Fitch upbeat on Thailand's economic resilience amid global trade tensions

By THE NATION

 

James McCormack, managing director and global head of Sovereigns at Fitch Ratings

 

Thailand's sound economic fundamentals can cope with the challenges from global trade tensions, while the Thai banking sector is less exposed to external risks, such as a slowdown in China, relative to other Fitch-rated banks in Asia, according to Fitch Ratings' sovereign and banking analysts at its annual global risk conference in Bangkok today (October 2).

 

James McCormack, managing director and global head of Sovereigns at Fitch Ratings, said revision of the 'BBB+' sovereign outlook rating on Thailand to 'positive' in July 2019 was driven by Fitch's increasing confidence that lingering political risks are unlikely to derail the country's macroeconomic management.

 

Thailand overcame a major political hurdle earlier this year with the formation of a new civilian-led government following elections in March, and the country has maintained sound external and public finance positions for several years.

 

Risks to the growth outlook stem primarily from the challenging global trade environment, although this may be mitigated by the more-supportive monetary policy and infrastructure projects, which are intended to increase investment and support growth in the medium term.

 

Global risks centre on policy uncertainty, particularly as it affects the trade outlook, and the UK's upcoming Brexit deadline, which could result in a recession in the country and weaker growth in the euro zone.

 

Fitch believes widespread monetary easing by central banks cannot fully offset the slowdown in trade, and policymakers will have to turn increasingly to accommodative fiscal policies, including in countries where government debt levels are already high.

 

In his presentation on the banking sector, Parson Singha, senior director of Financial Institutions at Fitch Ratings (Thailand) Limited, said Thai banks were well-positioned, in terms of potential vulnerabilities and loan-loss buffers, and they were able to cope with downside stresses such as a economic slowdown in China or a property-market downturn.

 

However, the upside for Thai banks' financial performance may be limited in the near term due to the challenging operating environment.

 

A sharp slowdown in China would likely have the most impact on developed markets, such as Hong Kong and Singapore.

 

Meanwhile, banking sectors with high property exposures include those in developed markets, such as Australia and New Zealand, and in emerging markets such as Malaysia.

 

Mervyn Tang, senior director, head of ESG Research, Sustainable Finance at Fitch Ratings, discussed regional trends in environmental, social and corporate governance (ESG).

 

ESG factors come with some level of influence on the credit ratings of around 22 per cent of corporate issuers in the world, with the governance element accounting for more than half of affected issuers, he said, adding that emerging-market credit ratings are more often influenced by governance issues.

 

Financial transparency and governance structure issues relating to key-person risks, concentrated ownership and board independence are most common in Asia. Environmental and social factors have more influence on credit ratings in the developed markets than in emerging markets due to tighter regulation and stiffer penalties for violations.

 

Fitch Ratings (Thailand)'s annual global risk conference was attended by more than 300 executives and officials from the regulatory, investor, financial and corporate sectors. Dr Uttama Savanayana, Minister of Finance, was the guest of honour and keynote speaker at the event.

 

Source: https://www.nationthailand.com/business/30376989

 

-- © Copyright The Nation Thailand 2019-10-03

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Fitch Ratings raises outlook on Thailand to positive

 

   

BANGKOK (NNT) - Investors who plan to establish a business in a foreign country usually examine its credit rating first. Fitch Ratings, an international credit rating agency, has recently raised Thailand’s outlook to positive amid the global economic slowdown.

 

The positive outlook is attributed to Thailand’s strong economic fundamentals and the government’s efforts to firmly establish its 20-year national strategy.

 

The Managing Director and Global Head of Sovereign Ratings for Fitch Ratings, James McCormack, said today that Thai economic growth this year stood at 3%, which was a little lower than the 3.2% projection, due to the global economic volatility, but Thailand is still one of 12 only countries around the world with a positive outlook.

 

Most countries’ ratings have been downgraded, while the agency sees that the Thai economy and its fiscal status remain strong. The country’s debt-to-GDP ratio stands at 40 to 42%. Although the government plans to take out more loans to implement new infrastructure projects, it is not likely to exceed the debt ceiling, which is set at 60%. Furthermore, such investments will help improve the country’s competitiveness.

 

The Finance Minister, Uttama Savanayana, said today it is good news that Thailand’s rating has been upgraded to positive from stable because Fitch Ratings still has confidence in the country’s economic potential. If the government is able to work in line with its 20-year national strategy, investor confidence will increase. Many renowned multinational corporations have also shown interest in expanding their businesses in Thailand.

 

"It’s revised to positive. The adjustment was made in July. This is interesting because they said Thailand’s outlook has been adjusted up despite challenges from global events.

 

That’s because Thailand in the long-term still has potential. If we can follow the socio-economic development strategy, Fitch Ratings believe that Thailand can still attract businesses on a global scale. They have noticed that many multinational corporations have shown interest to invest in Thailand because they see that a new government has been set up and a strategy."

 

-- © Copyright NNT 2019-10-03

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1 hour ago, webfact said:

The Managing Director and Global Head of Sovereign Ratings for Fitch Ratings, James McCormack, said today that Thai economic growth this year stood at 3%

The last I read GDP growth was predicted to be 2.7% and only then with a bit of luck and a tail wind. 

And of course the elephant in the room, the high Thai baht, doesn't get a mention. Nor does the flow on effect of seriously declining exports rate a comment.

How courteous and diplomatic that was of Fitch ratings; not wanting to offend their hosts who would be footing the bill. 

Yes sure - these manipulating idiots from rating companies who where “surprised” by the global financial meltdown in 2008 and where part of the derivative scam perpetuated by the criminal Banksters and Wall Street have long lost all credibility.
They gave the garbage they sold on to the world the highest ratings until it all imploded and cost tax payers around the world trillions and indebted the world to a scale never seen before.
Bunch of crooks in suits trying to look important!


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To translate: you 1 percenters will be fine, and will own even more of Thailand.  Another cheerleader for the rich of Thailand. 

5 hours ago, webfact said:

Thailand's sound economic fundamentals can cope with the challenges from global trade tensions,

Debatable!

Total Rubish!

9 hours ago, Cadbury said:

The last I read GDP growth was predicted to be 2.7% and only then with a bit of luck and a tail wind. 

And of course the elephant in the room, the high Thai baht, doesn't get a mention. Nor does the flow on effect of seriously declining exports rate a comment.

How courteous and diplomatic that was of Fitch ratings; not wanting to offend their hosts who would be footing the bill. 

why do you think it was worth mentioning that the baht is high?  are you saying it is overvalued against other currencies, or just high in historical terms?

 

I'm not sure why you are thinking exports are seriously declining.  2018 was a record year for exports.  2019 is expected to be anywhere from up by 3% to down by 1.2%.  The following is a ten year chart of exports by month.

 

 

Obviously, he never bothered to look at currency exchanges.  Baht surged again today vs USD, Euro, Pound, Looney and other western currencies.  And lo and behold, the ChiCom Yuan inched up again today.

Hot money foreign inflows over at BoT most likely originate from that gorilla in the room.  All part of the plan to oust expats, exports and western tourism from LoS...