Thai companies are looking beyond Asean for mergers and acquisitions, while the stronger baht is expected to help lower financial costs for these deals, HSBC says.
"We've seen Thai companies undertaking merger and acquisition activities in the UK, other parts of Europe and also in the US," Tim Evans, regional head of HSBC's commercial banking in Asia-Pacific, told the Bangkok Post.
He said that when domestic companies try to expand internationally, they tend to branch out into surrounding countries.
"You need assurances to undertake an acquisition or go international, so you go to the country next to you for the cultural familiarity," Mr Evans said.
Thai foreign investment over the last two years has been focused mostly on its Asean neighbours.
"But you now see larger Thai companies preparing to make acquisitions in France, the UK and North America," Mr Evans said.
A number of Thai companies that are HSBC clients are also entertaining M&A deals in the Philippines and Indonesia, he said without naming the clients.
"We expect to see a lot more Thai companies, both medium-sized and large, looking for either M&As or organic entries into some of these international markets," said Krisda Phatcharoen, country head of HSBC's commercial banking in Thailand.
He said the recent appreciation of the baht has also helped these companies in lowering acquisition-related costs.
Mr Evans said that with its geographic advantage and role in the Belt Road Initiative, Thailand has maintained investors' confidence in the country's potential to establish itself as a regional hub.
"Political and economic stability have also help strengthen the country's attractiveness for investment," he said.
Mr Evans said Thailand should be able to attract a number of foreign companies that want to break into the Asean market and set up a regional headquarters in the country.
He said improving economic activity in Asean under the Asean Economic Community will help spur cross-border trade and investment between Thailand and other emerging economies.
Meanwhile, Pham Hong Hai, general manager of HSBC Vietnam, said that in spite of increasing investments outside of Asia, Thai direct investment in the next two quarters will be driven by privatisation of Vietnamese state-owned enterprises (SOEs).
"HSBC is confident that SOE privatisation will provide big ticket deals for Thai investors going into 2018," Mr Pham said, adding that Thai companies will still be facing fierce competition from abroad.
But investors remain cautious because the Vietnamese government might slow up its privatisation plan, as it has only just 8% of its holding in SOEs thus far.
"This year, investors hope to see broader regulatory changes -- especially in the area of foreign ownership quotas -- along with the listings," Mr Pham said.
He said that in 2016, Thailand became the 10th-largest investor in Vietnam with a total of US$9.44 billion (320.3 million baht) in pledged investment in the country.
The €920-million (35 billion baht) Central-Big C Vietnam deal help pushed Thailand into Vietnam's top 10 for investment.
Other deals include TCC Group's €655-million acquisition of Metro Cash and Carry Vietnam in January and its move to buy a 5.4% stake in VinaMilk, the largest dairy company in Vietnam, for $500 million.
Mr Pham said trade flow between the two countries reached $12 billion in 2016 and is projected to surpass $20 billion over the next few years.
Singha Group in Thailand is expected to secure a stake in Sabeco, Vietnam's state-owned brewer, in an effort to expand its reach throughout the region, although it still has to compete with international players like AB InBev and Carlsberg.
"Aside from infrastructure, there are other sectors in which Vietnam is strong and can add value," said Winfield Wong, senior director at HSBC Vietnam. "The best example is the Masan-Singha deal in 2015."
In 2015, Singha Group paid upwards of $1 billion for a 25% stake in Masan Consumer Holding and a 35% share of Masan Brewery.