THANAI LIKITCHAIKUL

• My thinking process is Top-down. Looking at the big picture and taking care at the important things first.

• Knowing and being curious about economics, finance, history and portfolio management.

• Interested in everything about financial market, e.g., FX, stock, value investing, speculating, commodities etc.

• Triamudomsuksa School Science – Computer May 2010 – 2013

• Thammasat University (Thailand), Bachelor of Arts in Economics. June 2013 – Jan 2017

- Major in Monetary and Financial Economics, Minor in Finance GPA 3.31

(2nd class honors in 3 years and a half)

• York University (UK), English languages summer school program. March - April 2014

• TOEIC total score: 810 (issued Nov 5, 2016)

• Passed Single License & Derivatives License

• Passed CFA II with above 90th percentile ranking

• Internship in Lee Hecht Harrison (HR and MBTI test) June 2014

• Trading Forex 2015 – present

• Currently trade Forex, Futures, Options, and Stock

• Working at Asiawealth securities as assistant analyst Sep 17 – Apr 18

- Financial modeling, e.g., DCF and supporting data about analysis paper

- Making the Bloomberg formula excel file to download the information automatically, e.g., year-to-date return, PMI, etc.

- Translating the analysis paper and news from English to Thai and vice versa. 9 Imperial Park Village Sukhumvit101/1 road, Bangkok, 10260

Cell: 668******** Email: ac7t0e@r.postjobfree.com

Summary

Experience

Education

• Bloomberg terminal general use and database information formula, Bisnews Pro, Aspen, Metatrader, Metastock, Steaming Pro, Efinance, Microsoft Office

• Trading FX, Futures, Options, Stock, Gold, CFD.

Macro analysis at 25-Sep-18

Wait and see for the real opportunity

- This time geopolitical risk between US and China is still the main risk in financial market. We are in a turmoil situation that wavers us to determine an investment. Indeed, the real pressure for now that drives the market is only the sentiment. The sentiment that makes both real and financial sector to wait and see. This is akin to poker game. US makes a call and raise its bet higher, but China moves in defensive way. At the end, we will see smiley faces with hand shake of president Trump and Xi. President Trump is a negotiator instead of a mad guy that people think. If there is something wrong in US economic, he will make a pause and declare a victory. Increment of trade tax will dampen the velocity of economic transaction that has ramped up higher in the rising interest rate period, and this also offsets the positive from the new tax law in 2017. China will not make a dull decision to persevere this trade war which China has more negative impact than US. China has a bigger portion of export to GDP than US – around 20% vs 12%. And, China exports to US about 19% of its total export – number one of its trading partner. US, however, exports to China about 8% of its total export – number three of its trading partner. Further, the tools that many experts said are the efficient option to fight back are 1. Devaluation of its currency: this will make its destabilized economy to become worsen 2. Sell all of US treasury: this will do not thing to US economy. If that occurs, Fed will buy its treasury bond to stabilize its money market, and nothing would happen. So, I don’t think defensive or aggressive way would be positive to China. Skill

After this deal

- We will see USD depreciation compared to emerging market and all of this asset would be too cheap. Then, the equity price of emerging market will nudge or spike up in the Reflexivity way – both fundamental and price will reflect each other in a bullish trend.

- EURUSD will appreciate from ECB tightening policy and we will not see that USD is driven by trade tension anymore. However, rising interest rate will push German Bund price lower. Thus, short German Bunds is an interesting investment.

WTI crude oil price would stable around $60-70 a barrel

- Since 3Q17-2Q18, we saw WTI move higher from $44 to around $77. Main factor is Venezuela production decline about 0.55mn barrel a day. Even US increased its production by 1.42mn barrel a day, that wasn’t enough to replenish this void according higher world demand. Source: EIA

- This time, people see Iran crude oil production decline – sanction will be imposed on November 4 -- will be the main factor to sustain $60-$70 range. EIA estimates that Iran production declined 0.2mn barrel a day from July to August. In the near term, the market estimates a cut of Iran production about 0.3 to 0.7mn barrels a day. In addition, in 4Q18, EIA forecast that OPEC total supply would decline by 0.3mn barrel a day compare to 2Q18

- By the way, US crude oil production will fill this void. Since 2Q14 – 4Q18, EIA estimates that US will raise its crude oil production by 0.53mn barrel a day Source: EIA

- Nevertheless, we will see implied stock draw until 1Q19 according to EIA forecast. Source: EIA

- All in all, every supply country will ramp up its production as much as they can, but we won’t see oil crisis in 2014-2015 any time soon because

1. Saudi Aramco will debut its IPO in around 2020. Lower crude oil price will decrease its fair value.

2. Saudi Arabia would like to balance is fiscal budget by 2023. Crude oil export is its main revenue. On the other hand, cold war in middle east with Iran is its main expense being unstoppable anytime soon.

3. Shale oil cost is about $40-$50 a barrel, and that price will hurt OPEC and Russia too. This has already been proved in 2014-2015.

Waiting for gold

- I see gold is very interesting commodities. Everybody stares at it and buys it willingly if it collapses. Jim Roger, Ray Dalio, Stanly Druckenmiller, and even George Soros are likely to buy it when it meets $1,000 – 1,100 per ounce. Somebody said that it’s very cheap comparing to its All-in Sustainable Cost which is around 900-1,000 according to CPM group, commodities research company. By the way, AISC can decrease on the way down with gold price according to lower industry service cost, so the supply cost is not the main driver of gold as you’ve seen on 2013 – 2015. Actually, $700 per ounce would be a real price that makes supply shortage and pushes the price up like the commodity cycles are.

Source: CPM group

- The main driver of gold price is speculation, accounted for 15% of total demand in 2017 according to CPM group. And, as you can see on this chart below, fabrication demand, e.g., jewelry, technology things, etc. is unlikely to be a main driver of $300 to $1900 per ounce in 2002 – 2011. Note that, the proportion of investment or speculation demand is 28.5% in 2012 and dropped to 13.7% in 2013. Actually, we’ve seen the nightmare of gold price at that period. Hence, its bullish price action like the beginning of 2016, 2017 and 2018 will be a buy signal. Source: CPM group

- I think buy stop strategy at $1,215 is an interesting strategy. Gold is in a pure speculative market and the market will determine its fair price by itself. Reminiscence of gold price

1. In early 2013, USDJPY spiked up according to Abenomics and some signs of US tightening policy pressing gold price lower. This finished one of the great bullish trends in the world history that had started since 2001 in a range of round $260 - $1,900 an ounce. 2. In late 2015 – early 2016, we saw that market turmoil dragged gold price higher from as low as $1,060 an ounce to $1,360 an ounce

3. In late 2016 after US election with satisfactory tax bill gold plunged down $1,130 an ounce. Stanley Dunkenmiller bought it about that point just because it looked cheap. 17-Oct-18

Currency

Since 2016, we’ve seen inflow to emerging markets in the period of economic recovery stage after Fed tapering, eurozone crisis, and oil crisis. Then, in 2Q18, we’ve seen outflow from emerging markets due to trade war that will harm these countries, its significant portion in GDP is export. Now, MSCI Emerging Market Currency is in the range between 1,580 – 1,600 points. If we see 1,620 points or above, we will see that profoundly bearish sentiment has gone. So, when profoundly bearish in big picture of emerging markets has gone, the currencies that has high relative strength, e.g., KRW, MYR, THB would be interested currencies to invest. In addition, US-China trade war would end soon with smiley faces of both Trump and Xi. When each factor that oppresses emerging market is gradually unraveled, then we will see each other supports themselves like Reflexivity theory. Actually, CNH would be one of the best currency to trade too.

I expect this will be the last one of global bullish cycle. Needless to say, that the crisis usually happens aftermath.

All in all, for short to medium term, EM currency would be interested, but we always have to keep in mind that “winter is coming”.

EM Vulnerabilities Heatmap

Source: RoboReseach

As we can see on the heat map, KRW, THB, MYR, and CNH are also underpinned by its fundamental, e.g., high current account to GDP, moderate to low inflation and so on. 24-Nov-18

Interesting Thailand stock

PTTEP

Opportunity

- Due to sinking around 10% YTD of crude oil price ($50.39 for WTI and $58.80 for Brent), I see this an opportunity for PTTEP. PTTEP stock price has high correlation to Dubai price which relates to WTI and Brent. Even though 70:30 of its revenue is natural gas: crude oil, natural gas price structure still relates to Dubai crude oil.

- Natural gas selling price structure can be shown as following 1. 35-50% from fuel oil price, which is byproduct from crude oil refinery, relate to crude oil price

2. Inflation

3. Cost of E&P

So, we can conclude that the real factor of PTTEP price is crude oil WTI vs PTTEP since the highest oil price 2014 ($107) to Nov 23, 18

- The picture above shows relative strength of PTTEP vs WTI. PTTEP decrease less and increase more than WTI, so PTTEP have higher comparative advantage that WTI.

- Further, $50 of WTI would be the baseline of it according to 1. Saudi Aramco would be listed in stock market soon in these 1-2 years, so Saudi Arabia will sustain crude price to be an interesting price for investor. 2. Breakeven price of shale oil is around $47 a barrel according to Rystad Energy, Norwegian energy consulting firm, in Aug, 2018.

3. Saudi Arabia would like to eliminate budget deficit by 2023. Nevertheless, cold war against Iran in middle east still force Saudi Arabia to spend a lot of money in military budget. Thus, WTI at $50 is not a price that Saudi Arabia would like to see in the long term. Saudi Arabia government budget to GDP in percentage term since 2008 - 2017 Risk

- If PTT, which is the main customer, changes the policy about natural gas price structure to relate to its real demand supply, PTTEP would undergo the real market which its stock price will correlate to natural gas market, e.g., Henry hub, JKM, etc. instead of Dubai crude oil.

- Natural gas from another region may be a competitor of PTTEP. However, shale gas in the US would not be a competitor of PTTEP owning to higher cost than ASEAN region. Source: BP outlook report 2018

- As you can see from British Petroleum report picture, US exporters’ full-cycle cost is around $8.45 per MMBTU based on Henry Hub at $3 per MMBTU plus operation and liquefaction cost. Meanwhile PTTEP selling price of natural gas is $6.24 per MMBTU in 9M18, so not need to worry about shale gas.

- Unit cost, including both cash and non-cash cost in 9M18 is $5.39 per MMBTU, so profit margin is only around $0.85 per MMBTU (6.24-5.39 = 0.85).

The safer strategy is buying PTT. PTT energy business begins since upstream to downstream which would hedge their risks to each other parts, and there is no technology disruption or other disruption. For instance, if electric car substitutes petrol car, people will buy electricity from GPSC, subsidiary of PTT, and around 70% of electricity power in Thailand uses natural gas from PTT as feedstock. The picture below will show you that PTT decrease less but increase more than WTI. In addition, PTT has already reach new high in 2017 but WTI hasn’t. You can thus see the high relative strength of PTT to WTI. WTI vs PTT since the highest oil price 2014 ($107) to Nov 23, 18

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