The total value of Thai exports fell below target last year amidst the ongoing US-China trade dispute, but still hit a record high at US$252.486 billion (Bt8.0 trillion).

Pimchanok Vonkorpon, director-general of Ministry of Commerce’s Trade Policy and Strategy Office, said that Thai exports rose 6.7 per cent in 2018, lower than the target of 8 per cent. He blamed the continuing US-China trade war, which has disrupted the global trade and slowed down several countries’ imports, along with technology changes in several countries including electronic products.

In addition, Thai shipments to most major markets have seen a slowdown.

In December 2018, Thai exports contracted 1.71 per cent over the previous year to $19.38 billion. That followed the previous month’s 0.95 per cent shrinkage year on year, due mainly to drop in the shipment of electronic products.

Thai shipments of computers and components contracted 16.9 per cent and those of printed circuit boards shrank 4.5 per cent in December last year, due to the retaliatory tariff actions of the United States and China.

Thailand and other countries around the world have felt the trade war since the latter half of 2018. In the last month of the year, Thailand saw a 0.5 per cent contraction in its shipments to major markets, along with lower shipments to the European Union (EU).

Thai shipments to China shrank as much as 7.3 per cent in the month. However, Thai shipments to Asean and South Asia continued to expand.

Thai imports last December shrank 8.2 per cent to $18.316 billion. As a result, Thailand had a trade surplus of $1.065 billion in the month.

For the whole of last year, Thai imports increased 12.5 per cent to $249.232 billion and the country had a trade surplus of $3.255 billion.

Pimchanok said that December’s export contraction came from a 6.6 per cent decrease in Thai shipments of agricultural and agro-industry products and a 0.8 per cent decline in those of manufacturing goods. The trade war also shed $239.8 million off Thai exports during the month.

Among Thai shipments of agricultural and agro-industry products, rubber plunged by 32.3 per cent, tapioca by 22.8 per cent, frozen and processed shrimp by 13.2 per cent, rice by 5.5 per cent and other foods by 3.3 per cent.

Electronic products led the fall in Thai shipments to other countries, slipping by 13.5 per cent, while motorcycles and components dropped by 4.4 per cent and electrical appliances decreased by 1.7 per cent.

For the whole of last year, the trade dispute hit Thai exports by $382.1 million. Thai shipments declined by 41.6 per cent, or $421.5 million, as a result of direct impacts from the US tariff increase, while shipments of Thai products, as parts of the supply chain to China dropped by 5.8 per cent or $438.6 million. However, Thailand in sales of replacement products to the US, with an advance of 9.6 per cent or $478 million in Thai shipments to the US. “We hope that [US-China] trade negotiations will help improve Thai exports in the second quarter [of this year],” Pimchanok said. “As well, there are the matters of the baht appreciation, economic and financial fluctuations in emerging countries as a result of several countries’ shift in monetary policy, and the high export base in some product groups.”

So far, exports have declined while manufacturing purchase managers’ index has either contracted or stalled in several countries, including China and some Asean nations.

We believe the US Fed will hold its benchmark rate at the first few monetary policy meetings scheduled for this year.

Other central banks will likely refrain from tightening in tandem with the Fed. Given the potential peaking of interest rates, we believe the REIT sector will perform well this year.

The REIT sector in Singapore offers a wide array of assets to investors, such as office, malls, hospitality, industrials and healthcare. These REITs invest in assets across the globe, including real estate in Singapore, Australia, Europe, US and China.

For investors seeking a diversified SG REIT portfolio, they may be interested in “NIKKOAM StraitsTrading Asia ex Japan REIT ETF”.

The ETF is listed on the Singapore Stock Exchange, comes with an annual management fee of 0.50 per cent and offers quarterly dividends. – Thanawat Patchimkul,Head of Research, |DBS Vickers Securities (Thailand)

Poll news welcomed

The SET Index moved in a narrow range of 1,565-1,594 points last week, due mainly to the worse-than-expected earnings of banks and non-performing loans of financial groups despite the return of foreign investors.

Brexit failed to pass the UK parliament in a vote last week but a new plan is expected to be announced today for a new vote on January 29. Global crude price stayed above US&50 per barrel, helping to support energy stocks.

Locally, a deputy prime minister aired his view on March 24 as the proper election date which came as a positive to Thai stocks.

For this week, resistance is set at 1,610 points, support at 1,575.

Investment strategy: We expect the Thai bourse will gain from the clearer picture of the national election. Foreign capital has started to return to Thai stocks and the SET Index has a chance to test the resistance at 1,600. We pick ORI (estimated high earnings results in FY2018, its price has plunged by over 40 per cent in the past three months) and hold AOT (expecting recovery in number of passengers), BTS and KKP – both were included in our picks last week. An ex-dividend was posted on BTS with dividend of Bt0.17 a share. We revised the cut-loss to Bt9.20.

This week’s pick

 ORI: Technical fair price at Bt7.45

– Tisco Securities

SIDEWAYS CLIMB

The SET Index is expected to move up sideways in view of improved signals from the US-China trade negotiations, rising crude prices and better direction of capital movement. Given the sideways market and low trade volume, the proper strategy this week is to limit turnover and wait for the SET Index to move in a certain way before making a move. The short-term resistance is set between 1,600-1,620 points (forward price to earnings at 14 times) and the major support is 1,560-1,580 points (no new low). Buy on weakness and sell in strength within the lines. Accumulate big caps with high dividend (PTT, SCC, ADVANC, BBL, KTB).

The Thai bourse has yet to see large capital inflows (year to date – Bt500 million), compared with other countries. Some investors have adopted a wait-and-see attitude, expecting the election results in March to steer the SET index in a certain direction.

In the first 1-3 months of this fiscal year, the market has moved sideways in a narrow range. Given the base case, we expect the election results and the new government will lead to increased certainty in the economic policy. – Research Department, Trinity Securities

The State Enterprise Policy Commission, in putting the brakes on the increase, has let passengers off the hook only temporarily. It has asked that Ministry of Transport officials have discussions with their peers in the Bangkok Mass Transit Authority (BMTA) on a more appropriate time for the fare increase.

The commission acted to suspend the fair increase at a meeting chaired by Prime Minister Prayut Chan-o-cha yesterday, an anonymous source from Government House said. The fare increase had been scheduled to take effect from January 21.

“Now is not the right time to raise bus fares as oil prices are not rising,” the source said. “Just when the right time is should be considered.”

Pantip Sripimol, an adviser for state enterprise development at the State Enterprise Policy Office (Sepo), said that officials from the ministry and the BMTA will discuss a more appropriate time for the fare increase. They will also discuss the extent of any future rise in fares. The outcome of their talks will be reported to the commission’s next meeting.

“The commission is concerned that the fare raise could affect people and thinks that the proper time for it could be in 2020,” Pantip said. “The related agencies must consider when should be the time for the rise and whether it will be one-time increase or something done gradually.”

In the meeting yesterday, the BMTA said that it had received 300 natural gas vehicle (NGV) buses on expectation to receive the remaining 189 NGV buses of an initial batch by March. It expected to receive all of the 3,000 NGV buses on order by 2022.

Away from transport, the commission said that Islamic Bank of Thailand has left the state-enterprise rehabilitation plan, thanks to its strong financial status and higher-than-expected 2018 operating profit at more than Bt500 million.

The bank aims to lend more, particularly in the five southernmost provinces, while expecting to see a clearer picture for its foreign partner to participate in joint investments.

“The commission viewed that the bank recorded profits as a result of improvements to its work system that solved its previous problems and helps enable future operational sustainability,” Pantip said.

“It thus decided to have the bank leave the group of state enterprises that participate in the rehabilitation plan to solve their problems. The Ministry of Finance has been assigned to take care of the bank as it operates its business as planned.”

In regard to other state enterprises in rehabilitation, the commission asked Thai Airways International Plc (THAI) to expedite its plan to sell retired aircraft and present more clearly how it will join forces with Thai Smile Airways Co Ltd and Nok Air Plc.

The source said that THAI may operate Thai Smile but could sell off Nok Air, which operates services in closer competition with those of Thai Smile and suffered losses. THAI holds a 21.8 per cent stake in Nok Air.

In other transport matters, the State Railway of Thailand was asked to present its plan to set up an asset management company at the commission’s next meeting, along with updates on the development of new and double-track railways this year.

In telecommunications, a merger between TOT Plc and Cat Telecom Plc has been completed. But legal disputes between the companies will be considered later. All the employees of both companies will be transferred to the merged company.

The merged company, which will begin its operations by June, will have five main businesses: infrastructure, international communication network, broadband and fixed line, mobile phone and digital services.

“The board will consider CP’s financial offer, focusing on the investment and return, to ensure the government can provide sufficient support to the private sector ,” said Worawut Mala, SRT’s acting governer yesterday.

The final criteria will become effective on December 31, 2019, according to a SEC press release yesterday.