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  • ADB Trims Southeast Asia’s growth forecast to 4.4%

    Southeast Asia’s growth forecast is revised down slightly to 4.4% for 2019, as economic weakening in Singapore and Thailand prompts downward adjustments to their growth forecasts

    The post ADB Trims Southeast Asia’s growth forecast to 4.4% appeared first on Thailand Business News.

     The Asian Development Bank (ADB) has trimmed its forecasts for economic growth in developing Asia this year and next year as growth in the People’s Republic of China (PRC) and India is weighed down by both external and domestic factors.

    In a supplement to its Asian Development Outlook 2019 Update released in September, ADB now expects gross domestic product (GDP) in the region to expand 5.2% in both 2019 and 2020, down from the September forecast of 5.4% growth this year and 5.5% next year.

    Southeast Asia’s growth forecast is revised down slightly to 4.4% for 2019, as economic weakening in Singapore and Thailand prompts downward adjustments to their growth forecasts. Projected subregional growth in 2020 is maintained at 4.7%.

    Thailand’s economy expanded by only 2.5% in January– September this year as growth moderated for private consumption and for public consumption and investment. Weaker trade also dragged on growth, with export declines in both agriculture and manufacturing. Imports similarly declined in line with weaker domestic demand. The growth forecast for 2019 is adjusted down from 3.0% in the Update to 2.6%, and the growth forecast for 2020 is adjusted down from 3.2% to 3.0%.

    “While growth rates are still solid in developing Asia, persistent trade tensions have taken a toll on the region and are still the biggest risk to the longer-term economic outlook. Domestic investment is also weakening in many countries, as business sentiment has declined”

    ADB Chief Economist Mr. Yasuyuki Sawada

    “Inflation, on the other hand, is ticking up on the back of higher food prices, as African swine fever has raised pork prices significantly.” said ADB Chief Economist Mr. Yasuyuki Sawada

    Highlights

    • Growth forecasts for East Asia are downgraded to 5.4% in 2019 and 5.2% in 2020 as the People’s Republic of China and the Republic of Korea endure continuing trade tensions and slowing domestic investment—as does Hong Kong, China, where political unrest is another factor.
    • Growth projections for South Asia are lowered to 5.1% in 2019 and 6.1% in 2020. Growth in India is expected to slow to 5.1% in 2019 as the foundering of a major nonbanking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch. Also, consumption was affected by slow job growth and rural distress aggravated by poor harvest. Policy support will help growth recover to 6.5% in 2020.
    • Southeast Asia’s growth forecast is revised down slightly to 4.4% for 2019, as economic weakening in Singapore and Thailand prompts downward adjustments to their growth forecasts. Projected subregional growth in 2020 is maintained at 4.7%.

    The supplement forecasts inflation of 2.8% in 2019 and 3.1% in 2020, up from the September prediction that prices would rise 2.7% this year and next.

    In East Asia, growth in the PRC is now expected at 6.1% this year and 5.8% next year due to trade tensions and a slowdown in global activity coupled with weaker domestic demand, with family wallets being hit by pork prices that have doubled relative to a year ago.

    Growth could accelerate, however, should the United States and the PRC come to an agreement on trade, the report says. In September, ADB forecast GDP growth of 6.2% in 2019 and 6.0% in 2020.

    Hong Kong, China, already in technical recession, will see severe downward pressures persist possibly into 2020. The economy is now expected to contract 1.2% this year and grow 0.3% next year.

    In South Asia, India’s growth is now seen at a slower 5.1% in fiscal year 2019 as the foundering of a major nonbanking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch.

    Also, consumption was affected by slow job growth and rural distress aggravated by a poor harvest. Growth should pick up to 6.5% in fiscal year 2020 with supportive policies. In September, ADB forecast India’s GDP to grow 6.5% in 2019 and 7.2% in 2020.

    In Southeast Asia, many countries are seeing continued export declines and weaker investment, and growth forecasts have been downgraded for Singapore and Thailand. GDP growth is expected to slow in the Pacific with activity in Fiji, the subregion’s second largest economy after Papua New Guinea, expected to be more subdued than previously anticipated.

    Central Asia is the only subregion where prospects look a little brighter now than in September, largely thanks to increased public spending in Kazakhstan, the region’s largest economy. Central Asia is now forecast to grow 4.6% in 2019, up from the previous prediction for expansion of 4.4%.  The forecast for 2020 is for growth of 4.5%. Kazakhstan’s economy is seen expanding by 4.1% this year and 3.8% next year.

    ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.

    The post ADB Trims Southeast Asia’s growth forecast to 4.4% appeared first on Thailand Business News.

    11 December 2019
    Economics
    https://www.thailand-business-news.com/?p=77266
  • Bangkok enters top 50 most expensive locations for expatriates

    Rising by 43 places, Bangkok has entered the top 50 most expensive locations in the world for expatriates for the first time, coming in at 47th place

    The post Bangkok enters top 50 most expensive locations for expatriates appeared first on Thailand Business News.

     Thai cities continue to be among the biggest risers in the Cost of Living rankings, with Bangkok rising 43 places and entering the top 50 most expensive locations for the first time, at 47th place.

    This was one of the findings of the latest Cost of Living survey published by ECA International, the world’s leading provider of knowledge, information and software for the management and assignment of employees around the world.

    Bangkok, long seen as a cheap destination for holidaymakers and expatriates alike, has seen a huge jump in its rankings, moving the most out of all Asian cities surveyed.

    Lee Quane, Regional Director – Asia for ECA International 

    This is largely the result of a strong Thai baht. We have seen Thai cities moving significantly up the rankings over the past few years – Bangkok has moved up 75 places in the last two years alone while Chiang Mai moved up 56 places in the same period.”

    ECA International has been conducting research into the cost of living for more than 45 years. It carries out two main surveys per year to help companies calculate cost of living allowances so that their employees’ spending power is protected while on international assignment.

    The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 480 locations worldwide. Certain living costs, such as accommodation rental, utilities, car purchases and school fees are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA’s cost of living basket.

    The post Bangkok enters top 50 most expensive locations for expatriates appeared first on Thailand Business News.

    10 December 2019
    Lifestyle
    https://www.thailand-business-news.com/?p=77248
  • Bangkok drops to 20th spot on expat-friendly cities ranking

    Bangkok experienced a significant drop in 2019 compared to the 2018 edition of the list, where Thailand's capital ranked 5th worldwide and 4th in Asia.

    The post Bangkok drops to 20th spot on expat-friendly cities ranking appeared first on Thailand Business News.

    Asian cities dominate the global top 5 in the Expat City Ranking 2019, while Italian cities Rome and Milan join Kuwait City at the bottom of the scale.

    Bangkok experienced a significant drop compared to the 2018 edition of the list, where Thailand’s capital ranked 5th worldwide and 4th in Asia. Poor environmental management and horrendous traffic conditions eventually took a toll on Bangkok ratings.

    Bangkok now faces fierce competition in Asia, with Taipei, Kuala Lumpur and Ho Chi Minh City taking the lead.

    • #1 Taipei manages to defend its first place from 2018.
    • #2 Kuala Lumpur is rated the best city for getting settled.
    • #3 Ho Chi Minh City ranks first in the Finance & Housing Index.
    • #4 Following Singapore (#4) and Montréal (#5), European cities make up the rest of the top 10.

    Ranking fifth out of all the cities surveyed in Asia, Bangkok ranks third in the Finance and Housing Index, but the city ranking was shot down by poor scores for environmental quality and political stability.

    Some 59% of respondents say the environment is poor in Bangkok (vs 17% globally), and 36% worry about political stability (vs 17% globally).

    Singapore’s fourth place further adds to Asian destinations dominating the Expat City Ranking 2019. The four top cities all do very well regarding finance and housing, with Singapore receiving the “worst” result here, a 15th rank mostly due to the expensive housing in the city-state: 53% of expats rate this factor negatively (vs. 44% globally). All four Asian cities rank among the top 20 of the Getting Settled Index, though results in the Urban Work Life Index and especially the Quality of Urban Living Index vary greatly.

    Expat Insider 2019 survey, best and worst cities.

    Bangkok A Relatively Affordable Capital

    Bangkok, the Thai capital, stays in the top 3 in the Finance & Housing Index for another year running. Although the city has dropped from second place in 2018 to third place in 2019, the feedback from expats is still positive.

    With regards to how easy it is to find housing in Bangkok, 80% of respondents give agreeable answers, and 35% even completely agree (vs. 50% and 17% globally). The ease of finding a new, reasonably priced home appears to be an attractive aspect for expats moving to Bangkok; 58% of respondents find that the housing in the city is affordable (vs. 36% globally).

    For the local cost of living in general, 63% of respondents rate Bangkok positively, which is 20 percentage points higher than the global average (43%). An expat in Bangkok praises the city for having a “much lower expense comparing to the same level of living standard”. The results also illustrate the contentment of expats with their financial situation in Bangkok: 63% rate this factor positively (vs. 57% globally), though this is somewhat of a drop compared to 2018 when three-quarters (75%) were still of this opinion.

    Taipei Stays on Top

    Following Taiwan’s ranking as the best expat destination worldwide in 2019, Taipei’s first place in the Expat City Ranking 2019 is not much of a surprise. In fact, the city already held this spot in 2018, when it first featured in the ranking. Taipei continues to impress when it comes to the local quality of life, ranking 3rd out of 82 cities in this index (for detailed results, see the Quality of Urban Living Index).

    A Warm Welcome in Kuala Lumpur

    With its second place in 2019, Kuala Lumpur at last makes it into the global top 3 after consistently ranking among the top 10 cities in the past few years. Expats rate Kuala Lumpur the city where it’s easiest to get settled (for detailed results, see the Getting Settled Index), as well as one of the best cities worldwide when it comes to finance and housing. 

    Ho Chi Minh City: A Financial Paradise?

    Following a 4th place out of 72 cities in 2018, Ho Chi Minh City manages to further improve its result to rank 3rd out of 82 in 2019. Expats rate Vietnam’s most populous city as the best place for finance and housing, with the city ranking first for all but one of the underlying factors: HCMC places second regarding the affordability of housing (for more details, see the Finance & Housing Index).

    In the Expat Insider 2019 survey, over 20,000 participants were asked not only to rate their respective host country but also to share insights regarding their city of residence. Respondents rated more than 25 different aspects of urban life abroad on a scale of one to seven, with the rating process emphasizing expats’ personal satisfaction with these aspects. The individual ratings were bundled in various combinations for a total of 13 subcategories, and the mean values of these subcategories were used to draw up four topical indices:

    The post Bangkok drops to 20th spot on expat-friendly cities ranking appeared first on Thailand Business News.

    6 December 2019
    Lifestyle
    https://www.thailand-business-news.com/?p=77228
  • Thai economy continued to be on a decelerating trend (Bank of Thailand)

    The Thai economy continued to be on a decelerating trend in October, although private consumption indicators expanded and foreign tourist arrivals continued to expand.

    The post Thai economy continued to be on a decelerating trend (Bank of Thailand) appeared first on Thailand Business News.

    According to Bot latest Press Release, the Thai economy continued to be on a decelerating trend in October. The value of merchandise exports continued to contract, mainly due to the economic slowdown of trading partners, consistent with deterioration in manufacturing production and private investment indicators.

    Public spending contracted after last month’s expansion, from capital expenditures. However, private consumption indicators expanded at a higher pace compared with the previous month after temporarily benefiting from the government’s economic stimulus measures. The tourism sector also continued to expand well.​

              On the stability front, headline inflation edged lower on the back of falling energy prices while core inflation held steady. The seasonally adjusted unemployment rate slightly decreased, in line with the rising number of employed persons in agricultural sector. The current account registered a smaller surplus from trade balance. The capital and financial accounts posted a deficit from the asset position.

    Details of the economic conditions are as follows:

    The value of exports dropped by 5.0 percent

              The value of merchandise exports, both including and excluding gold, dropped by 5.0 percent compared with the same period last year.

    The contraction of exports in several categories was due to
    1) the economic slowdown of trading partners;

    2) the continued downturn in electronic cycle without clear sign of recovery; and

    3) the contraction of global crude oil prices, coupled with the temporary maintenance shutdown of oil refineries, leading to the contraction of petroleum-related products exports, both in terms of prices and quantity.

    Nevertheless, the value of exports in some categories, including agro-manufacturing products, electrical appliances, and automotive and parts, continued to expand, partly as substitution for Chinese products in the US market. In addition, the exports of hard disk drive grew for the first time in 12 months, thanks to the relocation of production base to Thailand.

    As a consequence of the merchandise exports contraction, manufacturing production continued to decline.

    Private investment indicators continued to deteriorate

              Private investment indicators continued to deteriorate from the same period last year, in line with weak domestic and external demand. Investment in machinery and equipment continued to contract from imports of capital goods, domestic machinery sales, and the number of newly registered motor vehicles. Meanwhile, investment in construction declined from permitted construction area in almost every purpose, consistent with subdued construction activities. Nevertheless, the permitted construction area for manufacturing purposes continued to grow.

    Merchandise imports contracted by 9.2 percent

              The value of merchandise imports contracted by 9.2 percent from the same period last year in almost every category, consistent with softening economic activities.

    The contraction was attributable to the decrease in imports of raw materials and intermediate goods, particularly in

    1) crude oil, due to the maintenance shutdown of oil refineries; and

    2) electronic parts, partly owing to the high base effect in the previous year as well as the contraction in the exports of electronic products. In addition, after last month expansion, imports of consumer goods contracted from seafood imports, mainly from the high base effect in the previous year. However, imports of capital goods accelerated due to imports of aircrafts, ships, floating structures, and locomotive, though mostly in the form of operational leasing. Excluding the category, the imports of capital goods continued to contract.

    Public spending contracted

              Public spending, excluding transfers, contracted due to

    1) central government’s capital expenditures, as the FY2020 budget has yet to be enforced; and

    2) state enterprises’ capital expenditures, particularly in the disbursement of the Mass Rapid Transit Authority of Thailand (MRTA). Meanwhile, current expenditures continued to grow owing to the compensation of civil servants and purchases of goods and services.

    Private consumption indicators expanded

             Private consumption indicators expanded at a higher pace compared with the previous month but continued to be on a decelerating trend. In this month, the improved private consumption indicators temporarily benefited from the government’s economic stimulus measures, boosting spending on non-durable goods and services.

    On the other hand, spending on semi-durable and durable goods contracted, especially on vehicles, in line with weakening supporting factors, namely continued contraction in non-farm income, softer farm income growth, and lower consumer confidence, together with financial institutions’ tightening of credit standards for auto-leasing loans after credit quality deteriorated.

    Foreign tourist arrivals continued to expand

              The number of foreign tourist arrivals continued to expand well at 12.5 percent compared with the same period last year. This was driven by

    1) the low base effect from the tour boat incident in Phuket; and

    2) the exemption of the visa on arrival fee, encouraging more visitors from China, India, and Taiwan. Additionally, the number of tourists from other Asian countries continued to grow such as those from South Korea, Japan, and Laos. The number of Malaysian visitors also rebounded from a temporary factor as Deepavali Holiday was celebrated at the end of October this year.

              On the stability front, headline inflation stood at 0.11 percent, decelerating from last month on the back of higher contraction in energy prices due to the lower domestic retail petroleum prices, while core inflation remained unchanged. The seasonally-adjusted unemployment rate slightly dropped, consistent with higher number of employed persons in agricultural sector. The current account surplus narrowed from trade balance as a result of the increase in merchandise imports value compared with the previous month. The overall capital and financial accounts registered a deficit from the asset position following the increase in Thai Other Depository Corporations’ (ODCs) deposits and Thai portfolio investment abroad.
     

    Bank of Thailand

    The post Thai economy continued to be on a decelerating trend (Bank of Thailand) appeared first on Thailand Business News.

    2 December 2019
    Economics
    https://www.thailand-business-news.com/?p=77194
  • Thai Cabinet approves new economic stimulus measures

    The Thai government has rolled out new stimulus measures intended to boost full-year economic growth to 2.8%

    The post Thai Cabinet approves new economic stimulus measures appeared first on Thailand Business News.

    The Thai Cabinet today approved three new stimulus packages to prop up the softening economy, said Finance Minister Uttama Savanayana.

    The government expects the measures to propel full-year economic growth to 2.8% from a projection of 2.6% recently announced by the National Economic and Social Development Council (NESDC).

    The Office of the National Economic and Social Development Council (NESDC) has recently announced that Thailand’s Q3 2019 GDP growth came in at 2.4 percent, adjusting the overall GDP growth this year down to 2.6 percent, citing negative factors from the trade war affecting the export sector.

    The aim is to boost the economy during the remainder of this year and the first quarter of next year

    Finance Minister, Mr Uttama Savanayana

    1. Grassroot economy  booster

    The first package is to boost the grassroots economy and is divided into three sub-projects, namely a village fund for 71,742 villages graded A, B and C. 

    Each will receive 200,000 baht to invest in community rice barns, space to dry crops, rice mills, organic fertilizer, water sources or machinery for processing farm products.

    There is also the Credit for Community Business project under which the BAAC will provide credit lines, amounting to 50 billion baht, to Village Funds and urban communities for investment in small businesses. The credit line will be for three years at an annual interest rate of 0.01%.  The program will start on December 1st and end on November 30th 2023.

    2. Helping farmers to reduce costs

    To help farmers cover harvesting and rice quality improvement costs for the 2019-20 crop year, each household will receive 500 baht per 0.06 hectares, up to a maximum of 1.2 hectares or 10,000 baht.  About 4.57 million farming households will benefit from this package, with payments to commence September 30th 2020. The Bank of Agriculture and Agricultural Cooperatives (BAAC) will make the payments, totalling 28 billion baht, and will be refunded later by the government.

    3. Home buyers 50000 baht giveaway

    The third package is intended to help real estate developers sell their surplus units by offering a 50,000 baht “giveaway” down payment incentive to buyers, each of whom must have a monthly income not exceeding 100,000 baht, and must be listed in the Revenue Department’s record of taxpayers.

    The number of buyers will be limited to 100,000 and the 50,000 baht “giveaway” will be on a first come first serve basis. The program will start on November 27th and last until March 31st 2020.

    Finance Minister Uttama said this housing stimulus package will cost the tax payer about 5 billion baht, and refunds will be wired into the accounts of the buyers through the PromptPay application by the Government Housing Bank.

    The post Thai Cabinet approves new economic stimulus measures appeared first on Thailand Business News.

    27 November 2019
    Economics
    https://www.thailand-business-news.com/?p=77174
  • Trade War Incentive Schemes flourishing in ASEAN

    Countries such as Thailand, the Philippines, Malaysia, and Indonesia have unveiled an array of incentive packages to entice businesses affected by the US-China trade war.

    The post Trade War Incentive Schemes flourishing in ASEAN appeared first on Thailand Business News.

    Governments across ASEAN have been unveiling an array of incentive packages to entice businesses affected by the US-China trade war.

    Countries such as Thailand, the Philippines, Malaysia, and Indonesia have introduced tax breaks and initiatives to improve the ease of doing business whereas Vietnam, Singapore, and Cambodia have accelerated business reforms, such as executing free trade agreements (FTAs), and double taxation agreements (DTAs).

    We consolidate and briefly discusses the development of each country’s incentives over the past year. The developments showcase how ASEAN members are distinguishing themselves from the fellow competition and what opportunities are available for investors looking elsewhere in Asia.

    Thailand Plus

    Thailand introduced a stimulus package called Thailand Plus that covers seven key points which include the introduction of new tax incentives and deductions.

    Thailand already offers investors corporate income tax (CIT) exemptions through the Eastern Economic Corridor, but Thailand Plus allows companies to be eligible for further reductions if they invest at least 1 billion baht (US$32 million) and apply for the incentive before 2020.

    Investors that are developing advanced technology, engaging in automation systems, or employ highly-skilled individuals in the fields of science, technology, engineering, and mathematics (STEM), can receive tax deductions of up to 200 percent.

    Additionally, the government will amend the main law regulating foreign business activities to simplify the process of acquiring visas and work permits and to improve information sharing between the government and relevant state agencies.

    Thailand will endeavor to expand its FTA network under Thailand Plus, reviving the Thailand-EU FTA and joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Moreover, special investment zones for companies from South Korea, Japan, China, and the US will be developed.

    Foreign investors with a foothold in the country, especially in high-value manufacturing sectors like electronics, automotive, aerospace, and maintenance, repair, and overhaul (MRO) services, could benefit from this latest package.


    The Philippines’ CITIRA, and legislative amendments

    In September 2019, the Philippines introduced the Corporate Income Tax and Incentives Rationalization Act (CITIRA). CITIRA will gradually reduce CIT from 30 percent to 20 percent over a ten-year period as well as rationalize specific tax incentives. The current CIT of 30 percent is the highest in ASEAN.

    The Act is the second phase of the government’s Comprehensive Tax Reform Package program and aims to increase foreign investment, stimulate job growth, and enable domestic small and medium-sized enterprises (SMEs) to be more regionally competitive.

    Under CITIRA, the government will also develop new priority regions beyond the National Capital Region, Metro Manila. Investments outside this region could help the country develop its infrastructure and supply chains to compete more readily with other ASEAN countries.

    To further encourage foreign investment, lawmakers amended two provisions of the Foreign Investment Act (FIA) of 1991.

    The amendments include the removal of the ‘practice of professionals’ from the foreign investment negative list (FINL). This was done to attract more skilled foreign professionals. The other amendments aim to reduce the number of mandatory direct local hires by foreign investors from 50 to 15 and to allow foreign investors to have 100 percent ownership of SMEs.

    The government also revized the Public Service Act and the Retail Trade Liberalization Act. The formerly opened utility sectors like telecommunications and transportation to foreign investors. The latter set the minimum paid-up capital at US$200 thousand for foreign businesses looking to invest in the country’s retail industry.

    Malaysia’s budget, investment fast track

    Read More : Trade War Incentive Schemes in ASEAN

    The post Trade War Incentive Schemes flourishing in ASEAN appeared first on Thailand Business News.

    25 November 2019
    Asean
    https://www.thailand-business-news.com/?p=77147
  • Thai exports down 4.5% in October

    Thai Exports dropped by 4.5% year-on-year in October to US$20.8 billion, bringing the contraction in first 10 months of 2019 to 2.35%

    The post Thai exports down 4.5% in October appeared first on Thailand Business News.

    BANGKOK (NNT) – The overall export sector performance in October 2019 has lagged for the third consecutive year, resulting in a negative 4.54 percent growth, mainly due to the consequences of the trade war between the U.S. and China as well as lower oil prices.

    The overall export sector performance in the first 10 months of 2019 remained negative.

    The Thai export sector in October 2019 was valued at 20.76 billion US dollars, a 4.54 percent deficit due to a 25 percent decrease in the oil price affecting the export of petroleum products.

    The ongoing trade war between the U.S. and China still contributes to an economic slowdown among trading partners.

    Thailand’s export to China have reduced by 4.2 percent, while exports to the EU, ASEAN, and CLMV countries have also seen a reduction.

    The overall export figure in the first 10 months of 2019 was 207.33 billion US dollar, showing a 2.35 percent deficit.

    The Trade Policy and Strategy Office (TPSO) Director General Pimchanok Vonkorpon, said today the export figure in December this year is likely to return to positive growth due to year end demand, however the overall export performance this year is expected to be a negative 1.5-2 percent, with 250 billion baht in gross value.

    She said exporters have started to adjust to the cicumstances and perform better compared to when trade sanctions recently hit, as shown from the expansion of exports in food and farm products such as sugar, vegetables, fruit, and frozen chicken; as well as computers and parts which have shown their first growth in 13 months.

    The TPSO chief said she is positive the overall export performance of Thailand will swing back to 1.5-2 percent growth next year, thanks to international marketing strategies and an expected deescalation of the trade war, which will positively affect global trade and commerce.

    The post Thai exports down 4.5% in October appeared first on Thailand Business News.

    22 November 2019
    Trade
    https://www.thailand-business-news.com/?p=77117
  • Corporate debt market in Thailand well positioned for further growth

    Brazil, China, South Africa and Thailand are best-placed for corporate debt market growth says Moody’s Investors Service in a report that analyzed trends in 35 emerging markets.

    The post Corporate debt market in Thailand well positioned for further growth appeared first on Thailand Business News.

    Corporate debt markets in Brazil (Ba2 stable), China (A1 stable), South Africa (Baa3 negative) and Thailand (Baa1 positive) are best-placed to achieve further growth in the coming years, Moody’s Investors Service said today in a report that analyzed trends in 35 emerging markets.

    ·         Study of 35 EMs highlights the key factors for growth of domestic corporate bond markets

    These four countries registered the biggest increase in the ratio of mutual funds and insurance investment portfolio assets to GDP between 2010 and 2016, improving their ability to withstand future financial shocks.

    “The development of corporate bond markets provides companies with an alternative source of funding beyond bank lending. This can help to mitigate declines in real economic activity from credit disruptions associated with a banking crisis.”

    Ruosha Li, a Moody’s AVP-Analyst and the report’s co-author

    The level of industrialisation in an the economy tends to drive the development of capital markets and results in a need for more capital funding. Countries that are highly reliant on commodity exports often show less progress in industrialisation and are less likely to require as much access to corporate bond market for funding.

    Thailand have the most developed domestic corporate bond market among emerging markets
    Brazil, China, Malaysia, South Africa and Thailand have the most developed domestic corporate bond market among emerging markets

    The report highlighted the three key factors that help to foster the growth of domestic corporate bond markets: firstly, an increase in the assets under management of domestic mutual funds. Secondly, the growth of insurance companies’ investment portfolios; and lastly, a reliable regulatory regime.

    In some cases, the level of the country’s public debt, the size of its domestic equity market and the amount of bank lending to companies also have implications for corporate bond market growth.

    Highlights of Thai Bond Market 2018

    Total outstanding value of Thai bond market at the end of 2018 surpassed THB 13 trillion for the first time, rising 12% from last year.

    Long term corporate bond issuance hit new record high for three consecutive years, reaching THB 879 billion.

    Green bond was first issued in Thailand.

    Non-resident investor holding of Thai bond reached new all-time high and touched trillion-level to THB 1.002 trillion in November 2018.

    For the first time, since the early of the year 10-year Thai government bond yield has declined to stay below 10-year US Treasury yield until now.

    The Securities and Exchange Commission of Thailand (SEC) amended regulations effective from April 2018 to tighten selling of bill of exchange (BE) to enhance investor protection

    The post Corporate debt market in Thailand well positioned for further growth appeared first on Thailand Business News.

    20 November 2019
    Banking
    https://www.thailand-business-news.com/?p=77092