June 2009
Markets & Economic Overview
The SET Index rose sharply in May, on hopes that the global recession may be abating and
political tensions receding. But economic data continued to deteriorate: first-quarter GDP
shrank 7.1% year-on-year, April exports recorded their sixth straight monthly decline, while
imports shrank as well. At the same time, consumer confidence fell to its lowest level in more
than seven years. Although May consumer prices continued to ease for the fifth straight month,
the central bank unexpectedly kept interest rates unchanged. Meanwhile, the government
unveiled a four-year 1.4-trillion baht investment plan, comprising infrastructure, energy, health
and education projects, to boost the economy and create jobs.
In politics, the informal pro-establishment movement, People’s Alliance for Democracy, decided
to form a new political party.
Portfolio news
There were no major changes to the portfolio during the month.
In corporate news, Moody’s Investors Service placed 11 Thai banks’ debt and deposit ratings on
review for a possible downgrade, on concerns about the government’s ability to support the
banking system. The list included two of our bank holdings, Kasikornbank and Siam Commercial
Bank. Meanwhile, most of our holdings reported generally weaker first-quarter results.
Strategy and outlook
Although the domestic market has rallied in recent months, we remain cautious because of
the mixed prospects for the economy. The government has predicted that the unemployment
rate may double this year, as exports continue to fall and investment remains stagnant. As well,
considerable uncertainty exists over the government’s staying power and credibility, which
may hinge on the implementation of its massive infrastructure programme. The central bank,
however, appears confident that there is adequate liquidity available locally to finance new
borrowing. Despite the headwinds, our holdings’ superior management and healthy balance
sheets should see them emerge stronger from the downturn eventually.
Source: Monthly Factsheet Aberdeen Asset Managers Limited