Thailand is still considered a safe haven as the kingdom’s credit-default swap (CDS) rate is among the lowest in the world, said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.

One-year CDS is about 14 basis points, compared with UK CDS rate which is about 24 basis points. Brexit has caused investors to become increasingly risk averse, while Thailand becomes a destination for bond investors when there is fear, he added.

Meanwhile, Kasikorn Research Centre says that the rejection of May’s Brexit plan would have a short-term impact on the financial markets and uncertainty may lead to an economic slowdown in Britain that could affect Thailand’s exports.

However, economic ties between Thailand and Britain is not large. Thailand’s exports to Britain were only 1.7 per cent of total exports in 2017.

Kasikorn forecast that Thai exports to Britain would expand 1.8-2.1 per cent this year if Europe and Britain can resolve the Brexit issue in the first half of this year.

For China, last year’s export receipts in fact saw their strongest gains in seven years, rising 9.9 per cent from a year earlier.

The recent US-China truce agreement has put on hold the expected tariff increases until the end of February, giving time for both countries to negotiate a trade deal. The ongoing trade negotiation seemed to yield significant progress. According the US President Trump’s tweet, the mid-level talks in Beijing last week went “very well” and he thinks, “we are going to be able to do a deal with China”.

So is it time to sound the all-clear and put trade war worries behind us?

Not so fast. The strong export figures last year were driven partly by the so-called “front-loading” efforts, in which exporters brought forward shipments to avoid the upcoming tariff increase. Anecdotal evidence from manufacturers, cargo ships and warehouses suggests that companies in the US were front-loading their orders from China ahead of the additional 25 per cent tariffs, which were expected to become effective on January 1, 2019.

But the recent agreement in the US-China trade truce that put on hold the tariff increase has taken away that sense of urgency. As a result, exports from China saw a sharp 4.4 per cent drop in December last year, the weakest reading since December 2016. Exports to the US fell 3.5 per cent, while imports from the US slumped a huge 36 per cent.

Regardless of the outcome of the US-China trade negotiations, global trade is poised to slow down significantly in 2019.

Thailand, as a small and open economy that is deeply integrated into China’s supply chain, will inevitably bear the brunt of such a slowdown in global demand.

KOMSORN PRAKOBPHOL is head of the Tisco Economic Strategy Unit.

Adisorn V. Singhsacha, who started the Twin Pine Group, also highlighted Thai investors’ understanding and knowledge of financial markets. Twin Pine is an adviser for cross-border fundraising for companies based in the so-called CLMV countries – Cambodia, Laos, Malaysia and Vietnam.

Adisorn, who is chief executive of Twin Pine Group, said this knowledge of the financial markets among Thais enabled them to diversify their portfolios to cover instruments of various credit risk levels to yield investment returns.

“This is evident through the successful issuance of the THB bonds by the Ministry of Finance of the Lao PDR and the THB debentures by EDL-Generation Public Company (EDL-Gen), as well as the upcoming first cross-border debenture issuance by a Myanmar-based company in the Thai capital market,” he said.

With these factors, Adisorn expressed his confidence in Thailand’s ability to establish itself as the centre for capital raising in Asean. In addition to its strong economic potential and market liquidity, Thai regulators – including the Ministry of Finance, the Bank of Thailand and the Securities and Exchange Commission – have regulations in place to facilitate qualified CLMV-based companies to raise funds in the Thai capital market.

Furthermore, Thai investors’ knowledge of the markets is comparable to that of investors from countries with developed financial markets. Investors are able to select from a number of financial instruments such as sovereign bonds, corporate debentures and equities; this reflects their ability to accept varying credit risk levels and to diversify their portfolio to seek returns from different investment opportunities, Adisorn said.

“The ability for CLMV-based companies to raise funds in the Thai capital market will allow for further regional growth and development, as well as financial cooperation and partnership,” he said. “Moreover, given these countries’ long-standing trade relations with Thailand, the fundraising exercises are expected to yield mutual benefits for CLMV and Thailand as trading partners.”

Adisorn said that there is an increasing trend for companies to do their fund raising in Asean. The issuance of bonds in local currencies by companies in the region grew 7.9 per cent year on year for the first nine months of 2018 – moving from US$83.5 billion to US$90.09 billion. Issuance of Asean G3 bonds grew 15.4 per cent year on year in the same period, from US$36.34 billion to US$41.93 billion, he said.

Currency mismatch

“The challenge is that there is still a level of currency mismatch between issuer use of proceeds and capital raised. However, there are financial instruments such as currency swaps that can help to cover this risk,” said Adisorn, adding that the increase in cross-border trade within the Asean countries will continue to help reduce the mismatch.

“For Asean companies issuing in Thailand, the companies will still need to spend some time to familiarise investors with them.

“In recent years, the rules and regulation have made it easier for CLMV countries to do a cross-border bond issuance, especially in Thailand. CLMV companies have the opportunity to tap into different source of funding to support their growth and reduce their cost of funding.”

Kavin Hetrakul, managing director of Twin Pine Group, said the company has advised a number of issuers on fundraising transactions. Recent deals include the Lao Ministry of Finance’s issuance of baht-denominated bonds, which was well-received by Thai institutional and high-net-worth investors.

Similarly, the baht-denominated debentures issued by EDL-Gen were received favourably by Thai investors given the company’s stability, sound credit rating and attractive coupon. Both these deals reflect Thailand’s readiness to become the financial hub and the centre for capital raisings in the Asean region.

Twin Pine Group is the sole adviser to Yoma Strategic Holdings Ltd – a conglomerate based in Myanmar and listed on the Singapore Stock Exchange – in its upcoming baht debenture issuance in the Thai capital market. Over the past 10 years, Yoma has grown its business to cover real estate, automobile, food and beverages, and financial services.

The company maintains relationships with leading corporations and organisations such as Mitsubishi, Sumitomo, KFC, Telenor, the Asian Development Bank (ADB) and the International Finance Corporation (IFC). The proceeds from this fundraising exercise will be used to support the development of Yoma’s core businesses.

Yoma’s debentures will be guaranteed by the Credit Guarantee and Investment Facility (CGIF), a trust fund of the ADB, established by the Asean +3 countries to promote economic development, stability and resilience of financial markets in the region. This issuance will be the first CGIF guaranteed bond by a Myanmar-based issuer.

“Yoma’s debentures issuance marks the first time that a leading Myanmar company will access the Thai capital market to raise funds for its business expansion,” said Adisorn.

“This exemplifies Thailand’s ability and preparedness in becoming the centre of capital raising for Asean-based companies. Additionally, it highlights Twin Pine Group’s mission to provide Thai investors with opportunities to diversify their investments through various fundraising instruments from CLMV countries.”

Despite external shocks to trade and tourism, growth of the Thai economy is estimated to have accelerated last year to 4.1 per cent, the report says.

It proved to be resilient in the face of strong global headwinds due to strengthening domestic demand, stemming from an upswing in private consumption and private investment.

Investing in human capital and pursuing economic reforms is critically important for Thailand to become a high-income nation with equal opportunities for all citizens, the World Bank said.

Pathamawan Sathorn, managing director at Mindshare, says the total advertising spending in the country this year will grow to Bt124.2 billion, around 4.8 per cent above 2018.

Analog TV continues to lead in advertising at Bt37.5 billion, or about 30.2 per cent of revenue, followed by digital TV at Bt33.5 billion or 27 per cent, while Internet will reach Bt18 billion or 14.5 per cent, with outdoor advertising getting Bt7.5 billion or 6.0 per cent, and cinema valued at 7.32 billion or 5.9 per cent.

The advertising spending will decline this year in the magazine category, followed by newspaper and cable/satellite.

The firm believes that magazines will attract Bt1 billion in advertising, a decline of around 23.9 per cent from 2017. The adverting spending via cable/satellite will draw about Bt1.95 billion, a 14.9 per cent decline from last year. Meanwhile, newspaper advertising spending will hit around Bt5.2 billion, about a 14.7 per cent decline.

Pathamawan said the factors driving increased adverting spending come from the economic rebound as a whole, the country’s upcoming election and the government 4.0 scheme. The firm also sees a continuing increase in Internet advertising spending,

Moreover, the firm also expects this year’s top five advertising spendings by sectors are media and marketing, motor vehicles, non-alcoholic beverages, communications and skin-care preparations.

Pathamawan said that brands are shifting their marketing as they follow their customers to new media in order to maximise the effectiveness of marketing communications.

“Marketing communication needs to be adaptive as the media landscape that we used to be familiar with is changing. The explosion of streamed content and the time consumers spend on social media has created both opportunities and challenges for brands to reach their target consumers. Marketers also need to be experimental and find creative ways to make both the media and platform work most effectively to achieve a connection with consumers,” said the managing director.

The five key trends making impact on the 2019 advertising industry will be streaming content, followed by social networks, shoppable media, a new-tech reality check and appealing to advertising avoiders, she predicted. Streaming content will experience growth as digital video options continue across TV, desktop and mobile and now provide viable alternatives as large numbers of consumers switch to new media. This is giving access to millennial audiences that watch less linear TV.

Meanwhile, social networks are gaining critical mass, reaching levels at par with other media. The challenge is in increasing the quantity and quality of social network as a medium. Facebook, Line and Instagram are popular social media for Thai consumers.

Shoppable media force media to work harder and close the full consumer journey. All media can address this opportunity.

It is also time for a new-tech reality check, questioning the hype on all things tech. In the real world, the “smart home” and smart personal devices are outpacing augmented reality and virtual reality growth, for example.

Lastly, there is the challenge of appealing to advertising avoiders as consumers increasingly adopt ad-blocking technologies, and marketers need to find new ways to make the offer appealing.

Pathamawan added that the total advertising spendings last year was valued at Bt118.48 billion.

The top five advertisers last year were Unilever at Bt3.79 billion, followed by Lifestar at Bt2.54 billion, P&G at Bt2.45 billion, TV Direct at Bt2.08 billion and Toyota at Bt1.94 billion.