● Exports fell at the steepest pace in five months (-4.5% YoY; consensus: -3.7%; Sep: -1.4%), but up 1.3% MoM

- Reflecting a high-base effect, weaker shipments of principle manufacturing goods and tapered demand from China.

● By product, the worsened exports figure was led by manufacturing and mineral & fuel

- Manufacturing (-2.6%; Sep: +0.2%): dwindling exports of unwrought gold, automotive and electrical equipment.

- Mineral & fuel (-34.5%; Sep: -22.8%): lessened shipments of refined fuels and crude oil, amid lower average Brent crude oil price (USD59.71/barrel; Sep: USD62.83/barrel).

● By destination, the weaker demand for Thailand’s exports was steered by China, the US and ASEAN-5

- Exports growth to China (-4.2%; Sep: +6.1%) and ASEAN-5 (-8.9%; Sep: 0.6%) turned negative, while exports to the US eased (4.8%; Sep: 7.8%), providing further signs of economic slowdown in key trade partners.

- The soaring THB, which has appreciated by 7.7% against the USD this year, will continue to exert pressure on Thailand’s export competitiveness in the immediate term.

● Imports declined to a two-month low (-7.6%; consensus: -6.5%; Sep: -4.2%)

- Attributable to a larger drop in imports of raw materials & intermediates (-9.4%; Sep: -5.4%), fuel lubricants (- 28.5%; Sep: -20.1%) and consumer goods (-0.8%; Sep: +11.0%), suggesting the government’s stimulus measures could be insufficient to uplift consumer activities.

- Trade surplus shrank to USD0.5b (Sep: USD1.3b) as imports (5.4%) charted a larger expansion compared to exports (1.3%) on a MoM basis.

● 2019 exports forecast revised lower to -1.0 to -2.0% from 0.0% to -1.0% (YTD: -2.4%; 2018: 6.9%) given the weaker-then-expected performance in October

- Rising headwinds from the US-China trade dispute, growth slowdown in key export markets and tech down cycle.

- After embarking on a second rate cut in November, we expect the Bank of Thailand to pause its monetary easing, keeping the policy rate at 1.25% by year-end. However, there is a slightly higher likelihood for it to be resumed as early as 1Q20 as recent domestic demand indicators and external development disappoint.

Source: Kenanga Research - 22 Nov 2019