(Bloomberg) – Thailand’s currency rally will help reverse a slump in its IPO market and provide firepower for takeovers by Thai companies overseas, according to JPMorgan Chase & Co.
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IPOs will benefit from the prospect of the strong baht and a heightened profile for the country as international travel accelerates, said Marco Sucharitkul, JPMorgan’s country head for Thailand. The currency has appreciated about 12% against the dollar over the past six months, with an increase of more than 5% this month alone, making it the best performer in Asia over these periods.
An early litmus test for the IPO market will be a stock sale of SCG Chemicals Pcl, which is expected to revive its bid up to $3 billion – a record for Thailand. Parent company Siam Cement Pcl delayed the sale in October, citing risks to the global economy, volatility in energy markets, high inflation and the lockdown situation in China.
JPMorgan is among the advisors on the proposed offering, and Marco expects the issuance after mid-year.
“As the baht strengthens, it changes views on the market; We believe foreign interest is returning,” Marco said in an interview. “At the same time, Asian companies — including Thai companies — want to expand overseas, and a strong Thai baht will be favorable to local firms with global ambitions.”
Among the positive signs is that the benchmark SET index this month hit its highest level since April, with global funds so far net US$590 million invested in Thai equities – for a record 5-month inflows, according to data from Bloomberg $.96 billion in 2022.
About $4.1 billion was raised by IPOs in Thailand in 2022, down 0.5% year over year. Still, the drop would have been worse if there hadn’t been supportive demand from local investors.
The story goes on
“If you look at the IPOs that took off in Thailand last year, 70% to 80% were taken by local funds,” Marco said. “External demand was light as the US dollar was strong against currencies in the APAC region.”
Still, the baht’s recent rally has worried Thai exporters, manufacturers and some businesses, who complain the currency’s rapid rise is eroding their competitiveness and the country’s economic recovery, according to local trade groups.
However, the baht’s performance will prompt Thai firms to renew their efforts to invest overseas as the pandemic has dashed most plans, Marco said.
According to Marco, there have been few significant overseas acquisitions by Thai companies in the past year. In 2021, PTT Global Chemical Pcl acquired Allnex Holding GmbH, a European specialty chemicals producer, for €4bn ($4.35bn), while Central Group and its partners Selfridges & Co. for £4bn ($4 $.95bn) at one of the UK’s biggest retail outlets in years.
–With the support of Filipe Pacheco.
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