The Thai Economy Is In Crisis

[highdiver]

all you guys seem to foirget that those investing in SET can not sell and get out as you would in western countries. this is beacuse the BOT is holding 30% of all the indirect invetments. fund managers are aware of this and are still pouring in.

it seesm the largest funds in the world have decdided to take positions in the thai SET. those positions are long term positions and the rest of he funds gang is following. the Thai market is now one of the favorites for long term investments.

As such the stocks are going up as any fund manager is willing to invest long term in the Thai market.

once again a proof that the thai economy is not in crisis and that investors confidence is mesured in cash and in words.

You could have argued that the U.S economy was going to the moon in 2000 just by looking at the Nasdaq. Speculation is a herding instinct the fuel for it being liquidity. To argue that funds with so called long term positions somehow sanitizes their speculation is a dangerous assumption just look at the CDO's (a.k.a toxic waste) being bought by pension funds for their longest of long term speculation. Imho world markets will have peaked by September if not before.

steely

I was being sarcastic on the post... but i gues only the real players in the market got it.

while some are very sure of the coming "crisis" and prdict dooms day predictions others are making a killer profit.

fund managers from across the globe have decided to take long term positions in the asian markets. as such huge amounts of money are moving asia side and specially into thailand.

its is not a high speculative market. as most positions are for long term. and if ou follow the funds investment policies you can easily see this.

I am sure all those investors that are taking those long term positions in the market are complete fools (this is sarcastic again)

but if you are a speculator then here is a nice tip. .

every time the dooms day brigade mainly our dear MId and bingo bongo publish a dooms day prediction or whine about the economy the stock market goes up. if you dont belive me check the posts from the begining of the thread.

[LaoPo]

all you guys seem to foirget that those investing in SET can not sell and get out as you would in western countries. this is beacuse the BOT is holding 30% of all the indirect invetments. fund managers are aware of this and are still pouring in.

it seesm the largest funds in the world have decdided to take positions in the thai SET. those positions are long term positions and the rest of he funds gang is following. the Thai market is now one of the favorites for long term investments.

As such the stocks are going up as any fund manager is willing to invest long term in the Thai market.

once again a proof that the thai economy is not in crisis and that investors confidence is mesured in cash and in words.

That's incorrect. The 30% rule doesn't apply for investments (by foreigners) in the SET stockmarket; i.e. buying and selling shares.

Believe me, NOT a single fund manager would invest with a rule like that.

Also, the last bold sentence is a naive one; shares can co up...and DOWN.

All investments/buying&selling nowadays goes via Internet, also with the SET.

SET: "Internet trading enables investors to send their orders to a broker from anywhere around the world. At present, the SET allows brokers to provide Internet trading services to their customers. Brokers will be responsible for all their clients' trading transactions. Internet trading may be used for all listed securities via the AOM method, with limit-price orders only. Only the main, odd lot and foreign boards may accept Internet Trading orders."

I'm not saying that the Thai economy is in crisis or not but the investments in shares on the SET [by foreigners] have nothing to do with that economy. It has to do with the undervalued share-prices, since quite a long time now, in Thailand.

The P/E's were low(er), in comparison with other regional and world stock markets.

Once they've reached their goals (fund managers') they'll leave and will 'shop' elsewhere.

LaoPo

Edited July 7, 2007 by LaoPo

[midas]

all you guys seem to foirget that those investing in SET can not sell and get out as you would in western countries. this is beacuse the BOT is holding 30% of all the indirect invetments. fund managers are aware of this and are still pouring in.

it seesm the largest funds in the world have decdided to take positions in the thai SET. those positions are long term positions and the rest of he funds gang is following. the Thai market is now one of the favorites for long term investments.

As such the stocks are going up as any fund manager is willing to invest long term in the Thai market.

once again a proof that the thai economy is not in crisis and that investors confidence is mesured in cash and in words.

That's incorrect. The 30% rule doesn't apply for investments (by foreigners) in the SET stockmarket; i.e. buying and selling shares.

Believe me, NOT a single fund manager would invest with a rule like that.

Also, the last bold sentence is a naive one; shares can co up...and DOWN.

All investments/buying&selling nowadays goes via Internet, also with the SET.

SET: "Internet trading enables investors to send their orders to a broker from anywhere around the world. At present, the SET allows brokers to provide Internet trading services to their customers. Brokers will be responsible for all their clients' trading transactions. Internet trading may be used for all listed securities via the AOM method, with limit-price orders only. Only the main, odd lot and foreign boards may accept Internet Trading orders."

I'm not saying that the Thai economy is in crisis or not but the investments in shares on the SET [by foreigners] have nothing to do with that economy. It has to do with the undervalued share-prices, since quite a long time now, in Thailand.

The P/E's were low(er), in comparison with other regional and world stock markets.

Once they've reached their goals (fund managers') they'll leave and will 'shop' elsewhere.

LaoPo

Yes indeed LaoPo and if SET goes up yet again on Monday - I would view the purchase

of a whole heap of medium / long dated Put Options as being a more attractive investment

- but I dont even know if they trade these on the SET ?

[LaoPo]

- but I dont even know if they trade these on the SET ?

At your service, Sir

"The Thailand Futures Exchange Plc (TFEX), a subsidiary of The Stock Exchange of Thailand (SET), was established on May 17, 2004 as a derivatives exchange. The TFEX is governed by the Derivatives Act B.E. 2546 (2003) and is under the supervision of the Securities and Exchange Commission (SEC).

By law, The TFEX is allowed to trade futures, options, and options on futures. The permitted underlying products include:

Equities and other securities indices;

Debts instruments and interest rates;

Non-agricultural commodities and other financial indices (e.g., gold, crude oil and foreign currencies)

The TFEX has planned its first product to be simple, but effective, hedging and trading instruments. The TFEX's plan is to launch its market in late 2005 with the SET50 Index Futures as its first product. In addition, bond futures, equity index options and stock options are all potential products down the line. "

LaoPo

[JR Texas]

- but I dont even know if they trade these on the SET ?

At your service, Sir

"The Thailand Futures Exchange Plc (TFEX), a subsidiary of The Stock Exchange of Thailand (SET), was established on May 17, 2004 as a derivatives exchange. The TFEX is governed by the Derivatives Act B.E. 2546 (2003) and is under the supervision of the Securities and Exchange Commission (SEC).

By law, The TFEX is allowed to trade futures, options, and options on futures. The permitted underlying products include:

Equities and other securities indices;

Debts instruments and interest rates;

Non-agricultural commodities and other financial indices (e.g., gold, crude oil and foreign currencies)

The TFEX has planned its first product to be simple, but effective, hedging and trading instruments. The TFEX's plan is to launch its market in late 2005 with the SET50 Index Futures as its first product. In addition, bond futures, equity index options and stock options are all potential products down the line. "

LaoPo

JR Texas: Yesterday (Friday) I took a look at that rag of a newspaper, the Bangkok Post. In it was an article about research done by JETRO on wages in Asia. It shows wages have increased enormously in Vietnam from 2004-2006 (and most of the other countries) but have fallen substantially in Thailand. If the data are correct, we have falling wages taking place at a time when inflation is increasing. It does not bode well for the economy.

[midas]

The TFEX is governed by the Derivatives Act B.E. 2546 (2003) and is under the supervision of the Securities and Exchange Commission (SEC).

By law, The TFEX is allowed to trade futures, options, and options on futures. The permitted underlying products include:

[midas]

The TFEX is governed by the Derivatives Act B.E. 2546 (2003) and is under the supervision of the Securities and Exchange Commission (SEC).

By law, The TFEX is allowed to trade futures, options, and options on futures. The permitted underlying products include:

Thank you for that ! Their web site appears outdated and suggests their range

of "products " is very limited indeed i.e. futures contracts. I was referring more

to option contracts on individual stocks but I don't think they've got that far yet ?

It reinforces my perception of the " casinos style " nature of the SET

[hammered]

Shawn Crispin has a new piece up at A-Times

From political darkness, economic optimism: http://www.atimes.com/atimes/Southeast_Asia/IG07Ae01.html

[Mid]

opps .........

Business News

EXIM Bank warns of Thailand's high exports "illusion"

Jul 9, 2007, 11:43 GMT

Bangkok - Thailand's 18.5 per cent rise in exports during the first five months of 2007 was an 'illusion' created by a surge in largely foreign-owned high-tech shipments, EXIM Thailand warned on Monday.

Apichai Boontherawara, president of the state-owned EXIM Thailand bank, said Thailand's impressive export performance over the past five months despite the appreciation of the baht currency 'has been fueled by high-tech products which constitute 11.6 per cent of such increase while representing 64 per cent of the country's total export value.'

Deutsche Presse-Agentur

[chinthee]

opps .........

Business News

EXIM Bank warns of Thailand's high exports "illusion"

Jul 9, 2007, 11:43 GMT

Bangkok - Thailand's 18.5 per cent rise in exports during the first five months of 2007 was an 'illusion' created by a surge in largely foreign-owned high-tech shipments, EXIM Thailand warned on Monday.

Apichai Boontherawara, president of the state-owned EXIM Thailand bank, said Thailand's impressive export performance over the past five months despite the appreciation of the baht currency 'has been fueled by high-tech products which constitute 11.6 per cent of such increase while representing 64 per cent of the country's total export value.'

Deutsche Presse-Agentur

I hate to say "I told you so," but Mid and I agree on a lot.

[Mid]

opps , opps ........................

Business News

World Bank warns Thailand of falling private investments

Apr 5, 2007, 5:31 GMT

Bangkok - The World Bank on Thursday dropped its forecast for Thailand's economic growth in 2007 to 4.3 per cent, warning that confidence in the kingdom's investment climate has hit a historic low and must be restored to improve future prospects.

'Low investment confidence - and it is at one of its lowest points - is the Thai economy's biggest weakness in the short-term,' said Kazi Matin, the WB's lead economist on Thailand.

Deutsche Presse-Agentur

[chinthee]

opps , opps ........................

Business News

World Bank warns Thailand of falling private investments

Apr 5, 2007, 5:31 GMT

Bangkok - The World Bank on Thursday dropped its forecast for Thailand's economic growth in 2007 to 4.3 per cent, warning that confidence in the kingdom's investment climate has hit a historic low and must be restored to improve future prospects.

'Low investment confidence - and it is at one of its lowest points - is the Thai economy's biggest weakness in the short-term,' said Kazi Matin, the WB's lead economist on Thailand.

Deutsche Presse-Agentur

Chai, Nee duay.

[LaoPo]

Shawn Crispin has a new piece up at A-Times

From political darkness, economic optimism: http://www.atimes.com/atimes/Southeast_Asia/IG07Ae01.html

Interesting read!

It's odd to learn that foreign -inflow- capital is so high (low Stock prices and low P/E's) "this year exceeding US$3.7 billion, including an inrush of US$600 million over the last fortnight."

and, at the same time:

" Private consumption, private investment and new bank lending are either stagnant or contracting. Consumer confidence fell for a seventh straight month in May, dragging local sentiment to its lowest level since February 2002. The crucial construction sector continues to contract. "

It is clear that the investors (buying stocks) have a different view [upon Thailand and it's economy] than the local people. The latter [also] because of tightened banking loans, less spending, declined imports, declined sales in cars/motobikes and real estate.

My experience however tells me that investors will walk away, and thus the capital inflow, once they've reached their goals: Profits.

It remains to be seen whether the major part of the in-flowed capital will stay in Thailand for the long term.

HOW that will leave the Thai people ?

I don't know, but the stock market will have higher share-prices & P/E's and might give a boost to the Thai confidence so that private consumers will start buying again, boosting their own economy.

Let's hope so.

LaoPo

[present]

The gouvernment is to nationalistic orientated and therefore to protectionist.Their main concern is to keep their power and influence, not to mention the money involved.Today,we live in a global economy, liking it or not, and politicians in Asia have to think global and not be afraid of other people and cultures mixing with theirs.If you look at the history of let say the last 2000 years, economics within a country did always benifit from new blood,wich bring new ideas and dynamics.Belgium is one of the richest countrys in the world, and this is merely while they were always open for the new.And many nationalitiies did pass in the last 2000 years, but we still are Belgians,so there is no need for protectionist politics unless for politians own sake. But short-term thinking can be dangerous for their positions as well.Construction is doing bad,well make it easier for retired people to come to Thailand and stay there, and a lot of new houses will be build.The last 10 years we did also more protectionist politics due to influence of nationalistic politicians. The problem we face now, that our economics can't grow because we don't have enough "farangs" to do the jobs. In metal construction there is a shortage of 100.000 people.So let people in and out who want to work and bring new ideas.Investors will follow and with an open minded gouvernment there can be a better investment climate.

The

Shawn Crispin has a new piece up at A-Times

From political darkness, economic optimism:

http://www.atimes.com/atimes/Southeast_Asia/IG07Ae01.html

Interesting read!

It's odd to learn that foreign -inflow- capital is so high (low Stock prices and low P/E's)

"this year exceeding US$3.7 billion, including an inrush of US$600 million over the last fortnight."

and, at the same time:

" Private consumption, private investment and new bank lending are either stagnant or contracting.

Consumer confidence

fell for a seventh straight month in May, dragging local sentiment to its

lowest level since February 2002

. The crucial construction sector continues to contract. "

It is clear that the investors (buying stocks) have a different view [upon Thailand and it's economy] than the local people. The latter [also] because of tightened banking loans, less spending, declined imports, declined sales in cars/motobikes and real estate.

My experience however tells me that investors will walk away, and thus the capital inflow, once they've reached their goals:

Profits.

It remains to be seen whether the major part of the in-flowed capital will stay in Thailand for the long term.

HOW

that

will leave the Thai people ?

I don't know, but the stock market will have higher share-prices & P/E's and might give a boost to the Thai confidence so that private consumers will start buying again, boosting their own economy.

Let's hope so.

LaoPo

[Old Man River]

the stock market will have higher share-prices & P/E's and might give a boost to the Thai confidence so that private consumers will start buying again, boosting their own economy.

Let's hope so.

LaoPo

Nice thought, but it will take more than this. As you say, hot money comes in and then goes out when profits are taken. Local investors try to guess when profit taking will occur and get out before it happens. Some do and some don't. Then, as long as the market appears stable, it happens again.

To turn the economy around, the government needs to spend, creating jobs and this government already knows that. Whoever wins the next election will know this as well, so I expect it will happen. However, politics being what it is, government spending is always slow, slow, slow.

Right now the economy is being driven by exports and this is not going to hold up where it counts. The majority of exports are MNC driven. The value of the THB does not impact these companies as great as they sell to group companies who adjust prices further on down the line. Since these are primarily assembly operations, they have less value added benefit to the local economy than agricultural exports, but it is the agricultural exports that get hurt when the THB appreciates faster than the currencies of competitors.

Therefore, since value added exports are at risk with the rising THB, besides focusing on Thaksin, politics and social related issues, it is vital that this and the next government speed up their spending.

[Mid]

memo to self .

read first , post second .

Edited July 10, 2007 by Mid

[Payboy]

Therefore, since value added exports are at risk with the rising THB, besides focusing on Thaksin, politics and social related issues, it is vital that this and the next government speed up their spending.

for the time being, thai exports have a reprieve - even with the rising value of the baht - that's because export prices of general goods from china are scheduled to climb 8-15% this month due to a withdrawal of export incentives.

Edited July 10, 2007 by Payboy

[LaoPo]

for the time being, thai exports have a reprieve - even with the rising value of the baht - that's because export prices of general goods from china are scheduled to climb 8-15% this month due to a withdrawal of export incentives.

I think it's not so easy as you described.

"China's trade surplus in June hit a new high of US$26.91 billion, up 85.5 percent on the same month last year, the General Administration of Customs said on Tuesday.

The aggregate surplus for the first half of the year jumped 83 percent to US$112.5 billion, it said.

Imports rose 14.2 percent to US$76.36 billion in June but exports grew 27.1 percent to US$103.27 billion. The growth rate in June's exports was 1.6 percentage points lower than that in May.

China's foreign trade volume for the first half year totaled US$980.93 billion, up 23.3 percent.

The administration predicted that the figure would grow by 20 percent to US$2 trillion this year, with the country's trade surplus reaching US$200 billion.

Huang Guohua, senior analyst with the administration, said China's trade surplus rose to a new high in June because domestic companies, whose export tax rebates were cut on July 1, were rushing exports out its doors.

The Chinese government announced on June 19 it would cut or eliminate export tax rebates for 2,831 commodities from July 1 in an attempt to "suppress overheated export growth and ease frictions between China and its trade partners". "

source: chinadaily.com.cn

You're -partly- right, but one can't say that Thailand will benefit just because China cut/eliminate export tax rebates. It's a bit more complicated than that I'm afraid.

Chinese imports rose 14.2 %, whilst Thai imports declined dramatically (don't have the % at hand; sorry).

Also, exports did indeed rise but the profits were lower....= higher Baht.

Exports=Oversees buyers [majority buy in US$'s] and they are NOT willing to pay more $'s for a certain product than previously; so, Thai exporters have no other choice than lowering their profits...

For example: rice exports rose but profits declined.

I mentioned it before: Thai fundamental economics might still be in place but that just counts for industrial production and service industry + tourism.

The, poor, -Thai majority- in rural areas still suffer, big deal, because they work in agriculture and also because that particular 'industry' is extremely diversified, read: small farmers.

And that's sad, very sad.

LaoPo

[Payboy]

for the time being, thai exports have a reprieve - even with the rising value of the baht - that's because export prices of general goods from china are scheduled to climb 8-15% this month due to a withdrawal of export incentives.

I think it's not so easy as you described.

"China's trade surplus in June hit a new high of US$26.91 billion, up 85.5 percent on the same month last year, the General Administration of Customs said on Tuesday.

The aggregate surplus for the first half of the year jumped 83 percent to US$112.5 billion, it said.

Imports rose 14.2 percent to US$76.36 billion in June but exports grew 27.1 percent to US$103.27 billion. The growth rate in June's exports was 1.6 percentage points lower than that in May.

China's foreign trade volume for the first half year totaled US$980.93 billion, up 23.3 percent.

The administration predicted that the figure would grow by 20 percent to US$2 trillion this year, with the country's trade surplus reaching US$200 billion.

Huang Guohua, senior analyst with the administration, said China's trade surplus rose to a new high in June because domestic companies, whose export tax rebates were cut on July 1, were rushing exports out its doors.

The Chinese government announced on June 19 it would cut or eliminate export tax rebates for 2,831 commodities from July 1 in an attempt to "suppress overheated export growth and ease frictions between China and its trade partners". "

source: chinadaily.com.cn

You're -partly- right, but one can't say that Thailand will benefit just because China cut/eliminate export tax rebates. It's a bit more complicated than that I'm afraid.

Chinese imports rose 14.2 %, whilst Thai imports declined dramatically (don't have the % at hand; sorry).

Also, exports did indeed rise but the profits were lower....= higher Baht.

Exports=Oversees buyers [majority buy in US$'s] and they are NOT willing to pay more $'s for a certain product than previously; so, Thai exporters have no other choice than lowering their profits...

For example: rice exports rose but profits declined.

I mentioned it before: Thai fundamental economics might still be in place but that just counts for industrial production and service industry + tourism.

The, poor, -Thai majority- in rural areas still suffer, big deal, because they work in agriculture and also because that particular 'industry' is extremely diversified, read: small farmers.

And that's sad, very sad.

LaoPo

you are absolutely right with your comments - and those are the precise reasons i started my post with the words "for the time being" meaning that any gains would be slight and temporary...

[Old Man River]

I mentioned it before: Thai fundamental economics might still be in place but that just counts for industrial production and service industry + tourism.

The, poor, -Thai majority- in rural areas still suffer, big deal, because they work in agriculture and also because that particular 'industry' is extremely diversified, read: small farmers.

And that's sad, very sad.

LaoPo

Yes it is sad and it will get worse if the economy falters and members of these families cannot work in the cities and send money home. People point to the strong fundamentals of current account surpluses and large foreign reserves, but the surpluses come from a lack of investment (imports of capital equipment) and the foreign reserves from a central bank that has been selling THB and buying USD's to weaken its currency. It looks good and brings hot money in, but does nothing for private investment, which creates jobs.

While a lot of negative things have been said about Thaksin, one positive thing is that his focus was on a strong economy. The stronger the economy was, the more money he made.

[LaoPo]

for the time being, thai exports have a reprieve - even with the rising value of the baht - that's because export prices of general goods from china are scheduled to climb 8-15% this month due to a withdrawal of export incentives.

I think it's not so easy as you described.

"China's trade surplus in June hit a new high of US$26.91 billion, up 85.5 percent on the same month last year, the General Administration of Customs said on Tuesday.

The aggregate surplus for the first half of the year jumped 83 percent to US$112.5 billion, it said.

Imports rose 14.2 percent to US$76.36 billion in June but exports grew 27.1 percent to US$103.27 billion. The growth rate in June's exports was 1.6 percentage points lower than that in May.

China's foreign trade volume for the first half year totaled US$980.93 billion, up 23.3 percent.

The administration predicted that the figure would grow by 20 percent to US$2 trillion this year, with the country's trade surplus reaching US$200 billion.

Huang Guohua, senior analyst with the administration, said China's trade surplus rose to a new high in June because domestic companies, whose export tax rebates were cut on July 1, were rushing exports out its doors.

The Chinese government announced on June 19 it would cut or eliminate export tax rebates for 2,831 commodities from July 1 in an attempt to "suppress overheated export growth and ease frictions between China and its trade partners". "

source: chinadaily.com.cn

You're -partly- right, but one can't say that Thailand will benefit just because China cut/eliminate export tax rebates. It's a bit more complicated than that I'm afraid.

Chinese imports rose 14.2 %, whilst Thai imports declined dramatically (don't have the % at hand; sorry).

Also, exports did indeed rise but the profits were lower....= higher Baht.

Exports=Oversees buyers [majority buy in US$'s] and they are NOT willing to pay more $'s for a certain product than previously; so, Thai exporters have no other choice than lowering their profits...

For example: rice exports rose but profits declined.

I mentioned it before: Thai fundamental economics might still be in place but that just counts for industrial production and service industry + tourism.

The, poor, -Thai majority- in rural areas still suffer, big deal, because they work in agriculture and also because that particular 'industry' is extremely diversified, read: small farmers.

And that's sad, very sad.

LaoPo

you are absolutely right with your comments - and those are the precise reasons i started my post with the words "for the time being" meaning that any gains would be slight and temporary...

Thanks but how do you know that there is or will be a 'reprieve' in Thai exports because of the Chinese steps to cut/eliminate tax rebates, even if it's slight and/or temporary ?

I'm puzzled, but maybe you know something that I don't. But, it could be that there are statistics I haven't seen or know about.

It was a good thing of China to cut/eliminate tax rebates in order to try and cool down the economy but it remains to be seen HOW Chinese exporters are dealing with this, since the steps are just some 10 days old -since July 1-.

But that it will have it's affects on exports is certain; how much is the question.

And, if Thailand will benefit...? hope so.

LaoPo

[LaoPo]

I mentioned it before: Thai fundamental economics might still be in place but that just counts for industrial production and service industry + tourism.

The, poor, -Thai majority- in rural areas still suffer, big deal, because they work in agriculture and also because that particular 'industry' is extremely diversified, read: small farmers.

And that's sad, very sad.

LaoPo

Yes it is sad and it will get worse if the economy falters and members of these families cannot work in the cities and send money home. People point to the strong fundamentals of current account surpluses and large foreign reserves, but the surpluses come from a lack of investment (imports of capital equipment) and the foreign reserves from a central bank that has been selling THB and buying USD's to weaken its currency. It looks good and brings hot money in, but does nothing for private investment, which creates jobs.

While a lot of negative things have been said about Thaksin, one positive thing is that his focus was on a strong economy. The stronger the economy was, the more money he made.

You're so right.

In my own opinion there are 2 Thailands.

1. The industrial, service, tourism, real estate, cement, electronics, car/parts-production etcetera, etcetera...Thailand

2. Rural -agricultural- Thailand where the vast majority of Thai live and work and where more than 50% of Thai Labor produces a mere 16% of the total.

That says it all.

LaoPo

[Payboy]

for the time being, thai exports have a reprieve - even with the rising value of the baht - that's because export prices of general goods from china are scheduled to climb 8-15% this month due to a withdrawal of export incentives.

I think it's not so easy as you described.

"China's trade surplus in June hit a new high of US$26.91 billion, up 85.5 percent on the same month last year, the General Administration of Customs said on Tuesday.

The aggregate surplus for the first half of the year jumped 83 percent to US$112.5 billion, it said.

Imports rose 14.2 percent to US$76.36 billion in June but exports grew 27.1 percent to US$103.27 billion. The growth rate in June's exports was 1.6 percentage points lower than that in May.

China's foreign trade volume for the first half year totaled US$980.93 billion, up 23.3 percent.

The administration predicted that the figure would grow by 20 percent to US$2 trillion this year, with the country's trade surplus reaching US$200 billion.

Huang Guohua, senior analyst with the administration, said China's trade surplus rose to a new high in June because domestic companies, whose export tax rebates were cut on July 1, were rushing exports out its doors.

The Chinese government announced on June 19 it would cut or eliminate export tax rebates for 2,831 commodities from July 1 in an attempt to "suppress overheated export growth and ease frictions between China and its trade partners". "

source: chinadaily.com.cn

You're -partly- right, but one can't say that Thailand will benefit just because China cut/eliminate export tax rebates. It's a bit more complicated than that I'm afraid.

Chinese imports rose 14.2 %, whilst Thai imports declined dramatically (don't have the % at hand; sorry).

Also, exports did indeed rise but the profits were lower....= higher Baht.

Exports=Oversees buyers [majority buy in US$'s] and they are NOT willing to pay more $'s for a certain product than previously; so, Thai exporters have no other choice than lowering their profits...

For example: rice exports rose but profits declined.

I mentioned it before: Thai fundamental economics might still be in place but that just counts for industrial production and service industry + tourism.

The, poor, -Thai majority- in rural areas still suffer, big deal, because they work in agriculture and also because that particular 'industry' is extremely diversified, read: small farmers.

And that's sad, very sad.

LaoPo

you are absolutely right with your comments - and those are the precise reasons i started my post with the words "for the time being" meaning that any gains would be slight and temporary...

Thanks but how do you know that there is or will be a 'reprieve' in Thai exports because of the Chinese steps to cut/eliminate tax rebates, even if it's slight and/or temporary ?

I'm puzzled, but maybe you know something that I don't. But, it could be that there are statistics I haven't seen or know about.

It was a good thing of China to cut/eliminate tax rebates in order to try and cool down the economy but it remains to be seen HOW Chinese exporters are dealing with this, since the steps are just some 10 days old -since July 1-.

But that it will have it's affects on exports is certain; how much is the question.

And, if Thailand will benefit...? hope so.

LaoPo

i know because my business is spread over several products covered by the recent chinese announcement - we have vendors all over south-east asia, as well as the chinese mainland.

several locally (thai) produced items with low entry-barrier (lower transfer-of-vendor cost) such as basic clothing, plastic moulding, single-use products, etc have long been on the brink of moving to china. some (maybe only a few) american / european companies chose to buy such articles from thailand only because the net saving on transferring production of those to china was only marginal given the quality, productivity, convenience and other issues. such buyers would now have been quick to move their business volume to china given a severely strong baht, had it not been for the price increase announced by chinese producers.

chinese exporters have already started sending price revision notices to their clients since last month!

the chinese policy is actually going to hit hong kong / taiwan trading companies really hard - because their onward quotes were usually the same as their buying prices in china, having factored their profits into the incentive drawback scheme.

[LaoPo]

i know because my business is spread over several products covered by the recent chinese announcement - we have vendors all over south-east asia, as well as the chinese mainland.

several locally (thai) produced items with low entry-barrier (lower transfer-of-vendor cost) such as basic clothing, plastic moulding, single-use products, etc have long been on the brink of moving to china. some (maybe only a few) american / european companies chose to buy such articles from thailand only because the net saving on transferring production of those to china was only marginal given the quality, productivity, convenience and other issues. such buyers would now have been quick to move their business volume to china given a severely strong baht, had it not been for the price increase announced by chinese producers.

chinese exporters have already started sending price revision notices to their clients since last month!

the chinese policy is actually going to hit hong kong / taiwan trading companies really hard - because their onward quotes were usually the same as their buying prices in china, having factored their profits into the incentive drawback scheme.

Interesting and you're right.

I learned from business friends that Chinese manufacturers from Guangdong [shenzhen, Guangzhou ect.) are moving their production facilities -almost overnight- to cheaper locations in more north/western regions such as Chongqing and Chengdu because salaries (not the basic materials, of course) are a lot lower there.

The upper northern region is also booming (like Jilin province) since the salaries are also lower than southern/eastern provinces.

Interesting times for sure and hope you can manage your Thai produced items to stay competitive.

LaoPo

[Payboy]

Interesting times for sure and hope you can manage your Thai produced items to stay competitive.

thanks - would fight to keep our business here - for a start we are changing from dollar based calculations to other currencies...

Edited July 10, 2007 by Payboy

[LaoPo]

Interesting times for sure and hope you can manage your Thai produced items to stay competitive.

thanks - would fight to keep our business here - for a start we are changing from dollar based calculations to other currencies...

Interesting...but do your customers accept that (if they're used to buy in $'s...are they willing to take the risks?)

LaoPo

[LaoPo]

Japan doubled the amount of foreign currency reserves it makes available to Thailand to shield against a possible financial crisis.

UP to 6 Billion US$ - instead 3 Billion...

Japan, Thailand expand currency swap pact

TOKYO (Thomson Financial) - Japan said Tuesday it had doubled the amount of foreign currency reserves it makes available to Thailand to shield against a possible financial crisis.

Under the bilateral arrangement, Japan will now offer up to 6 billion US dollars from its foreign exchange reserves to Thailand in the event of a currency crisis, a finance ministry statement said.

Previously, it had made up to 3 billion dollars available in exchange for the baht.

Thailand for its part will continue to provide up to 3 billion dollars to Japan in exchange for yen if needed.

The pact is part of the Chiang Mai Initiative of bilateral currency swaps set up by Southeast Asian nations plus Japan, China and South Korea in May 2000 as part of efforts to prevent a repeat of the 1997 East Asian financial crisis.

Asia now holds the bulk of the world's foreign reserves at some 2.7 trillion dollars, led by China, which alone has more than 1.0 trillion dollars.

Asian finance ministers agreed in May to pool part of their huge forex reserves to enable a country to borrow foreign currency from another more quickly until a crisis passes.

ABCmoney.co.uk

Interesting.

LaoPo

[Mid]

hummn ,

if i borrow $10 from you , it's my problem

now

if I borrow a couple of billion who's got the problem ??

[LaoPo]

hummn ,

if i borrow $10 from you , it's my problem

now

if I borrow a couple of billion who's got the problem ??

I would never lend you a couple of Billion...

Serious: IF such a crisis would happen, Thailand would virtually be owned by the Japanese...not a pretty future sight.

LaoPo

[MaiPenLai]

Japan doubled the amount of foreign currency reserves it makes available to Thailand to shield against a possible financial crisis.

UP to 6 Billion US$ - instead 3 Billion...

Japan, Thailand expand currency swap pact

TOKYO (Thomson Financial) - Japan said Tuesday it had doubled the amount of foreign currency reserves it makes available to Thailand to shield against a possible financial crisis.

Under the bilateral arrangement, Japan will now offer up to 6 billion US dollars from its foreign exchange reserves to Thailand in the event of a currency crisis, a finance ministry statement said.

Previously, it had made up to 3 billion dollars available in exchange for the baht.

Thailand for its part will continue to provide up to 3 billion dollars to Japan in exchange for yen if needed.

The pact is part of the Chiang Mai Initiative of bilateral currency swaps set up by Southeast Asian nations plus Japan, China and South Korea in May 2000 as part of efforts to prevent a repeat of the 1997 East Asian financial crisis.

Asia now holds the bulk of the world's foreign reserves at some 2.7 trillion dollars, led by China, which alone has more than 1.0 trillion dollars.

Asian finance ministers agreed in May to pool part of their huge forex reserves to enable a country to borrow foreign currency from another more quickly until a crisis passes.

ABCmoney.co.uk

Interesting.

LaoPo

Under the agreement made between Thailand and Japan, Tokyo will now offer up to US$6 billion from its foreign exchange reserves to Thailand in the event of a currency crisis. Thailand will provide up to

US$3 billion to Japan in exchange for Japanese yen if needed.

Also, the amount of loan would be increased to 20 per cent from the current 10 per cent before a borrowing country could seek financial assistance from the International Monetary Fund (IMF), Mrs. Pannee said.

She said the bilateral agreement would further boost Thailand's credibility in international financial markets and also to would-be foreign investors. The agreement will carry a three-year maturity

date, starting from when it is endorses. (TNA)-E111

Quote from MCOT story.

Deal not inked yet but interesting none the less