 517 listed firms on SET Source : The Stock Exchange of Thailand 16
II. Thai listed companies Thai listed companies gear toward sustainable growth strategies and international expansion. Number of Thai listed companies investing abroad classified by target region (data as of end-215) ASEAN CLMV East Asia America Europe South Asia Australia Middle east Africa 4 36 27 18 15 13 79 115 Note: One company may invested in more than one region Source : The Stock Exchange of Thailand 152 The ratio of revenue from abroad to total revenue (Data of 11 companies which continually reported revenue from trade and investment abroad during 26 215) 36% 37% 37% 39% 39% 7 8 9 42% 42% 43% 45% 46% Note: 1) Revenue from abroad refers to the revenue derived from business operating overseas and exports revenue. Nevertheless, some firms usually classify revenue from overseas based on geographical locations of customers without indicating whether the amount is derived from operation overseas or exports. All foreign revenue that fall under these criteria will be classified as revenue from abroad. 2) In 215, there are 233 listed firms reports revenue from abroad. Total revenue from abroad of these firms accounts for 22% of total revenue of all 517 firms on SET. 17
II. Thai listed companies Thailand is recognized as a leader in capital market corporate governance. ACGA s CG Watch market scores: 27 to 216 27 21 212 214 216 1.Hong Kong (67) 1.Singapore (67) 1.Singapore (69) 1.Hong Kong (65) 1.Singapore (67) 2.Singapore (65) 2.Hong Kong (65) 2.Hong Kong (66) 2.Singapore (64) 2.Hong Kong (65) 3.India (56) 3.Japan (57) 3.Thailand (58) 3.Japan (6) 3.Japan (63) 4.Taiwan (54) 4.Thailand (55) 4.Japan (55) 4.Thailand (58) 4.Taiwan (6) 5.Japan (52) 4.Taiwan (55) 4.Malaysia (55) 4.Malaysia (58) 5.Thailand (58) 6. Korea (49) 6.Malaysia (52) 6.Taiwan (53) 6.Taiwan (56) 6.Malaysia (56) 6. Malaysia (49) 7.India (49) 7.India (51) 7.India (54) 7.India (55) 8.Thailand (47) 7.China (49) 8.Korea (49) 8.Korea (49) 8.Korea (52) 9.China (45) 9.Korea (45) 9.China (45) 9.China (45) 9.China (43) 1.Philippines (41) 1.Indonesia (4) 1.Philippines(41) 1.Philippines(4) 1.Philippines(38) 11.Indonesia (37) 11.Philippines(37) 11.Indonesia (37) 1.Indonesia (39) 11.Indonesia (36) Source: Asian Corporate Governance Association, CG Watch 216 report, September 216 * 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. Number of top 5 companies in ASEAN were awarded 215 ASEAN CG scorecard* 23 11 8 Thailand Philippines Singapore Malaysia Indonesia Source : ASEAN CG Scorecard is a program initiated by the ASEAN Capital Markets Forum (ACMF) and supported by the Asian Development Bank (ADB). 6 2 18
II. Thai listed companies Thai listed companies continued to expand their presence on sustainability and investor relation. Number of Thai listed companies in DJSI Index IR awards 216: nominees and winner 216 DJSI member: DJSI World: KBANK*, PTT, PTTEP, PTTGC, SCC DJSI EM: ADVANC, AOT, BANPU, CPF, CPN, IRPC, KBANK* MINT, PTT, PTTEP, PTTGC, SCC, TOP, TU *new members in 216 4 1 2 3 4 1 5 14 Thailand Philippines Indonesia 2 Kasikorn bank 2 1 6 6 Metro Pacific Investments 1 1 3 Siam Cement winner 1 2 4 Kasikorn bank DJSI World Index DJSI Emerging Market Index Best overall IR (large cap) Best overall IR (small & mid-cap) Best corporate governance Best sustainability practice Source : DJSI Note: DJSI Emerging Market Index has been calculated since 213 Source: IR magazine 19
Thailand s economic resilience amid global uncertainties I. Thailand s economic resilience II. Thai corporates target for sustainable growth III. Thai capital markets landscape Appendix
III. Thai capital market landscape Thai capital market has become the highest IPO venue during the past 4 years. Initial Public Offering raising fund in ASEAN-5 Market (million USD, data as of Feb 217) 8, 6, 4, 2, Accumulated 5 years IPO value - 6,522 5,196 * 2M217 4,35 4,24 2,835 2,55 1,54 1,659 1,669 1,2511,312 1,369 768 878 1,43 1,17 49 319 14 299 194 316 116 Thailand Singapore Malaysia Indonesia Philippines 16,449 9,827 5,891 4,358 2,818 Source: Bloomberg, The Stock Exchange of Thailand Note: In 216, Large IPO in Singapore from Frasers Logistics & Industrial REIT valued USD million and Manulife US REIT valued USD 7 million 21
III. Thai capital market landscape Number of listed companies has been gradually increasing. Number of newly listed securities* Number of listed companies data as of Feb 217 data as of Feb 217 5 4 3 2 1 15 16 24 38 45 Newly listed securities (LHS) 27 1,559 4 217 YTD SET index (RHS) 1,8 1,6 1,4 1,2 1, 8 6 4 2 Newly listed securities 214 215 216 217 (YTD) List of companies under listing application consideration. Total outstanding Number of companies Market capitalization (million THB) Stocks: SET 16 2 1 1 7 522 15,343,515 Stocks: mai 2 13 13 3 4 137 331,59 Property funds & REIT 9 6 4-1 6 417,917 Infrastructure funds 2-1 5 238,18 Total 45 41 27 4 13 724 16,33,959 Source: The Stock Exchange of Thailand Note: * Listed companies in SET and mai and property funds & REIT and Infrastructure funds 22
Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 III. Thai capital market landscape SET market capitalization has gradually increased and become the third largest in ASEAN. Market capitalization Market capitalization to GDP* (billion USD) (% to GDP, data as of Jan 217) 8 7 6 5 4 3 2 1-68 45 432 373 252 Singapore Thailand Indonesia Malaysia Philippines 232 126 12 86 52 Singapore Malaysia Thailand Philippines Indonesia Source : World Federation of Exchanges (WFE) Note: * GDP 215 23
III. Thai capital market landscape SET has a relatively larger number of liquid large-cap listed companies and increasing number of constituents in MSCI. Number of listed companies having market capitalization >= $1 billion and average daily trading value* >= $1 million data as of Feb 217 34 21 6 5 Thailand Singapore Malaysia Indonesia Philippines Source : Bloomberg *Average daily trading value during Sep 216 - Feb 217 Number of Thai listed companies in MSCI Standard index 17 2 Source : MSCI, 25 29 29 34 216 MSCI member: ADVANC AOT BANPU BBL BEC BH BGH BTS BJC* CPALL CPF CPN DELTA EA GLOW HMPRO EGCO* KCE* IVL IRPC KBANK KTB MINT PTT PTTGC PTTEP SCB SCC TMB TOP TRUE TU BEM* ROBINS* *5 new members in 216 24
Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 III. Thai capital market landscape Thai stock market has been the most liquid market in ASEAN since 212. Average daily turnover (million USD, data as of Jan 217) 2,5 2, 1,5 1,53 Average daily trading value by investor type (million THB, data as of Feb 217) 9% 9% 9% 1% 11% (2,25) (2,586) (2,512) (6,347) (4,294) (4,283) (5,59) 13% (3,495) 9% (3,886) (4,198) 9% 11% 1% (3,495) (3,886) (4,198) (6,347) (6,23) 22% (5,347) 2% 22% (6,713) (7,83) 26% 27% (1,94) (14,881) 1, 74 5 384 343 119 Thailand Singapore Malaysia Indonesia Philippines 57% 63% 59% 53% 52% (18,18) (16,287) (17,765) (28,742) (28,798) 2M217 Local retail investors Foreign investors Proprietary trading Local institutes Source : World Federation of Exchanges (WFE), The Stock Exchange of Thailand 25
Thailand s economic resilience amid global uncertainties I. Thailand s economic resilience II. Thai corporates target for sustainable growth III. Thai capital markets landscape Appendix
Appendix Established under a special law in 1975, the Stock Exchange of Thailand (SET) is a non-governmental organization with a juristic person status. Thai Capital Market Structure Board of Governors Structure Exchange Business Pre-Trade IPO Trade Matching Post-Trade Depository/Clearing/Registrar Capital Market Development Capital Market Education Industry Development Capital Market Research 27
97 98 98 99 99 216 Appendix Development of the Thai capital market has continued over the past 4 years Average daily trading value 1975 216 (million USD) Kick off Financial Literacy Program Investor development >> Development of SET >> 2, 1,5 1, 5 Commenced operation Social Security Fund Provident Fund Mutual Fund Government Pension Fund Computerized trading Retirement Mutual Fund Program Long-Term Equity Fund Program Money Channel 1,483 New trading system SET CONNECT Listed company development >> Thai Institute of Directors SET s Corporate Governance Center Privatization and listing of state-owned enterprises Source: The Stock Exchange of Thailand (as of December 216) 28
Appendix Key success factors contributing to the growth of the Thai capital market Listed companies Investors Platform Offer a wide variety of fund raising instruments, e.g. common stock, infrastructure fund, property fund, real estate investment trust (REIT) Groom prospective and existing listed companies and train them about the use of financial instrument to match business objectives and cycle Incentivize listed companies to upgrade their capability to be on par with regional and global quality standards in terms of governance and sustainability Promote proactive investor relations program, e.g. Opportunity Day as well as inbound and outbound road shows Local individual: Online trading, investor base expansion through commercial banks and commitment to financial literacy Local institution: Long-term equity investment incentive (Long-term Equity Fund and Retirement Mutual Fund) and Provident Fund Foreign: Promote high quality with good performance stocks SET CONNECT increases trading efficiency, ease market access with international standard protocol, and cover new products and other trading innovations FUND CONNEXT, fund service platform, to build the future ecosystem for mutual fund distribution and investment and to make it easy to access mutual funds 29
Appendix The Thai capital market has been recognized internationally. Asian Development Bank Asian Corporate Governance Association FTSE upgraded SET from the Secondary Emerging Market to the Advanced Emerging Market Thai listed companies achieved the highest marks on the ASEAN Corporate Governance Scorecard among all ASEAN Countries, assessed by ADB In 216, Thailand s CG score ranks 5th in Asia, assessed by the Asian Corporate Governance Association SET has the highest increment of stocks for calculating purpose in Asia (34 Thai stocks are now included in MSCI Standard index) 14 Thai listed companies are included in Dow Jones Sustainability Indexes (DJSI) The Report on the Observance of Standards and Codes (ROSC) by World Bank confirms Thailand as a regional leader in corporate governance 3
Appendix: Foreign investor information center Follow the updates on the Thai economy and capital market developments on SET website. http://www.set.or.th/en/news/econ_mkt_dev/overview_p1.html 31
Appendix: Foreign investor information center 1 2 Detail of each PLC: price, financial ratio Stock Calendar of rights and benefits 3 Stocks in pipeline for IPOs in this year 1 2 3 4 5 6 4 5 6 Statistic on the number of listed companies and market capitalizations List of Index constituents in SET 1, SET5, FTSE SET index Opportunity Day: A day for PLC to communicate with Investors, Analysts on their recent business and operations. 32
Appendix: All Products 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 SET5 index futures Single stock futures Gold futures Interest rate futures Oil futures Currency futures Sector Index Futures SET5 index options Rubber futures Post-Trade Services Clearing & settlement Central Depository Securities registration Fixed Income Corporate bonds Government and state enterprises bonds SET Information Services SET listed companies & product information database 33
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