Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Macroeconomics

<ul><li>The BoT faces direct pressure to expedite the easing of monetary policy due to the lower-than-potential Thai economic growth and requests from the private sector to mitigate risks associated with bad debts.</li><li>The Office of the National Economic and Social Development Council (NESDC) disclosed that Thai 4Q23 GDP came in at +1.7% YoY and -0.6% QoQ (vs. +1.4% YoY and +0.6% QoQ in 3Q23 and lower than the expected +2.5% YoY and +0.1% QoQ).</li><li>Krungthai COMPASS expects Thailand's 2024E GDP to grow by 2.7% YoY, showing moderate improvement but remaining weak.</li></ul>

The BoT faces direct pressure to expedite the easing of monetary policy due to the lower-than-potential Thai economic growth and requests from the private sector to mitigate risks associated with bad debts.The Office of the National Economic and Social Development Council (NESDC) disclosed that Thai 4Q23 GDP came in at +1.7% YoY and -0.6% QoQ (vs. +1.4% YoY and +0.6% QoQ in 3Q23 and lower than the expected +2.5% YoY and +0.1% QoQ).Krungthai COMPASS expects Thailand's 2024E GDP to grow by 2.7% YoY, showing moderate improvement but remaining weak.

Cross Asset Strategy

<ul><li>Technically, the SET Index is expected to move sideways, with the support at 1,385 points (10-day EMA)/1,379 points and the resistance at 1,396 points (50-day EMA)/1,400 points, after it was unable to create a higher high and higher low pattern in the last few days and instead formed a lower low pattern.</li><li>MSCI will announce newly added and removed stocks today (i.e., Tuesday morning Thai local time), which will have an impact on closing prices on February 29, 2024.</li><li>Consumers still anticipate 12M forward inflation to decline but remain higher than the Fed's target of 2%, suggesting a diminishing likelihood of the Fed cutting interest rates in the meeting in March.</li></ul>

Technically, the SET Index is expected to move sideways, with the support at 1,385 points (10-day EMA)/1,379 points and the resistance at 1,396 points (50-day EMA)/1,400 points, after it was unable to create a higher high and higher low pattern in the last few days and instead formed a lower low pattern.MSCI will announce newly added and removed stocks today (i.e., Tuesday morning Thai local time), which will have an impact on closing prices on February 29, 2024.Consumers still anticipate 12M forward inflation to decline but remain higher than the Fed's target of 2%, suggesting a diminishing likelihood of the Fed cutting interest rates in the meeting in March.

Wait for MSCI Rebalancing and US Inflation Tomorrow

Thematic (Sector/Industry)

<ul><li>The MPC's softer outlook for 2024E GDP growth, now projected within the range of 2.5-3.0%, will provide more leeway for the committee to maintain the policy interest rate above inflation, thereby ensuring a positive real interest rate.</li><li>Considering i) the current real interest rate at 3.6% (Thai policy rate at 2.5%, CPI at -1.1% YoY), the highest in 32 months and higher than the US real interest rate at 2.1% (US policy rate at 5.5% and CPI at +3.4% YoY); ii) the uncertain outlook for the Digital Wallet scheme, which may prevent Thai GDP growth in 2024E from reaching its full potential level; and iii) the divided vote (five to two) in the most recent meeting, there is a possibility that the MPC may reduce the policy interest rate in the future to stimulate the economy and bring economic growth back to its potential level.</li><li>This scenario would be positive for high dividend plays (BCP, PTT, TOP, WHAUP, SABINA and ADVANC) and the finance sector (SAWAD, MTC and TIDLOR) (Figure 9).</li></ul>

The MPC's softer outlook for 2024E GDP growth, now projected within the range of 2.5-3.0%, will provide more leeway for the committee to maintain the policy interest rate above inflation, thereby ensuring a positive real interest rate.Considering i) the current real interest rate at 3.6% (Thai policy rate at 2.5%, CPI at -1.1% YoY), the highest in 32 months and higher than the US real interest rate at 2.1% (US policy rate at 5.5% and CPI at +3.4% YoY); ii) the uncertain outlook for the Digital Wallet scheme, which may prevent Thai GDP growth in 2024E from reaching its full potential level; and iii) the divided vote (five to two) in the most recent meeting, there is a possibility that the MPC may reduce the policy interest rate in the future to stimulate the economy and bring economic growth back to its potential level.This scenario would be positive for high dividend plays (BCP, PTT, TOP, WHAUP, SABINA and ADVANC) and the finance sector (SAWAD, MTC and TIDLOR) (Figure 9).

Economic Update: MPC Holds Policy Interest Rate at 2.5%

<ul><li>As a result of continued negative inflation, the Fiscal Policy Office became the first to lower this year's inflation forecast to +1%, which is the lower bound of the MPC's +1-3% inflation target.</li><li>The Ministry of Commerce (MoC) revealed that Thailand's Consumer Price Index for January 2024 stood at 106.98 (January 2023 = 108.18).</li><li>Headline inflation in February 2024E is likely to continue its decline thanks to: measures aimed at curbing energy costs, such as capping electricity tariffs at not exceeding Bt3.99/unit for households using electricity not exceeding 300 units/month and imposing a cap on the diesel price at not exceeding Bt30/liter until April 19, 2024; and the diminishing impact of the El Niño phenomenon.</li></ul>

As a result of continued negative inflation, the Fiscal Policy Office became the first to lower this year's inflation forecast to +1%, which is the lower bound of the MPC's +1-3% inflation target.The Ministry of Commerce (MoC) revealed that Thailand's Consumer Price Index for January 2024 stood at 106.98 (January 2023 = 108.18).Headline inflation in February 2024E is likely to continue its decline thanks to: measures aimed at curbing energy costs, such as capping electricity tariffs at not exceeding Bt3.99/unit for households using electricity not exceeding 300 units/month and imposing a cap on the diesel price at not exceeding Bt30/liter until April 19, 2024; and the diminishing impact of the El Niño phenomenon.

Economic Update: Disinflation to Continue in 1Q24E

<ul><li>Despite the surrounding factors urging the MPC to reduce its policy interest rate, the committee's decision-making seems anchored in an outlook-dependent approach.</li><li>Consequently, KTX views that the MPC may be inclined to resist cutting the policy interest rate, contrary to market expectations, until there is more clarity regarding the Digital Wallet scheme.</li><li>This positive development may influence the MPC to maintain the policy interest rate at 2.5% throughout 2024E, preserving policy space in case of a potential economic slowdown.</li></ul>

Despite the surrounding factors urging the MPC to reduce its policy interest rate, the committee's decision-making seems anchored in an outlook-dependent approach.Consequently, KTX views that the MPC may be inclined to resist cutting the policy interest rate, contrary to market expectations, until there is more clarity regarding the Digital Wallet scheme.This positive development may influence the MPC to maintain the policy interest rate at 2.5% throughout 2024E, preserving policy space in case of a potential economic slowdown.

MPC May Maintain Policy Interest Rate Pending Clarity Concerning Digital Wallet Scheme

Thailand

WHA Utilities and Power provides integrated utility products and services, including comprehensive water and wastewater management solutions. They also offer diversified power generation and distribution, with a strong focus on renewable energy and smart power solutions for the industrial sector. The company is headquartered in Samutprakarn, Thailand, and was established on June 30, 2008.

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WHA Utilities and Power (WHAUP TB)

Thai 4Q23 GDP Contracted 0.6% QoQ

The BoT faces direct pressure to expedite the easing of monetary policy due to the lower-than-potential Thai economic growth and requests from the...

Krungthai XSpring

Wait for MSCI Rebalancing and US Inflation Tomorrow

Technically, the SET Index is expected to move sideways, with the support at 1,385 points (10-day EMA)/1,379 points and the resistance at 1,396...

Krungthai XSpring

Economic Update: MPC Holds Policy Interest Rate at 2.5%

This scenario would be positive for high dividend plays (BCP, PTT, TOP, WHAUP, SABINA and ADVANC) and the finance sector (SAWAD, MTC and TIDLOR)

Krungthai XSpring

Economic Update: Disinflation to Continue in 1Q24E

As a result of continued negative inflation, the Fiscal Policy Office became the first to lower this year's inflation forecast to +1%, which is...

Krungthai XSpring

MPC May Maintain Policy Interest Rate Pending Clarity Concerning Digital Wallet Scheme

Despite the surrounding factors urging the MPC to reduce its policy interest rate, the committee's decision-making seems anchored in an...

Krungthai XSpring

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