ASEAN Market Watch: Slipping Industrial Confidence in Thailand, Philippine Air Expansion, and the Looming Threat of Malaysian Debt
Thailand: Industrial Confidence Dips First Time in Five Months
Thai industrial confidence has dipped for the first time in five months. Drawing on data accumulated in January of 2016, Suphan Mongkolsuthee, Chairman of the Federation of Thai Industries (FTI), indicated that the Thai Industries Sentiment Index (TOSO) dropped from 87.5 in December 2015 to 86.3 as of January 2016.
Industry analysts believe that the dip was caused by multiple factors, including drought concerns, risks in the global markets, particularly China, as well as low domestic spending. In addition, the outlook for the next three months was forecast at 100.8 points, which is lower than the sentiment point for December 2015, when it was 102.7 points. Despite the downturn, the index remaining above 100 bodes well for investors. This indicates that the business and industry confidence still remain relatively high, which is reflective of numerous prospective business opportunities in the next three months.
Philippines: Philippine Airlines Signs New Deal with Airbus to Expand Fleet
Philippine Airlines (PAL) has signed a new deal with Airbus to expand their fleet. PAL ordered six new wide-body aircrafts for around US $1.8 billion. Jamie Bautista, PAL’s president, and Fabrice Bregier, the president of Airbus, announced that PAL will start taking delivery of the A350-900 jets in two years.
The airline is expanding its fleet to cater to the demand of the growing population of Philippine nationals working abroad. Bautista argues that the airline market is growing and a booming economy will ensure that more Filipinos are able to afford travel in the coming years. The introduction of new airplanes will allow PAL to operate non-stop flights to several US cities and a few direct routes to European cities as well. In addition to allowing for increased global coverage, the increased capital expenditure of PAL is indicative of a positive outlook on the Philippine market, particularly in the aviation and travel sectors. This development bodes well for investors who are looking to invest in the aforementioned sectors in Philippines within the coming years.
Malaysia: Independent Survey Reveals Malaysians Most Indebted in Asia
Recent survey data has revealed that Malaysians are the most indebted among several Asian countries. The survey conducted by Manulife, an insurance firm, states that 68 percent of Malaysians are in some level of debt. This is the highest proportion of the eight markets surveyed. The countries surveyed included: Hong Kong, China, Taiwan, Japan, Singapore, Malaysia, the Philippines, and Indonesia. The company compiled the Manulife Investor Sentiment Index, which revealed the regional average of debt to be around 33 percent.
Average debt levels in Malaysia are nearly ten times the average monthly income. Several factors are responsible for these levels of debt, including high daily living expenses, high rents, and education. Analysts state that while such debt may be natural in such an economy, the high proportion of relatively longer-term debt is a larger worry. They believe that such debt could stifle spending capability in the country, which could adversely affect the market conditions. In addition, such levels of debt could be symptomatic of poor financial management. Thus, investors looking to invest in Malaysia should make a wary approach to mitigate their financial risks.
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