Fitch rates TMB funds on 'strong capacity' to meet

Both are money-market funds managed by TMB Asset Management Co (TMBAM).
The ratings reflect the funds' strong capacity to achieve their investment objectives of preserving principal and providing shareholder liquidity through limiting credit, market and liquidity risk, Fitch said.
The main rating drivers are the credit quality, diversification, and liquidity of the funds' portfolios and the capabilities and resources of TMBAM as an investment adviser, it said.
As of June 30, TMBTM and TMBMF had about Bt16.9 billion and Bt14.3 billion, respectively, in total assets under management.


Both funds pursue their objectives by investing in high-quality short-term debt securities, including those of the Thai government and the Bank of Thailand, time deposits, bills of exchange, promissory notes, and repurchase agreements.
Consistent with Fitch's "AAAmmf(tha)" investment guidelines, TMBTM and TMBMF maintain high credit quality by investing exclusively in securities rated "F1(tha)" or "F1+(tha)" - with a minimum 50 per cent in the latter - by Fitch or comparable credit quality according to other rating agencies.
In keeping with the same guidelines, the funds limit their exposure to individual obligors and counter-parties. As of June 30, both funds' portfolio credit factor, which is a risk-weighted measure of the credit quality and maturity profile of the funds' portfolio securities, met Fitch's "AAAmmf(tha)" investment guidelines of 1.50 or less.
The funds seek to limit their interest-rate exposure by limiting weighted average maturity to reset date (WAMr) to 60 days, consistent with Fitch's guidelines. Although the funds do not set a limit on weighted average final maturity (WAMf), all of their investments are in fixed-rate securities resulting in similar levels between their WAMr and WAMf.
As of June 30, TMBTM's and TMBMF's WAMr was 44 and 56 days, respectively. The funds' overall maturity profiles are currently consistent with Fitch's investment guidelines of 397-day maximum maturity limit for financial institution, corporate and fixed rate-government securities.
The funds' additional investment restrictions are aimed at maintaining sufficient levels of daily and weekly liquidity to meet investors' redemption requests. In line with Fitch's investment guidelines applicable to money market funds in Thailand, the funds invest at least 15 per cent of total assets in securities maturing overnight or other qualified assets and at least 30 per cent in securities maturing within seven business days or other qualified assets.
The funds have fully met these liquidity requirements over the past 12 months, the agency said.

Two securities houses fined by SET

In a statement, the exchange said KT Zmico is fined Bt510,000 for providing incentives to marketing officers despite the absence of advice to clients or transaction orders. Two marketing officers were also put on probation. KGI Securities is also fined Bt300,000 for a similar reason and its three marketing officers are put on probation.
Both companies clarified that they did not intend to breach the rules and promised to adhere to the rules.

TOT, AIS strike roaming deal

This deal should help AIS expand its 3G service so it can compete with True Corp, which has partnered with CAT Telecom.
A TOT source said both sides had agreed on the matter and were waiting for the deal to take effect soon. TOT apparently sent the draft contract to AIS as soon as it looked like Pheu Thai was going to take over the country's reins. Party leader Yingluck Shinawatra is the former president of AIS.
Negotiations for this deal have been going on since last year. The source said that under this deal, TOT would initially allow 60,000 AIS customers to use its 3G network in Greater Bangkok for data roaming, while AIS will allow 200,000 TOT customers voice access and 10,000 customers for data services.


Under the deal, both sides are allowed to provide roaming access to a million customers each.
AIS will pay TOT a roaming fee of 85 satang for each megabyte downloaded, while TOT will pay AIS a promotional rate of 60 satang per minute for subscribers using the AIS network for voice service, Bt1 per SMS and 85 satang per megabyte of data downloaded.
The TOT source added that AIS initially wanted to charge a roaming fee of Bt1.10 per minute, but later agreed to bring it down to the promotional rate. AIS will also give TOT 30 per cent of the revenue it earns from subscribers using the TOT network for roaming access.
The TOT source said this deal was not exclusively for AIS, but AIS had the right to ask TOT to refuse other telecom firms.
AIS wants its subscribers to use the TOT network for roaming access in order to ease the burden on its 3G-900 MHz network, which is serving voice and data services to more than 30 million customers. However, partners that provide the 3G service on TOT's existing network are against the deal because they are concerned AIS would compete with them to acquire customers.
AIS is also interested in partnering with TOT to provide 3G services on TOT's soon-to-be set up nationwide 3G network.

Pheu Thai to go for revamp of energy policy

The end to Oil Fund levies on three fuel products marks the beginning of the Pheu Thai government's revamping of energy pricing, including ex-refinery prices, and possible exploitation of petroleum royalties, Energy Ministry and Government House sources said.
"The party made it clear that it will control the Energy Ministry. The minister is someone proficient in energy affairs and he will overhaul the energy price structure, particularly gasoline prices, for fairness to consumers particularly the grassroots who contributed massive votes to the party," said the Energy Ministry source who asked not to be named.
Ending contributions from fuel product sales to the Oil Fund could be implemented immediately, with the endorsement of the National Energy Council chaired by the prime minister, he said.
The Oil Fund levies are Bt7.50 per litre for 95-octane petrol, Bt6.70 for 91-octane petrol and Bt1.27 for diesel.
The levy for gasohol 95 with 10-per-cent ethanol content is Bt2.40 and for gasohol 91 with similar ethanol content is Bt0.10. The fund subsidises Bt1.30 and Bt13.50 per litre for gasohol 95 with ethanol blends of 20 and 85 per cent.


The decision to scrap contributions from the two petrol products will not hurt the Oil Fund much. Based on daily consumption of 7 million to 8 million litres of 91-octane, and 100,000 litres of 95-octane, the fund would lose only about Bt60 million a day from the decision.
It would also be giving up Bt67.3 million by scrapping the diesel contribution, based on a daily consumption of 53 million litres.
The government's decision will leave intact the levies on gasohol 95 and gasohol 91 with combined daily consumption of 10 million to 12 million litres. The Oil Fund - due to the stiff subsidies for diesel and gas - is saddled with Bt1.13 billion debts.
"The party originally wanted to please motorcyclists with the campaign to end the Oil Fund. However, that would require a new mechanism as the Oil Fund is still needed to subsidise cooking gas and other products like gasohol E85," the source said.
Over 10 million motorcycles nationwide are running on regular or premium petrol.
Part of the overhaul would be a change in the ex-refinery price, which now references the Singapore price. To attract investment in refineries, the government allows refineries to add to the Singapore price the cost of transporting oil from Singapore, even though there was no such transaction. Without the extra cost, the ex-refinery prices would be lower and so would pump prices.
Besides the new pricing formulas, an oil stock is part of the plan for energy security, which is in line with the International Energy Agency's recommendations. Such stocks are used in countries without a mechanism like the Oil Fund to stabilise prices. For instance, the IEA earlier this month released 60 million barrels of its stock to ease global demand, and this effectively reduced global oil prices.
The oil reserve depots would be part of the Land Bridge project in the South, which was part of Pheu Thai's election platform, the source added.
Krairit Nilkuha, director-general of the Alternative Energy Development and Efficiency Department, said the loss could be addressed by the Energy Conservation Fund, which accumulates Bt4 billion to Bt5 billion annually through the contribution of 25 satang per litre from various fuel products.
Royalty income from petroleum concessions, worth nearly Bt50 billion per year, could be used to cover the Oil Fund's support of alternative fuels like gasohol E20, E85 and liquefied petroleum gas, which is much lower.
"I'm convinced that the promotion under the 15-year alternative energy development plan [2008-2022] would remain and this requires further subsidies," he said.
In the US, petroleum concession holders are required to remit 10 per cent of output to the government. The government then resorts to the stock at times of high global prices, or sells it to make profits.
The Government House source said no legal amendment is needed if royalties would be used for this purpose. Under the Fiscal Reserve Act, that could be done only with the approval of the finance minister, with a clear set of spending plans.
Then the royalty income now parked at the Mineral Fuels Department would be exploited. However, such a change would give the spending mandate to the department's chief or the related ministry's permanent secretary, and the off-balance spending would not be subject to parliamentary scrutiny. For the sake of transparency, a new committee may be set up to manage the fund.

Strong baht policy

A treasurer at Bangkok Bank said that the appreciation could continue in line with regional movement. The appreciation is guaranteed after Pheu Thai prime minister-elect Yingluck Shinawatra promised to let market mechanism rule.
He expected the baht to move in the range of 30.20-30 today.

Thai Airways chief seeks fewer regulations

Thai Airways International president Piyasvasti Amranand said at a seminar yesterday on furthering the country's economy and society under the new government that he would like to urge the incoming administration to bring peace to the country and ease any conflict among the people.
The government will have to resolve corruption, which has affected the confidence of foreign investors in Thailand. THAI, which is listed in the local stock market, is quite sensitive to these issues.

"The new elected government should reduce regulations that have obstructed state-run enterprises such as Thai Airways from doing business effectively. Those regulations were created along with the government's concern about any corruption that might be conducted by executives of those state-run enterprises," Piyasvasti said.
"The government then adopted many regulations for the prevention of any corrupt activities, which have made Thai Airways run its airline business inefficiently. It will, however, allow outside people to interfere and do the corruption themselves," he noted.
Piyasvasti said the airline business had suffered a heavy impact from last year's political unrest and massive rallies, which caused many foreign tourists to cancel their trips to Thailand. The airline industry has also been hit severely by volcanic eruptions, which have affected its flying routes.
The company has also been affected by higher operational costs due to the increase of the price of fuel by almost 40 per cent in the first six months of this year compared with the same period last year.
The airline is in a highly competitive industry, mainly with other leading airlines from around the world because of aviation liberalisation. It has also less profit margin and is quite sensitive to any political conflict, which has had an impact on the confidence of foreign travellers considering visits to Thailand.
"About 90 per cent of Thai Airways revenue is from international routes, and the remaining 10 per cent from domestic routes. About 70 per cent of foreign tourists have the intention of direct visits to Thailand, while the other 30 per cent use Thailand as a transit point to other countries.
"If the government manages the country peacefully with no political conflict, which has had an impact on the confidence of foreign tourists, our Thai Airways business will benefit," Piyasvasti said.
Chanin Vongkusolkit, chief executive officer of Banpu, said the new government should not implement policies that will shock the economy. He explained that the economic fundamentals were sound because of high international reserves, relatively low inflation and manageable public debts. Past governments have done well in managing the economy, and growth could continue. No sign of trouble has emerged, he said.
"Capital flew out of the country because of worries about the political situation. [But we should see] capital flow back after the election, as the prime minister-designate has promised national reconciliation," he said.
Suvit Maesincee, an academic at the Sasin Institute for Global Affairs, suggested the new government should ensure less political conflict and much more political stability. Winning a majority of votes should enable the government to manage the country better. Thailand's competitiveness has been adversely affected by political conflicts over the past five to six years, he said.
The country's global market share increased only slightly - from 1.15 per cent in 2004 to 1.36 per cent in 2009 - while China's jumped from 0.76 per cent to 10.75 per cent, and Indonesia succeeded in increasing its export share from 0.85 per cent to 1.04 per cent in the same period.

SET sees foreign capital

The market's record daily value without any help from big-lot transactions is a shade higher at Bt63.116 billion, registered in September 2010 when the court unlocked suspended industrial projects at Map Ta Phut in Rayong.
The highest-ever daily transaction value is Bt75 billion, but that included the big-lot transaction when the Shinawatra family sold its stake in Shin Corp for Bt73 billion back in 2006.
Yesterday's huge turnover pushed the Stock Exchange of Thailand Index up by 48.80 points, a 4.69-per-cent rise, to 1,090.28 points.
The landslide poll victory by the opposition Pheu Thai Party convinced investors that Thailand would soon welcome in a new government, while some returned to the market after gains in overseas markets last week due to Greece's success in tapping a new loan facility from the International Monetary Fund.
"The Thai market performed extraordinarily yesterday, reflecting the strong confi?dence of foreign investors. The election on Sunday was com?pleted peacefully, and the majority win will pave the way for quick government formation," said Patteera Dilokrungthirapop, CEO of DBS Vickers Securities (Thailand) and president of the Association of Securities Companies.
HSBC Thailand chief mar?kets strategist Parson Singha said the election result had been better than expected for investors, driving the SET Index up and strengthening the baht.
The baht gained 0.34 per cent to 30.46 against the US dollar as of 5.30pm yesterday, because of the capital inflow into the stock market as well as the dollar weakening against the euro. "Investor confidence is on the rise as no violence is expected [following the election]," Parson said.
Investors turned their atten?tion to stocks linked directly or indirectly to the Shinawatra family, as Yingluck Shinawatra, the sister of ousted prime minister Thaksin Shinawatra, is tipped to become the next prime minister.