The details of the measures are as follows.

1) Enhance “Measures to Prevent Thai Baht Speculation” by reducing the limit on the outstanding balance of Non-resident Baht Account (NRBA) and Non-resident Baht Account for Securities (NRBS) from Bt300 million per non-resident to Bt200 million per non-resident with effect from July 22. For NRBA and/or NRBS with outstanding balances at the end of the day higher than Bt200 million per non-resident, financial institutions are required to notify the corresponding non-resident account holders to comply with these changes by reducing the outstanding balances within the effective date.

NRBA holders who are non-financial corporates with underlying trade and investment in Thailand, and have opened accounts directly with Thai financial institutions, may submit requests to the BOT for waivers of this outstanding balance limit, which will be considered on a case-by-case basis.

2) Enhance the reporting requirements for non-residents’ holdings of debt securities issued in Thailand where the names of end beneficiaries shall be reported for all non-residents’ holdings of Thai debt securities. This measure will help enhance the BOT’s surveillance of non-residents’ investment behaviours and will come into effect as of the July 2019 reporting period.

The BOT will continue to closely monitor the Thai baht movements as well as non-resident behaviours, and stand ready to use additional measures if undesirable speculative behaviours persist.

Vachira added that the measures address the heightened volatility in global financial market due to various factors, such as trade tensions between the US and major trading partners, the global economic slowdown, and the shift towards a more accommodative monetary policy stance amongst major central banks. These developments have increasingly led capital flows to return to Emerging Market Economies.

With a relatively more positive outlook on the Thai baht, investors have increased their positions in Thai baht and Thai securities, in part for short-term speculative purposes.

The Bank of Thailand (BOT) has been closely monitoring the Thai baht as well as non-residents’ capital flow movements, and is concerned about the rapid appreciation of the Thai baht relative to its regional peers, as it could lead to unfavorable macroeconomic repercussions.

The trade battle between the US and China as well as geopolitical tensions are undermining confidence and economic momentum across the globe. This has prompted the US Federal Reserve and the European Central Bank to take a more dovish stance, leading to financing conditions that remain broadly supportive for banks worldwide. That said, “low for longer” interest rates and increasing competition from non-bank players, including fintechs, are putting more pressure on bank profitability and business models.

“The low for longer monetary policy is creating a headache for banks, at a time when the profitability of many is already strained and new forms of competition are emerging,” said S&P Global Ratings credit analyst Emmanuel Volland in the report “Global Banks Midyear 2019 Outlook: Low For Longer And Digital Prompt Further Rethink”.

Credit conditions remain supportive for banks going into third-quarter 2019, even if trade and geopolitical tensions are undermining confidence and economic momentum.

The Fed’s and ECB’s responses to counter the slowdown are positive for banks’ funding conditions but continue to call into question their business models given that interest margins will remain low for longer. The pressure on profitability is higher in Europe and Japan.

The vast majority of outlooks on banks is stable globally, and the bias has become less positive in Europe.

Credit losses have likely bottomed out in many countries, while capitalisation is unlikely to improve further.

The steady push to make systemic banks resolvable continues, through a variety of approaches across the world.

Technology is disrupting retail banking across the globe. Banks’ ability to respond will depend on their digital readiness, the report said.

The analysts gave an overweight rating to equities in emerging markets, particularly China due to the lower prices and the country’s stable economy.

Boonnisead Thanyaworanan, Citibank Thailand’s investment consultant, said the bank expects global earnings per share (EPS) to grow by 4 per cent in 2019, slightly below the consensus estimate of 5 per cent, due to different fiscal policies in each region, political uncertainties, and trade tensions between the world’s two largest economies.

The markets will be looking at the EPS prospects next year, where current consensus on global growth stands at 11 per cent.

He said Citi preferred emerging market equities, mainly due to cheaper prices than their counterparts in developed markets.

The MSCI regional trailing price-to-earnings (P/E) ratio shows that emerging market P/E was 13.5 times on average compared to 18 times in the United States while long-run median emerging markets’ P/E has climbed to 19 times.

“EM [emerging market] equities are a lot cheaper than developed market equities. EM trailing P/E is a lot lower than its long-term average while the trailing P/E in the US is somewhat higher than its long-term average,” he said.

A-shares of Chinese firms that largely depend on the domestic market are particularly attractive given their lower prices. Focus should be on consumer goods sold in the Chinese market, products that would not be adversely affected in the event of the US further raising tariffs on Chinese products, Boonnisead said, adding that companies that could sell premium products in China are competitive and have room to grow.

Equity prices in Taiwan and South Korea are above those in China but still relatively cheaper than other emerging markets, while Vietnam stocks are suitable for very long-term investment as their prices tend to be highly volatile in the short term.

The Stock Exchange of Thailand Index would rise should the US Federal Reserve cut its policy rate this month, leading to increased capital inflows, he said.

Investors should hold multi-assets in their portfolio including investment-grade bonds. The bank has been advising clients to invest in US investment grade bonds since early this year and they have enjoyed returns. Bond holders would benefit from a cut in the US rate, he said.

The Fed will likely cut its policy rate by 25 basis points this month to avert the risk of an economic slowdown. Bond holders would be the first to gain from a lower rate given the stable returns, he said. Selective US stocks are also recommended as their prices could rise further.

Meanwhile, Citibank Thailand economist Nalin Chatchotitham said the global economic growth was expected to slow down slightly to 2.9 per cent this year, from 3.2 per cent in 2018 while inflation would dip from 2.7 per cent in 2018 to 2.4 per cent.

“We expect the Thai economy to grow by 3.3 per cent, subject to downside risk. The forming of the new Cabinet on Wednesday has made Thai politics clearer and the market will respond positively to it. But any rise in the SET Index would depend on how the government implements policies. We remain worried about a delay in public spending as it would weigh down the economy,” she said.

“Decline in exports is the biggest threat for the Thai economy,” she added.

Research houses have predicted zero growth or a slight contraction for Thai shipments this year while the Commerce Ministry has revised down its export growth target to 3 per cent from the previous estimate of 8 per cent.

In the first five months of this year, Thai exports dropped by 3 per cent compared to the same period last year, contracting in value by more than US$4 billion (Bt122.5 billion). Thailand’s economic institutions have started predicting that Thai exports will drop by around 1 per cent in 2019, compared to last year’s 6.9 per cent year-on-year growth. The Joint Standing Committee on Commerce, Industry, and Banking forecast a 1 per cent contraction recently, while Siam Commercial Bank’s Economic Intelligence Centre (EIC) estimated a 1.6 per cent decline.

In order to deal with this, private sector representatives suggested that the new government use a two-pronged approach to stimulate export growth.

“In the short and medium-term, the new government can work more closely with the private sector to ensure the FTA privileges are being utilised,” said Yunyong Thaicharoen, first executive vice president and head of the EIC.

In 2018, only 58.4 per cent of Thailand’s exports to China enjoyed FTA privileges, the Commerce Ministry said. However, from January to May this year, Thai exports to China dropped by 8.7 per cent year-on-year, reducing in value by more than $1 billion, data from the Customs Department shows.

“There are many exporters in the agriculture sector who are not aware of their FTA privileges when exporting to China. They may also not possess the knowledge on regulatory standards, intellectual property licensing and effective strategies,” said Auramon Supthaweethum, director-general of the Department of Trade Negotiations (DTN) under the Commerce Ministry.

Hence, Yunyong said, promoting the use of FTA privileges can go a long way in supporting Thai exports. However, the incoming government should continue seeking new export markets and negotiating more FTAs to support the country’s export growth prospects in the long term, he added. For instance, he said, the new government could focus on completing negotiations for the Regional Comprehensive Economic Partnership (RCEP) as soon as possible.

Prime Minister General Prayut Chan-o-cha said during the Asean Summit in June that as chair of the grouping, Thailand can be confident of completing the RCEP negotiations by the end of this year.

The mega-trade deal, which will link up the 10 Asean members and China, India, Japan, South Korea, Australia and New Zealand, has been stuck at the negotiating stage for the past seven years. Once completed, it will be the largest multilateral trade deal in history, accounting for a third of the world trade.

Thailand will benefit from lower tariffs from the 16 RCEP signatories, as it already exports 57 per cent of its goods to them. Goods exported to the 16 countries was valued at over $58 billion in the first five months of 2019.

The ASW is also on Thailand’s economic agenda this year. The regional single window aims to integrate the single-window systems of Asean countries in order to expedite cargo clearance and boost cross-border trade by enabling an electronic exchange of trade-related documents.

The new government should continue developing the ASW to improve the flow of goods within the region and boost the ease of doing business for exporters, said Kalin Sarasin, chair of the Board of Trade of Thailand.

Five Asean countries – Thailand, Vietnam, Singapore, Malaysia and Indonesia – launched the ASW in 2018, with Thailand being given the task of developing an ASW system for Cambodia, the Philippines, Brunei, Laos and Myanmar this year.

Cambodia, Philippines and Brunei have been testing the ASW option since the beginning of 2019, while Brunei recently confirmed that it can adopt the system fully, bringing the number of Asean members already using the single-window clearance system to six, DTN’s Auramon said.

The new government should also consider seeking an FTA with the European Union (EU), advised Aat Pisanwanich, director of the University of the Thai Chamber of Commerce’s Centre for International Trade Studies (CITS).

Exports to the EU account for up to 10 per cent of Thailand’s total export, though the amount has been declining at an alarming rate as Vietnam, a key competitor, has already established an FTA with the EU, he said.

Thai exports to the EU in the first five months of this year dropped by 6.9 per cent year-on-year to around $700 million and Thai-EU trade will continue declining if the Kingdom fails to swiftly negotiate a trade deal with the European bloc, Aat warned.

Vietnam’s goods that are in direct competition with Thailand, like electrical appliances, rice and fruit, will become even more competitive due to lower tariffs once the Vietnam-EU FTA is activated, Aat said. This, he added, will further reduce Thailand’s market share in the EU leading to long-term negative impacts on Thai exports.

A study conducted by the CITS suggests that once the Vietnam-EU FTA kicks in, Vietnam’s exports to the EU will rise from $50 billion per year to Bt70 billion, and reduce Thai exports by $20 billion in the second quarter of 2019 and by $40 billion in the next two years.

Meanwhile, Supant Mongkolsuthree, chair of the Thai Federation of Industries, said the new government also needs to actively support the agricultural sector.

He pointed out that the agricultural sector has been struggling on both domestic and international fronts. The price of agricultural goods has remained low locally, and those within the grassroots economy have been struggling financially due to this. Meanwhile, the export of agricultural goods has also been performing poorly due to a stronger Thai baht, which has increased the price of agricultural goods from Thailand compared to those from its competitors like Vietnam.

“We expect the new government’s agriculture-related policies to vary from controlling prices by limiting exports to offering soft loans for producers to produce less and offering price guarantees on agricultural goods,” said Mana Nimitvanich, first vice president of Krungthai Bank’s Global Business Development and Strategy Group. “While these policies are unhealthy for the economy in the long-run as they interfere with the market mechanism, they may be necessary to boost the income of those in the agricultural sector in the short-term.”

He also suggested that new government work on boosting the productivity of the agricultural sector by leveraging new technology in the long-run.

The Commerce Ministry, meanwhile, has prepared an agenda for the incoming minister to consider, such as stabilising the price of agricultural goods like rubber, cassava and rice, said Boonyarit Kalayanamit, permanent secretary of the Commerce Ministry.

Other policies the incoming commerce minister has to review include stimulating spending in the grassroots economy through the use of welfare cars and coping with the impact of the US-China trade row by negotiating more trade deals. The new minister will also have to consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Deputy Commerce Minister Weeresak Wangsupakitkosol, however, said he still doesn’t know when his official tenure begins.

The July edition of PwC’s Global Economy Watch said US imports from China fell by around 15 per cent year on year in the first quarter of 2019. This fall had, however, created opportunities for its regional trading partners, with imports to the US from a group of eight other Asian economies – Bangladesh, India, Indonesia, Malaysia, South Korea, Taiwan, Thailand and Vietnam – growing by more than 16 per cent.

Mike Jakeman, senior economist at PwC UK, says: “Economics can sometimes lag behind politics but we are now seeing hard economic data of the impact of US-China tensions.

“This has benefited other economies in the region and if this trend continues it will contribute to faster economic growth in Vietnam, South Korea and Taiwan in particular.

“Yet if your goal is to primarily tackle trade imbalances, then bilateral tariffs are an imperfect tool – import substitution can simply recreate the problem elsewhere.

“So, as a result of Vietnam becoming more competitive than China, the US’s trade deficit with Vietnam stood at $13.5bn in the first quarter, compared to $9.3bn in the same quarter a year ago.”

The July edition of Global Economy Watch also evaluates concerns about the risk of another global recession, as trade tensions impact on business sentiment and demand for exports.

Certainly, the outlook for the world’s biggest economies is less bright than it was 18 months ago.

In early 2018 the global economy witnessed the fastest and most synchronised growth since before the global financial crisis but since then, the deepening of the trade conflict between the US and China, a series of stumbles in Europe and further struggles in slow-growing emerging markets have transformed sentiment among businesses and policymakers, Jakeman added.

“However, slower growth in 2019 in each of the crucial markets of the US, China and the Eurozone is to be expected.

“The US benefited from a one-off tax cut in 2018. The Chinese government continues to cool its economy very gradually, while the Eurozone is correcting after a couple of years of above-trend growth in 2016-17. That these three economies have cooled simultaneously has been alarming but fundamentals remain strong,” Jakeman said.

The Thai benchmark index shared in the gains of stock markets across the region. Hong Kong’s Hang Seng Index closed the morning session at 28,539.74, up 335.05 points – or 1.19 per cent – from Wednesday. Tokyo’s Nikkei index began the lunch break at 21,609.08 points, up 75.6 points for a gain of 0.35 per cent from Wednesday. Singapore’s

Straits Times finished the morning session at 3,353.81 points, up 13.39 points – or 0.4 per cent – from the previous day.

The gains in Asia were attributed to the reports that US Federal Reserve, under chief Jerome Powell, is likely to cut the benchmark interest when it meets at the end of this month.

The reports have caused the US dollar to weaken, which in turn has strengthened the baht and equity markets in Asia.

The gold futures price is also rising. KGI Securities (Thailand) Plc said on Thursday it believes this will reach US$1,415.40 per ounce in August.

“I have confidence we can manage the country’s economy under the coalition government to boost its growth to 3.5 per cent, after the World Bank revised down [its forecast for] Thailand’s economic growth from 3.8 per cent to [instead] 3.5 per cent in this year,” Somkid said.

He added that the coalition government will work together to drive the country’s economic growth for the rest of this year during a period of a declining global economy. Thailand’s economy has to be driven by domestic actions such as investments in infrastructure projects and a boost to domestic consumption.

“We have already discussed this with the new Transport Minister from Bhumjaithai Party, who wanted to speed up investment to develop the country’s infrastructure in order to boost the country’s economy in the rest of this year,” he said.

Meanwhile, Somkid said, he had also held talks with the new Finance Minister over launching, perhaps soon, a stimulus package to boost domestic spending by focusing on lower-income people.

“The Finance Ministry has a sufficient budget to boost domestic consumption for the rest of this year,” he said.

Somkid said if the plan was implemented, he was confident it would boost the country’s economy for the remainder of 2019 and perhaps drive economic growth above 3.5 per cent.

Thanawat Polvichai, o the Centre for Economic and Business Forecasting Director at UTTC, expects Thailand’s economy in 2019 to grow up by 3.5 per cent with 2.9-3 per cent GDP growth in the first half and 3-4 per cent in the second half, depending on the policy to be announced by the new government next month.

To secure 3.5-4 per cent GDP growth, the government will need to boost the economy in five key areas: 1) Boost budget spending by Bt50 billion or 100 billion, which will push the GDP growth by 0.2-0.3 per cent and 0.5-0.7 per cent respectively; 2) Guarantee prices for major crops to raise farmers’ income and purchasing power; 3) Provide financial subsidies to the grassroots level and local citizens by organising seminars and activities in rural areas and raising the financial amount of state welfare cards; 4) Bring the baht down to Bt31 per US dollar, as a strong baht adversely affects SMEs and the private sectors; and 5) Promote investment in the Eastern Economic Corridor (EEC) and finalise the EEC city plan to attract foreign investors.

“Apart from introducing policies that will boost the economy, the new government must implement tangible policies for both the public and private sectors, such as cannabis legalisation, boosting farmers’ income and tax and customs measures to help private entrepreneurs,” he said.