It's the end of first quarter and we have already traveled to Malaysia, Indonesia, Hong Kong and Thailand to do on-the-ground research. We hope the preparation work done today will lay a very good foundation for better future. Below is a summary of our perspective after a company-visit trip to Thailand:

We last visited Bangkok in September 2014, a few months after the coup took place. The Thai market went up initially but have since then corrected over 20% from peak due to weak economic conditions. In fact, the weakness is even more apparent if one were to look at the sub-sectors. For example, the Technology and Resources sectors corrected nearly 40%. The 10% depreciation of Baht versus the US Dollar further exacerbated the weakness. We felt it was the right time to revisit the country, and so on 22nd February we landed in Bangkok to assess the ground sentiment and scout for opportunities. We met 15 companies, covering the property, infrastructure, financial, telecom, industrial, renewable energy and consumer sectors, over 3 days.

Business sentiment was very different compared to our last visit in 2014. Back then, there was a sense of relief after the Royal Thai Army stepped in to put an end to political uncertainty and struggle. Now, corporate heads we met are adopting a wait-and-see attitude. They felt there will be more uncertainties until the next election is held. Weak external environment and delays in domestic infrastructure projects were two reasons often cited for their cautiousness. Excesses created by the previous government’s policies, such as rice-pledge scheme and subsidies for first-time car buyers, would require more measures and effort before its negative impact can be removed.

While Thai economy is not yet at inflection point where growth accelerates again, we find comfort that expectations are low, which means share prices may have discounted a lot of negative elements. Thai economy will continue to be anchored by its dynamic SME*. They should thrive again when domestic factors stabilize. The cautiousness in the air did not stop us from discovering new ideas. Two companies have made it into our watch list. We will continue to monitor and act when the prices are right.

* p.s. As of 2014, there were over 2.7 million SMEs or 99.7% of total enterprises, according to Office of SME Promotion. SMEs contributed to 39.6% of the country’s GDP and 80.3% of overall employment. More in the SME whitepaper:

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