9 February 2010
Even more expect the unexpected
Last week on impact Asia (BBC World News) the spotlight was on Thailand and the state of the economy, with the BBC doing an update a year after Thai finance Minister Korn Chatikavanij ascended to office. As well as Khun Korn, the BBC interviewed MBMG’s commodity portfolio manager, Jeremy Charlesworth of Moonraker Fund Management and John Sheehan of MBMG’s affiliated research consultancy, Global Markets Asia.
Khun Korn was somewhat bullish about the Thai economy whereas Jeremy and John were hopeful but also sceptical. 12 months ago, when appointed as the Finance Minister in PM Abhisit Vejjajiwa’s cabinet, Korn was quoted as saying “ I can keep the Thai engine running for 2 years”, admitting that after that he would need a global economic recovery. However things have been going remarkably well - “ doing better than expected from this time last year with 3 consecutive quarters of positive GDP growth, full year growth of a minimum of 3.5%, exports up, tourist arrivals at peak levels again, trade with China has doubled, around 1% only of the Thai working population unemployed...things are going better than expected”. A positive analysis and perhaps the figures are true BUT the Year-on-Year figures should look if we compare with the start of 2009 when the global markets were at the trough of the initial collapse and when flights into and out of Bangkok were virtually impossible during the occupation of Suvarnabhumi Airport…
John Sheehan had a different outlook;
“Thai exports collapsed last year as the world markets went down, and Thailand had to either sit down and wait for a western recovery or find an alternative, they have not shown themselves to be good at looking for alternatives yet. One of the things that they always quote as one of their great strengths is their reserve position, well that’s good but, the bad news is the reserves are mainly in US Dollars and my view of the USD going forward is that it is on a gradual slide.”
This is a view that John has stated many time in previous MBMG updates.Jeremy Charlesworth of Moonraker Fund Management focused on political issues and tax issues that could affect Thailand’s recovery;
“The Thai people have had difficulty retaining any government for any length of time, so that is a concern. Another issue for any potential outside investor looking to invest in Thailand is tax. If you look at the world as a beauty parade and compare Thailand relative to its peers in the region I’m not so sure whether Thailand has the most competitive tax rates.” Khun Korn seemed less sure of his ground than John and Jeremy – but uncertainty is a prevailing throughout financial markets right now - contrasting opinions remain the order of the day and our continued stance remains ‘prepare for a “bolt out of the blue” and ensure you can be “nimble and quick” in your investment choices’.
Be ready and able to change the direction and focus of your portfolio quickly as global events unfold during yet another year of great uncertainty. It’s never been more necessary to have an experienced advisor on hand through these tough , challenging times.
Questioned how the last 12 months have been for him in Khun Korn said “ I have lost a bit of hair as you may have noticed”. Let’s hope that recovery continues for the sake of the economy and for Khun Korn’s hairline! Let us know if you’d like to see the full details of the interview.