BUSINESS SUPPLEMENT The Japanese Yen weakened against the US dollar substantially following Trump’s election victory, moving from 102 to 118.65. Subsequent movements have respected the aforementioned 118.65 level as a temporary top and the pair has traded lower to 113 and 114 as part of an expected correction. Against the Thai Baht, the same movements have been mirrored with the Yen dropping from 0.35 down to 0.30 to the Thai Baht and recovering slightly to 0.315. FOREIGN CURRENCY UPDATE The US Dollar vs. the Thai Baht exchange rate has been remarkably stable when considering both oversees and local events. Following Trump’s election victory the Baht weakened slightly from 35 to the US Dollar to 36, a fall of just under 3%. Much of this move has been reversed in recent weeks with the US Dollar fetching 35.4 baht. Worth watching is the Dollar index (DXY), which measures the US Dollar’s overall strength against a basket of currencies. It has moved to multi-year highs, hitting 104 before retreating to 101. To give this some context the Dollar index has previously remained at below 95 for most of the last 2 years and below 85 for the 3 years prior to that. The British pound has remained at the low end of the recent range fetching just 43 to 44 Thai Baht. It can’t seem to shake off the Brexit woes and looks set to possibly depreciate further against all major currencies. If it drops through the 42 Thai Baht mark, it could well head lower as Brexit plans, or a lack of them, emerge. Support is currently at 1.18 to the USD, which would equate to around 41.5 Thai Baht, but a dip even lower cannot be ruled out. The prospect of America having warmer ties with Russia has meant that the Russian Rouble has benefited of late. Even against a strengthening US Dollar the Rouble appreciated from 60 to 54 and against the Thai Baht it has moved from 0.53 to 0.59. This would need to be considered against previous rates barely two years ago, before the rouble crash, when it was trading at 33 to the US dollar and 1 Rouble would fetch 1 Thai Baht. However, the recent move is a significant improvement. The Euro has also seen some weakness against the Greenback since the US election, but has remained less volatile and has put on arguably a slightly stronger recovery than some other currencies. Prior to the election the European unit was trading at 1.11 to the USD and fell to 1.03 before bouncing back recently to the 1.06 mark. Against the Thai Baht the moves have been slightly more muted since the Thai baht has also weakened somewhat. The Euro moved from 39 Thai Baht towards 37, before recovering to 37.6 In the previous issue we took a different slant on previous articles regarding the Asean Economic Community (AEC), choosing to start a series on its potential in ecommerce terms. This is the second part of this series. Drawing heavily from an article published online in November last year by Sheji Ho, it’s interesting to see where the ecommerce marketplace may be across the AEC by 2025, particularly based on how much an average person is likely to spend on ecommerce in a given year. THE AEC AND ITS ECOMMERCE POTENTIAL, PART 2 As of 2025, China will be the world’s largest ecommerce market reaching US$3 trillion in Gross Merchandise Volume (GMV) and with 25 percent penetration. ‘By 2025, the average Chinese shopper is expected to spend north of US$2,000 per year online, almost triple the amount Singaporeans will spend online and catching up quickly to Americans who, 10 years from now, will be spending almost $3,000 on ecommerce annually,’ writes Ho. What is really interesting is the projection for Thailand. Both Google and Temasek have reports which suggest Thailand’s ecommerce market will be around $11.1 billion by 2025, although in reality when broken down to per capita numbers this equates to just $155. Ho believes this is far too low. As he notes, ‘US and Singapore’s GDP per capita are obviously much higher than that of emerging markets like Thailand…, people have more money to spend in general, and China’s not exactly a developing country anymore with its GDP per capita projected to reach $14,000 by 2025.’ Ho goes on to write, that ‘Thailand’s GDP per capita is estimated to reach $11,000 by 2025, which is higher than China’s GDP per capita today and not far from China’s projected 2025 number. However, based on current ecommerce projections, Thailand’s per capita online spend will only be $155 or one percent of household purchasing power.’ Ho suggests, ‘This doesn’t make sense given that Thai consumers do have spending power and retail makes up a large part of Thailand’s economy…’ From 2006 to 2016, China’s ecommerce GMV per capita grew 127 times. It’s hard then to believe that Thailand’s GMV per capita will only grow nine times over the next decade, ‘especially given that Thai people are already spending more online on a per person basis today than Chinese did at the beginning of the Chinese ecommerce boom around 2006.’ This only makes sense if we assume SEA’s growth markets like Thailand and Indonesia will grow at a modest, Western-style pace of 18 percent (US 2000-2015) and won’t be growing at China ecommerce’s last 10-year CAGR of 68 percent. Ho believes ‘the reason for this discrepancy is the faulty application of a Western-centric ecommerce growth model whereas the right model to size up ecommerce in emerging SEA is actually the Chinese model of hyper-growth.’ In the next issue we’ll look further at why a Western-centric model may well be flawed when it comes to AEC ecommerce numbers. High Tower Co., Ltd. Tel: 038 411 009 For all your advertising enquiries - Tel: 0846 77 43 60
BUSINESS SUPPLEMENT Email: ben.hightowerltd@gmail.com High Tower Co., Ltd. Tel: 038 411 009