June exports blamed for SET slump
STOCK ANALYSTS blamed poor June export figures and the decline of Asian stock markets for a big drop in the SET Index yesterday, which plunged to the lowest level in more than seven months.
The Stock Exchange of Thailand’s main index slipped 25.53 points or 1.78 per cent to close at 1,412.55. It plunged to the lowest level of 1,410.72 during yesterday’s trades. Trading volume exceeded Bt40 billion.
Padermpob Songkroh, managing director of Kasikorn Securities, said two main factors contributed to the SET’s drop: the sell-offs in nearly all stock markets in Asia due to a sharper-than-expected decline of China’s economy, and Thai export figures released by the Commerce Ministry yesterday.
First-half exports, especially from the agricultural sector and industry, slid by 4.8 per cent to US$106.85 billion (Bt3.72 trillion) because of weak overall global trade, despite the depreciating baht, according to the ministry.
“Because of the large decline in Thai exports in June and the gloomy global economic recovery, the ministry will need to revise down the 1.2-per-cent export-growth target soon,” said Somkiat Triratpan, director of the ministry’s Policies and Trade Strategies Bureau.
“The unclear global economic recovery and declining oil and gold prices will spoil Thai exports in the following months.”
Isara Vongkusolkit, chairman of the Board of Trade of Thailand and the Thai Chamber of Commerce, said the export slump in the first half of this year had been in line with that of other nations amid fragile growth of the global economy.
However, he foresees a return to export growth in the remaining months thanks to the depreciation of the baht. Still, exports for the whole year will inevitably face negative growth because the global economy has still not recovered.
The Commerce Ministry reported that exports in June continued contracting for the sixth month by 7.9 per cent to $18.16 billion, the sharpest year-on-year decline in three and a half years since December 2011.
Imports last month barely budged, falling 0.2 per cent to $18.01 billion. This left the country with a monthly trade surplus of $150 million. In the first half, imports declined 7.9 per cent to $103.38 billion, leaving a cumulative trade surplus of $3.47 billion.
However, the continuing depreciation of the baht should help drive exports somewhat. Export growth should return to positive territory by next month or next quarter.
In June, agricultural exports fell 4.1 per cent, while industrial shipments dropped 7.7 per cent, mainly due to automobiles, particularly pickup trucks.
Exports to some countries declined again, mainly to the United States (0.1 per cent), Japan (4.2 per cent), China (0.8 per cent) and Asean (7.1 per cent).
Only shipments to the CLMV (Cambodia, Laos, Myanmar and Vietnam) markets rose by 10.8 per cent last month.
The ministry predicts that the price of oil in the world market will increase in the final quarter of the year, resulting in more exports and imports. Last month, the average Dubai oil price was $61.76 per barrel, down 42.8 per cent year on year, while the baht averaged 34.1 against the US dollar, compared with 33.7 in May.
The gold price has also continued to decline, which would encourage more imports for speculation, Somkiat said.
Krungsri Research showed exports dipping further than expected in June, raising downside risk to its full-year forecast of a contraction by 2 per cent. Exports could see a three-year streak of declines this year.
The recent softening of the baht looks less likely to help boost export volume in line with what historical data suggest. The fresh rout in oil and commodity prices could continue to weigh on export prices and overall exports. Given the dismal export data in the first half, KResearch’s export forecast is skewed towards the worst-case scenario of a decline of 2 per cent this year.
Maybank Kim Eng projects exports of $19 billion for the rest of this year, which would yield a whole-year export contraction of about 2.9 per cent. Negative factors for exports include a short-term decline in exports of oil-related products, weaker external demand, falling prices of agricultural products, lower exports to the European Union and the EU threat of a ban on Thai seafood.
It doubts whether the interest-rate cut to weaken the baht could solve the weak exports mentioned in the Bank of Thailand’s statement at the last meeting of its Monetary Policy Committee.
The baht is not the only regional currency losing value. Others have also depreciated against the US dollar since the end of last year, including the Malaysian ringgit, the Indonesian rupiah, and South Korean won.
