January 2010
Markets & Economic Overview
Thai equities recorded solid gains in December, led by local institutional buying. This was
despite negative sentiment over the court’s injunction order of industrial operations in Map
Ta Phut. Most major sectors rose, although the construction materials, petrochemicals and
property sectors lagged.
November data continued to indicate an improvement in economic activity. Exports grew
for the first time since October 2008, while higher demand for durable goods eased the
contraction in imports. Inflation rose for a second straight month but remained largely benign,
allowing the Bank of Thailand to keep the benchmark interest rate unchanged at a five-year
low of 1.25%. Government revenue exceeded its target for a second consecutive month,
suggesting continuing recovery in domestic demand during the fourth quarter. Meanwhile,
consumer confidence rose as the outlook for the economy and employment improved.
Portfolio news
There were no major changes to the portfolio in December.
In corporate news, the Supreme Court upheld the suspension of 65 industrial projects, including
investments by Siam Cement and PT Exploration and Production, which were halted earlier
because of pollution concerns. Nevertheless, the Court’s decision does not affect current
operations at Siam Cement’s new petrochemical complex, which are expected to commence in
the second quarter.
Strategy and outlook
The recent improvement in economic data has led the Bank of Thailand to forecast a smaller
contraction for full-year GDP, and for the economy to grow 3.3-5.3% in 2010, underpinned
by exports and government spending, particularly in view of the three-year 1.4 trillion baht
stimulus programme that involves transport, logistics, health and education projects. But
the suspension of investment projects in the Map Ta Phut area could weigh on foreign direct
investment and affect the economy this year. As such, much is dependent on the government’s
ability to establish clear investment rules to regain investor confidence in the nation.
Source: Monthly Factsheet Aberdeen Asset Managers Limited