Asia Plus Securities stated that the Bank of Thailand (BOT) and the Ministry of Finance are considering measures to impose a tax on domestic gold trading, in order to curb excessive appreciation of the Thai baht. The value of imported goods in the “precious stones, gems, and gold” category is THB 478 billion, accounting for 7.2% (from January to July).
The scope of the tax under consideration will cover gold bars / physical gold traded online and paid in Thai baht. Transactions that would be exempt from tax include those conducted in the U.S. dollars, trading in futures markets, or purchases from officially registered gold shops.
The measures should be closely monitored to see what the tax rate will be, as it will require approval from the new Cabinet. This has resulted in a short-term depreciation of the Thai baht, and if the measure is approved, it may continue to put depreciating pressure on the baht.
Stocks that benefit from a weaker baht include exporters such as Hana Microelectronics Public Company Limited (SET: HANA), Delta Electronics (Thailand) Public Company Limited (SET: DELTA), KCE Electronics Public Company Limited (SET: KCE), Thai Union Group Public Company Limited (SET: TU), i-Tail Corporation Public Company Limited (SET: ITC), and Charoen Pokphand Foods Public Company Limited (SET: CPF).
Tourism-related stocks include Airports of Thailand Public Company Limited (SET: AOT), Asia Aviation Public Company Limited (SET: AAV), Central Plaza Hotel Public Company Limited (SET: CENTEL), The Erawan Group Public Company Limited (SET: ERW), and hospital group stocks such as Bumrungrad Hospital Public Company Limited (SET: BH), Bangkok Dusit Medical Services Public Company Limited (SET: BDMS), and Bangkok Chain Hospital Public Company Limited (SET: BCH).
Groups expected to be adversely affected include those with costs or debts in foreign currencies such as Gulf Development Public Company Limited (SET: GULF), B.Grimm Power Public Company Limited (SET: BGRIM), Electricity Generating Public Company Limited (SET: EGCO), PTT Public Company Limited (SET: PTT), PTT Exploration and Production Public Company Limited (SET: PTTEP), PTT Global Chemical Public Company Limited (SET: PTTGC), and companies that focus on imports such as Thai Foods Group Public Company Limited (SET: TFG) and Thai Vegetable Oil Public Company Limited (SET: TVO).
