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Thailand 2015: Re-engaging engines of growth

June 2015

I. Thailand’s engines of growth

II. Thai corporates target for sustainable growth

III. Thai capital markets: connectivity to regional opportunities

Re-engaging engines of growth

Source: Office of the National Economic and Social Development Board (NESDB), Department of Tourism, Bank of Thailand, IMF’s World Economic Outlook, April 2015

(%YoY) 2013 2014 1Q2015 2015

GDP Growth 2.9 0.7 3.0 3.0-4.0 (f)

- Private consumption 0.2 0.3 2.4 2.3 (f)

- Private investment -2.8 -1.9 3.6 3.8 (f)

- Public consumption 4.9 2.8 2.5 3.8 (f)

- Public investment 1.3 -6.1 37.8 15.8 (f)

- Export value of goods -0.2 -0.3 -4.3 0.2 (f)

- Import value of goods -0.4 -8.5 -7.2 -0.8 (f)

- Number of international tourists (%YoY) 18.7 -6.7 23.5 8.0 (f)

(million) 26.7 24.8 7.9 27.0 (f)

• Thailand’s economic recovery is gaining momentum. • The economy grew by 3 percent in 1Q2015. In 2015, growth will likely expand at a healthy pace of 3-4 percent.

Thailand: Medium-term GDP growth forecast

0.1

6.4

2.9

0.7

3.0

4.4 4.3 4.3

0

1

2

3

4

5

6

7

2015f 2016f 2017f 2018f

(%)

3

I. Re-engaging engines of growth

Actual Forecast*

Note: 2015 forecast by NESDB, 2016 onward forecast by IMF

Source: Bank of Thailand, Public debt management office , Fiscal Policy Office 1/ International reserves and net forward positions 2/ Calculate base on fiscal year basis

External debt and international reserves (billion USD)

• Unlike the run-up to the Asian financial crisis of 1997, Thailand’s economic stability is currently sound. • External vulnerability appears manageable with strong foreign reserves and a current account surplus. • Strong commitment to fiscal discipline is reflected in sound fiscal positions and well-managed public debt.

4

Public debt and fiscal balance (percent of GDP)

0

50

100

150

200

250

Apr-1

5

Short-term external debt

Gross external debt

Net international reserves 1/ 180

138

55

0

10

20

30

40

50

60

-10

-5

0

5

10

15

Apr-1

5

Fiscal balance/ GDP (LHS) 2/Current account/ GDP (LHS) 2/Public debt/ GDP (RHS) 2/

(%) (%)

2.3

43.5

Public debt to stay below fiscal sustainability framework, 60%


-4.0

0

10

20

30

40

50

0

5

10

15

20

Mar-1

5

Tier1 (LHS) CAR (LHS) Gross NPLs to total loan (RHS)

Source: Bank of Thailand, Bloomberg

Capital adequacy and Non-performing loans (%) (%)

16.3

13.0

2.3

• Falling oil prices will likely benefit the Thai economy: boosting purchasing power while lowering production and transportation costs.

• Financial sector resilience is strengthening. Banks are well-capitalized and asset quality has been stable.

5

Inflation (%YoY) (USD per barrel)

0

20

40

60

80

100

120

-2

0

2

4

6

8

10

Apr-1

5

headline inflation (LHS) policy interest rate (LHS)

oil price (RHS)

50

1.50


-1.04

Source: Ministry of Tourism and Sports

6


• International tourist arrivals and receipts quickly rebounded as political stability returned.

Tourism receipts per head (baht) (% YoY)

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

38,000

40,000

42,000

44,000

46,000

48,000

50,000

52,000

1Q20

13

2Q20

13

3Q20

13

4Q20

13

1Q20

14

2Q20

14

3Q20

14

4Q20

14

1Q20

15

Tourism receipts (LHS) %YoY (RHS)

* 2014 tourism receipts contributed 9.5% in GDP

Number of international tourist arrivals

-20%-15%-10%-5%0%5%10%15%20%25%30%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1Q20

13

2Q20

13

3Q20

13

4Q20

13

1Q20

14

2Q20

14

3Q20

14

4Q20

14

1Q20

15

No.of international tourists (LHS) %YoY (RHS)

(thousand) (%)

7,876 50,050

7

• Infrastructure investments in the pipeline will boost the country’s potential, support regional connectivity, and enhance logistic efficiency.


Bangkok public

transport39%

Railway network

26%

Regional connectivity road and motorway

27%Water freight

5%

Airport capacity

expansion3%

Transportation Infrastructure Development (Total of USD 58 Billion in 2015-2022)

Source: Office of Transport and Traffic Policy and Planning

8

• Bangkok public transport progresses as planned.



Bangkok public transport, 8 new lines (USD 23 billion)

Operating

1.Under construction (start operation in Dec 2015)

Operating

2.Under construction (start operation in 2016)

3.Under construction*

4.Under construction*

7.Bidding 2H15*

5.Bidding 2H15*

6.Bidding 2H15*

8.Bidding in 2015

Note: * construction complete in 2020

9

• Railway network has been developed in partnership with China and Japan.



4. North – South Corridor • linkage to Khunming • MOU Thai-China, Dec 2014 • construction starts Jan 2016 • operating within 2019 • double track, standard gauge • speed: 180 km/h

3. Lower East – West Corridor • linkage to Myanmar • MOC Thai-Japan within 2Q2015 • feasibility study

Railway network (USD 15 billion)

2. Bangkok-Chiang mai high speed train • MOC Thai-Japan within 2Q2015 • construction start Jan 2016 • speed: 200 km/h

1. Upper East – West Corridor • feasibility study

Source: The customs of Thailand, IMF's World Economic Database, forecast as of October 2014 *CLMV= Cambodia, Laos, Myanmar and Vietnam. Real GDP growth rate for CLMV is weighted averaged. **CLMM= Cambodia, Laos, Myanmar and Malaysia (border trade). Real GDP growth rate for CLMM is weighted averaged.

Upturning industries (%YoY)

10


• The US economic recovery and robust growth in CLMV will be the key drivers for Thai exports in 2015.

25.4

7.7 8.911.1 10.6 10.2 9.6

0

10

20

30

ASEAN (9) CLMV CLMM US China EU (27) Japan

4M15

-3.3

10.6

-8.4

6.3

-11.0-5.0 -7.8

-25-15-55

15

ASEAN (9) CLMV CLMM US China EU (27) Japan

4M15

Thailand’s export growth by destination (value in term of USD)

Thailand’s exports by destination to total exports

(%YoY)

(%)

4M2014 4M2015 % to total exports

1. Auto and parts 1.96 5.30 15.1

2. Electronic parts 1.54 3.28 14.8

3. Agro-industrial products

-9.04 0.34 7.6

4. Electrical appliance 1.54 5.00 4.7

5. Steel -38.86 10.78 2.6

6. Jewelry -4.36 4.51 1.7

Total -5.8 3.50 46.5

0

100

200

300

Finance Resources* Property and construction

material

Technology Service** Agricultural industry

Industrials* Consumer products

Source: Stock Exchange of Thailand

Net profit growth by sector

• Non-oil firms grew robustly, supported by economic upturn and falling oil prices.

12

II. Thai listed companies

(billion THB)

+4.1% -51.8%

+3.5% +40.8% -23.1%

+26.1% -44.4%

-14.3%

2014 total net profit decreased 11% YoY Non-oil sectors net profit increased 5.7% YoY

* Resources and Industrials (oil sectors) ‘s 2014 profit directly effected by oil price ** Air transportation ‘s 2014 profit directly effected by tourism slow down

6.9

8.6 7.9

5.7

3.1

7.1 6.6

7.5

3.8 3.6

Thailand Singapore Malaysia Indonesia Phillippines

1Q/2014 1Q/2015

Source: Bloomberg

Net profits of listed companies on ASEAN exchanges in 1Q of 2014-2015

• Earnings of the Thai listed companies remain resilient in 1Q/2015 despite the slowdown.

13


(billion USD)

+2.9%

-23.3% -5.1%

-33.3%

+16.1%

6.3 7.4 14.3 20.9 23.5 36.5 37.2 56.7

107.0 144.6

-3.4

7.4 13.2 13.8 16.2 38.8 84.4 106.2 103.9

136.9

China Hong Kong Taiwan Korea Singapore Malaysia Japan Indonesia Thailand Philippines

USD Local currency

5-year (2010-2014) index performance (%); as of Dec 30, 2014

-6.3 -4.9 -2.5 -1.0

5.3 6.9 8.7 16.2 14.5

37.3

-0.2 -0.8 -0.1

0.8 4.8 4.2 10.4

16.2 18.9

37.0

Indonesia Malaysia Thailand Singapore Philippines Taiwan Korea Hong Kong Japan China

USD Local currency

YTD index performance and movement (%); as of May 2015

• SET ranks among the best performers in Asia over the past 5 years.

Source : Bloomberg, The Stock Exchange of Thailand

14


1.10

3.00

1.94 2.18 2.002.66

3.26 3.37 3.143.21

1.23 1.44 1.59 1.82 1.97

2.99 3.00 3.08 3.223.33

Korea China Japan Philippines Indonesia Taiwan Thailand Hong Kong Malaysia Singapore

May 2014 May 2015

10.86 10.7914.91 14.55 13.76 13.50 16.75 15.52

7.91

18.53

11.46 13.00 13.56 14.09 15.01 16.20 16.30 16.3418.36 19.61

Korea Hong Kong Taiwan Singapore Thailand Japan Malaysia Indonesia China Philippines

May 2014 May 2015


(%)

Market Dividend Yield

Forward P/E ratio

Source : Bloomberg, The Stock Exchange of Thailand

15

(times)

• SET’s valuation and dividend yield are comparable with those of regional peers.

9 9 10 13 20 9 9 9 10 16 7 7 8 10 13

16 17 20 21 24

9 11 12 21

27

10 11 13 14

19

14 17 20

27

40

11 11 11

13

14

Technology

Services

Resources

Property & Construction Industrial

Financials

Consumer product Agro & Food Industry

16


• Thai corporates gear toward sustainable growth strategies and international expansion.

Number of Thai listed companies invested abroad

Source : The Stock Exchange of Thailand

78%

59%

43%

22% 19% 13% 11% 9% 8%

Proportion of investment target region (data as of 2014)

Source : MSCI, DJSI Note: DJSI Emerging Market Index has been calculated since 2013

• Thai stocks continued to expand their presence on the leading global indices - MSCI and DJSI, reflecting the strong potential and world-class quality of Thai listed companies.

Number of Thai stocks in MSCI Standard index

17


Number of Thai stocks in DJSI Index

1620

2529

0

5

10

15

20

25

30

35

12

344

10

0

2

4

6

8

10

12

DJSI World Index

DJSI Emerging Market Index


19

III. Thai capital market landscape

• Various schemes to facilitate foreign listing are available to suit different capital requirements and business structures.

Holding Company

1 Primary Listing

2 Secondary

Listing

3 Infrastructure

Trust

4 Real Estate

Investment Trust (REIT)

5

Foreign Company

Listed company in Home Exchange

(e.g. JPX)

Listed company on SET

Infrastructure Asset (or)

Infrastructure company

Infrastructure trust

Real estate property

Real estate Investment trust

(REIT)

Ordinary Share Unit Trust

Holding Company (Thai incorporated)

Core Company (Foreign subsidiary)

Hold > 50%

Listing of the Thai holding company with core companies operating overseas

Listing of a company incorporated abroad on the SET as a primary exchange

Allow a foreign listed company to list on SET as the Secondary Listing

Listing of Foreign Infrastructure Projects

Listing of Foreign Real Estate

20


• Fund raising for IPO on SET has been the most active in ASEAN since 2013.

6,447

2,669

1,536

5,183

947

3,447

1,685

274

2,614

328

2,484

796 415 12 5

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Thailand Malaysia Indonesia Singapore Philipphines

2015 (YTD)

IPO fund raising in ASEAN (million USD, data as of May 2015)

Source: Bloomberg

Source: Stock Exchange of Thailand

• The Thai capital market has grown significantly during the past 10 years.

21


Market capitalization composition

0

1

2

3

Agricultural industry

Consumer products

Finance

Industrials

Property and construction

material

Resources

Service

Technology

2005 1Q2015

(trillion THB)


15 1624

38

45

12500

550

600

650

700

0

10

20

30

40

50

2015(YTD)

Newly listed securities (LHS)Total listed securities (RHS)

Breakdown of number of listed companies No. of newly listed securities Total outstanding Companies under listing

application consideration 2014 2015 (YTD) 2015 (YTD) Stocks: SET 16 7 508 13 Stocks: mai 3 114 8 Property funds & REIT 1 55 5 Infrastructure funds 1 4 1

Total 45 12 681 27

Source: The Stock Exchange of Thailand * Listed companies in SET and mai and property funds & REIT and Infrastructure funds

• The number of listed companies and securities has consistently increased due to new IPOs.

22

Number of newly listed securities* data as of May 2015

Property funds & REIT2%

mai5%

Infrastructure funds37%

SET56%

Market capitalization of newly IPOs (YTD) data as of May 2015

YTD market capitalization of new IPOs THB 147,532 million 681

570 580 599

633

671

Source : World Federation of Exchanges (WFE), The Stock Exchange of Thailand *Share turnover velocity is calculated by {Monthly EOB Domestic Share Turnover / Month-end Domestic Market Capitalization) *12


23

• The Thai stock market has been the most liquid market in ASEAN for three consecutive years.

Daily average turnover (million USD, data as of April 2015)

0200400600800

1,0001,2001,4001,6001,800

2015 (YTD)

Thailand Singapore MalaysiaIndonesia Philippines

1,459

884

564

206 393

Transactions by investor type (Daily average trading value: million THB) data as of May 2015

(3,495) (3,886) (4,198) (6,347) (4,283)

23% 24% 22% 20% 21%

9% 8% 9% 9% 9%

13% 13% 13% 9% 9%

55% 55% 57% 63% 61%

2015 YTD

Foreign investors Local institutes

Proprietary trading Local retail investors

(18,018) (16,287) (17,765) (28,742) (29,904)

(3,495) (3,886) (4,198) (6,347) (4,283)

(2,205) (2,586) (2,512) (4,294) (4,598)

(5,347) (6,713) (7,830) (10,940) (10,440)


24

(billion THB) Foreign holding value, proportion and SET Index


• Foreign investors holding in Thai stocks have been quite stable despite international and domestic uncertainties.

1,8802,669

3,066

4,6654,159 4,453

35.3

34.0

36.335.9

34.5

32.7

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

30

31

32

33

34

35

36

37

38

2010( Apr)

2011(May)

2012(Apr)

2013(Apr)

2014(Apr)

2015(May)

Foreign Holding Value % Foreign Holding

(% of Thai stock market capitalization)

Holding value proportion by investor types

SET Index 763.51 1,073.83 1,228.49 1,597.86 1,414.94 1,496.05

36.8% 35.9% 34.5% 32.7%

14.8% 24.6% 24.8% 23.5%

48.4% 39.5% 40.6% 43.8%

Foreign investors Local institutes

Local retail investors

(% of Thai stock market capitalization)

Number of listed companies having market capitalization >= $1 billion and daily average trading value** >= $10 million data as of May 2015

Source : World Federation of Exchanges (WFE), Bloomberg * GDP 2014 **Average daily trading value during Nov 2014 - May 2015

24 23

97

Thailand Singapore Malaysia Indonesia

25

• SET has a relatively larger number of liquid large-cap listed companies, compared to peers.


Market capitalization data as of April 2015 792

476 445397

258

141 11746

Singapore Malaysia Thailand Indonesia

Market cap. Size (billion USD) % Market cap. to GDP*

Source: Asian Corporate Governance Association * Remark on Thailand: ACGA sees Thailand is moving ahead with pre-existing national CG policies and plans. Enforcement is also better. However, political / regulatory falls in Thailand remain a drag, though this could be improved as political blockage is solved and institutional framework is enhanced.

ACGA ’s CG Watch market scores: 2007 to 2014*

67.7%62.3%

55.7%48.9%

43.3%

28.4%

75.4%71.7% 71.7%

58.0%54.6%

33.9%

0%

20%

40%

60%

80%

Thailand Malaysia Singapore Philippines Indonesia Vietnam

ASEAN corporate governance scorecard 2012 - 2013 **

Source : Joint Initiative of the ASEAN Capital Markets Forum and the Asian Development Bank ** average total corporate governance score of the country’s 100 largest listed companies based on market capitalization

2007 2010 2012 2014

1.Hong Kong (67) 1.Singapore (67) 1.Singapore (69) 1.Hong Kong (65)

2.Singapore (65) 2.Hong Kong (65) 2.Hong Kong (66) 1.Singapore (64)

3.India (56) 3.Japan (57) 3.Thailand (58) 3.Japan (60)

4.Taiwan (54) 4.Thailand (55) 4.Japan (55) 4.Thailand (58) *

5.Japan (52) 4.Taiwan (55) 4.Malaysia (55) 4.Malaysia (58)

6. Korea (49) 6.Malaysia (52) 6.Taiwan (53) 6.Taiwan (56)

6. Malaysia (49) 7.India (49) 7.India (51) 7.India (54)

8.Thailand (47) 7.China (49) 8.Korea (49) 8.Korea (49)

9.China (45) 9.Korea (45) 9.China (45) 9.China (45)

10.Philippines (41) 10.Indonesia (40) 10.Philippines(41) 10.Philippines(40)

11.Indonesia (37) 11.Philippines(37) 11.Indonesia (37) 10.Indonesia (39)

26


• Thailand is internationally recognized as a leader in capital market corporate governance.

10,381 10,212 17,690 16,467 23,218 58,790

93,868

6,468 8,849 34,351

80,100

89,177

16,479 14,927

9,009

6,293

5,623

2009 2010 2011 2012 2013 2014 2015 (YTD)

Others*

Currency futures

Gold futures

Single stock futures

SET50 index futures

Source: The Stock Exchange of Thailand * Others comprise of Oil futures, SET50 Index options, Silver futures, Interest rate futures and Sector futures Note: TFEX has modified its SET50 futures contract to have a smaller contract size on May 6, 2014. The new SET50 futures, or mini-SET50 futures, have a contract size that is one-fifth that of the previous one. The contract multiplier was reduced from THB 1,000 per index point to THB 200 per index point, resulting in a drop in size to about THB 200,000. 27

• Thai derivatives market is growing rapidly, expanding multi-asset-class investment capability

Daily average trading volume in TFEX (number of contracts per day)

CAGR 2008-2014 60%

Total 12,771 18,676 41,145 147,025


43,823 68,017 191,076

data as of May 2015

Disclaimer

This document was prepared by The Stock Exchange of Thailand in good faith upon sources believed to

be reliable but no representation or warranty expressed or implied is made to their accuracy or correctness.

The Stock Exchange of Thailand accepts no liability for any direct or consequential loss or damage arising

from any use of this document or its contents. All information and opinion expressed here is subject to

change without notice. The copyright belongs to The Stock Exchange of Thailand. No part of this document

may be published or copied in any form or by any means without the written permission of The Stock

Exchange of Thailand.

28

Post-Trade Services Clearing & settlement Central Depository Securities registration

Derivatives SET50 index futures Single stock futures Gold futures Interest rate futures Oil futures Currency futures Sector Index Futures

Equities Domestic common shares Dual listings State enterprise listings SME listings Warrants Property funds / REITs / Infrastructure Fund Domestic mutual funds / ETFs Domestic indices / FTSE indices Shariah index Derivative warrants

Fixed Income Corporate bonds Government and state

enterprises bonds

SET Information Services SET listed companies &

product information database

Exchange and

Trading

Post-Trade Services

Data, System and Other Services

Integrated

Model

Appendix: Trading at SET

29

REIT: first listing in October 2014


30


Impact Growth Real Estate Investment Trust (IMPACT) • Investing in freehold right of Building Exhibition and Conference of Project IMPACT, Muang Thong Thani, on 4 buildings including utilities and equipment.

3 REITs listed on SET in 2014 Important Codes Regarding REIT

LH Shopping Centers Leasehold Real Estate Investment Trust (LHSC) • Investing in the leasehold right in immovable properties and the ownership in movable properties in Terminal 21 Shopping Center.

1 REITs listed on SET in 2015

TICON Freehold and Leasehold Real Estate Investment Trust (TREIT) • Investing in freehold and leasehold rights of land together with factories and warehouses of TICON Industrial Connection PCL. and TICON Logistics Park Co.,Ltd.

• The paid-up capital after units offering must be ≥ THB 500 million; • Main Investment: - All kinds of real estates, with the objective of seeking benefits in the form of rental income; - Investment in real estates abroad; - Real estates already generating income must be ≥ 75% of the total value of units offered plus loans (if any); • Leverage limit: ≤ 35% of the total assets; in the case of assets with an investment grade, ≤ 60% of the total assets. • Foreign investment limited 49% of units holding.

WHA Premium Growth Freehold and Leasehold Real Estate Investment Trust (WHART) • Investing in the freehold and leasehold rights of properties in distribution and logistic center in Ladkrabang and Bangna zone.

Infrastructure fund listing: first listing in April 2013

BTS rail mass transit growth infrastructure fund (BTSGIF) • 60 billion baht IPO size : the largest IPO in Thailand • Revenue from the operation of the original BTS sky train system.

4 infrastructure funds listed on SET

Amata B.Grimm power plant infrastructure fund (ABPIF) • 6 billion baht IPO size • Revenue from the operation of power plants for industrial sectors in Thailand and Vietnam


True Telecommunications Growth Infrastructure Fund (TRUEIF) • 58 billion baht IPO size: the first telecom infrastructure fund • Revenue from the rental of 5,845 telecommunication towers, core fiber-optic cable grids and related transmission equipment.

31

Jasmine Broadband Internet Infrastructure Fund (JASIF) • 55 billion baht IPO size • Revenue from the rental of fiber-optic network for broadband internet.


1 infrastructure fund to listed on SET in 2015

North Bangkok Power Plant Block 1 Infrastructure Fund , Electricity Generating Authority of Thailand (EGATIF) • 20 billion baht IPO size • The Right to availability payments (AP1) of EGAT's North Bangkok Power Plant Block 1 for 20 years period, with a contracted power generation capacity of 670 megawatts.

NVDR

43.83%Local

Shares46.60%

Foreign

Shares9.59%

Proportion of trading value by type of stocks by foreign investors

Trade stock-F

Most SET-listed Thai companies have foreign ownership restriction. Check out foreign ownership restriction of each stock via www.set.or.th >> company/securities info >> equity >> then select your preferred company.

2 options to get all benefits from investing in Thai stocks.

Option 1: Mostly for strategic shareholders

Trade NVDR stock or stock-R

•Another option is to trade NVDRs. (Non-Voting Depository Receipts) •Obtain all financial benefits with the exception of voting rights. •Gain greater efficiency, flexibility and convenience as if you are local investors.

Option 2: General option


Remarks: Trading stocks on local board is applicable. However, to get all benefits, stocks should be transferred to stock-F or stock-R. NVDRs traded on local board, no price different from local stocks.

Source: SET, May2013 - Apr2014

32

http://www.set.or.th/

Appendix: Foreign investor information center

• Follow the updates on the Thai economy and capital market developments on SET website.

33

http://www.set.or.th/en/news/econ_mkt_dev/overview_p1.html

Appendix: GMS Exchanges information center

• SET and GMS exchanges agree to exchange market information to be shown on GMS Exchanges’ information. The website will be an integrated single-window view into the GMS capital market.

34

http://www.set.or.th/en/gms_exchanges

35

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By Invitation Only

Opportunity Growth and Reform

26 – 28 August 2015 Bangkok, Thailand

By Invitation Only

The largest forum ever in Thailand where investors can learn about Thailand’s economic, investment and policy environment from a range of experts, including senior government officials and business leaders.

Upgrading the international profile of the Stock Exchange of Thailand (SET) and regional capital markets by bringing together the lesson learned from the key stakeholders around the world.

For more information, please visit us at www.set.or.th

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