J.P. Morgan Re-Enter OW THB

"We took profit on being long THB in January, noting that speculative flows had driven the currency too rich, after having gone long in September to position for a recovery in the current account. Following a pullback in the baht since then we now see the currency as just 0.6 s.d. rich. Our medium-term view for the baht remains constructive. As such we enter a long in THB vs INR, CNH, PHP (equally weighted). We revise our GBI-EM portfolio, adding a 1% OW in THB (previously neutral), trimming our IDR OW to 0.5% (previously 1%) and increasing our PHP UW to 1.5% (previously 1%) – our overall Asia FX stance remains neutral.

Benefitting from the tourism recovery. Looking ahead we are assuming that monthly arrivals gradually improve to 3.2 million for December 2023 (Dec 2022: 2.2 million), with total annual arrivals of 28-30 million in 2023. Much of this is thanks to the expected return of Chinese tourists who made up over quarter of total arrivals in 2019. While this appears to be optimistic, it actually assumes a significant slowdown in seasonally-adjusted arrival growth. This view imputes a notable slowdown in non-China arrival growth, reflecting our view of weaker growth conditions since tourism is a cyclically-exposed sector."