Baht likely to be volatile, weaken due to Covid-19 situation: market strategist
The baht opened at 33.46 to the US dollar on Wednesday, its lowest in three years and unchanged from Tuesday’s closing rate.
The Thai currency is likely to move between 33.40 and 33.55 during the day, Krungthai Bank market strategist Poon Panichpibool said.
He said the baht was likely to be volatile and weaken due to the Covid-19 situation and the rising momentum of the US currency.
He expected the dollar in the short term to receive support if the US Federal Reserve moves to decrease quantitative easing (QE) quicker than expected. Investors are keenly watching US economic data, including employment and inflation. If the results are worse than expected, investors in turn will not expect the Fed to decrease QE quickly, affecting the weakening or strengthening of the dollar, Poon explained.
He also said the Covid-19 situation worldwide is affecting the dollar and the baht. If the situation in Europe and Asia improves, the dollar might weaken.
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Meanwhile, the baht itself might weaken because foreign investors were still offloading their assets, feeling the Covid-19 situation in Thailand could worsen, he said.
The baht was likely to be volatile in the short term due to uncertainty amid the Covid situation, he added, recommending that investors use various hedging tools as options.
Tokyo games revive buyer interest for Olympic Village condos
Condominiums at the Olympic Village, where many of the athletes for the Tokyo games stayed as they prepared for competition, are seeing a revival in buyer interest after the sports spectacle took place without any major hitches.
Rising prices for Tokyo real estate are starting to make the Olympic Village condos in the Harumi district near Tokyo Bay an attractive proposition. More than 5,600 units for an estimated 12,000 residents will be made available at the development, called Harumi Flag.
When the Olympics were delayed last year, sales of the condos were also suspended. While the delay fueled concerns that potential buyers wouldn’t be willing to wait another year to move into the properties, there were 5,000 requests for more information while it was paused, prior to the re-launching of the website for the development in June, according to Mitsui Fudosan Co. A total of 10 real-estate firms, including Mitsui and Mitsubishi Estate Co., developed the project. Public viewings for the former Olympics condos start later this month.
According to Tokyo Kantei Co., a property research firm, average listing prices for used condos in the city central districts were up 11% in June from a year earlier, at 91.5 million yen ($829,000). By comparison, the average price for a 72.9 square meter (785 square feet) property in the former Olympic Village is 57 million yen.
Although the Harumi area, built on reclaimed land in Tokyo Bay, is ideally situated 2.5 kilometers from the Ginza shopping district, the lower cost reflects less-than-ideal access to public transport, 16 to 20 minutes away by foot.
“They’re much cheaper than properties located closer to stations, and that makes them very competitive,” said Koki Ozawa, an analyst at SBI Securities Co. With more people working from home, there’s less of a need to be closer to transport, he added.
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While prices for the properties were unveiled in January of 2020, the delay of the games also meant that buyers won’t be able to move in until March of 2024 while they are being refurbished for the long-term buyers.
Takashi Kakizaki, editor of the Suumo real-estate portal run by Recruit Holdings Co., said that the former Olympic Village properties seem to be within reach of more buyers, given that they are selling at around 60 million yen, compared with 80 million to 90 million for similar-sized properties closer to nearby Kachidoki station.
Demand appears to be solid. There were 2,220 applications for 940 Mitsui properties when they went on sale in January of last year. There were some cancellations, and the company hasn’t decided whether to include any of those in future sales.
“We don’t consider any of these properties to be discounted,” said Satoshi Katsuki, the manager in charge of residential projects at Mitsui. “Considering their location relative to public transport, we think the prices are appropriate.”
Published : August 11, 2021
By : Syndication Washington Post, Bloomberg · Grace Huang
Goldman team wary on dollar breaks from market full of bulls
Goldman Sachs is calling time out on the dollars recent rally, pitting itself against a market largely dominated by bulls.
Strategists at the Wall Street behemoth argue the greenback’s recent strength is going to peter out as U.S. economic growth begins to slow, bolstering the case for an extend period of loose monetary policy from the Federal Reserve. The greenback climbed to a two-week high on Tuesday.
The move has come amid a hawkish tilt from Fed officials and a solid U.S. labor market report, wrong-footing leveraged funds who were short the currency, while opening the way for its ascent. Against this backdrop, strategists from Rabobank to ING and MUFG all see momentum for now, especially as Fed is now seen diverging from other major central banks in paring back stimulus.
Yet for Goldman strategists including Kamakshya Trivedi, the room for appreciation remains limited, citing a slowdown in fiscal spending and inflation that will weigh on dollar again. And it’s a view that will further divide currency watchers ahead of the Jackson Hole symposium later in August, when Fed officials are expected to discuss tapering in more detail.
“We do not see a case for sustained dollar appreciation” analysts including Trivedi wrote in a client note. “The U.S. economy should slow as the fiscal impulse turns negative, and falling inflation should allow the Fed to remain on hold for a lengthy period.”
Bloomberg’s dollar spot index has climbed around 1% so far this month, supported by a chorus of Fed officials, which have raised the prospect for stimulus to be dialed back sooner than expected. Meanwhile, bets on central bank divergence are building, with the European Central Bank expected to keep policy supportive, driving the euro to its lowest level against the dollar since April this week.
“The fact that we have significant concerns over the Delta variant in Asia and elsewhere suggests that the USD could pick up some safe haven support,” said Jane Foley, head of foreign-exchange strategy at Rabobank. “This suggests that there is a stronger risk of the euro breaking below the 1.17 level and for USD strength to be more marked into late 2021 and early 2022 than I had anticipated earlier in the year.”
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Hedge funds have been caught off guard by the rally since mid-June and are clinging to short positions which they are slowly reducing. Leveraged funds’ net dollar shorts peaked in the week ending July 9 at over 78,000, data from the Commodity Futures Trading Commission show. They have been reduced every week since and now halved from the peak, according to the latest data.
“I think the taper decision, which looks more like it will come in September, may usher in a ‘sell the fact’ slide in the dollar,” said Standard Bank’s Steven Barrow, who sees the dollar topping out at 1.15 against the euro. “I also think that many countries struggling with the delta virus now, like Australia, will get past the lockdowns and the recovery in these countries and currencies could weigh on the dollar.”
The August jobs report bolstered the dollar but low risk appetite and reduced liquidity suggest markets will need additional confirmation in September, wrote JPMorgan Chase strategists including Paul Meggyesi in a note.
They prefer keeping risk exposure light, with a bias to be long dollars against more dovish central banks like the European Central Bank as well as against some currencies more closely linked to sentiment to hedge against any risk deterioration due to the delta variant.
Morgan Stanley has been among those ahead of the trend and continue to recommend investors hold onto dollars. Their analysts see rising Treasury real yields, which strip out the expected impact of inflation, boosting the dollar. Still, they noted that “risk/reward for a higher USD is not as compelling as it was when we turned bullish in early June,” with the dollar index facing potential technical headwinds around 93.
Published : August 11, 2021
By : Syndication Washington Post, Bloomberg · Stephen Spratt, Jill Ward
Slumping technology stocks stood in contrast to a broader gain in U.S. equities, exposing the lingering concerns about the ability of the economy to weather less stimulus and rising covid outbreaks.
While the S&P 500 climbed to another all-time high, the tech-heavy Nasdaq 100 declined along with Amazon.com Inc. Micron Technology Inc. led a decline in chip stocks, which slid for a fourth session. Energy shares rallied with oil. In Europe, the Stoxx 600 Index climbed for a seventh day.
“The move lower in growth, especially the tech sector, may be twofold,” said Dave Mazza, head of product at Direxion. “First, with the recent outperformance in the space, investors may be taking profits ahead of this week’s inflation data. Secondly, investors may be pricing in tapering by the Federal Reserve sooner then expected considering recent comments from officials.”
Crude oil bounced back from a three-week low on bets that the global demand recovery will remain intact despite the fast-spreading delta virus variant. Treasurys declined while the dollar was stronger against major peers.
Remarks from Atlanta Fed President Raphael Bostic on Monday added to the mix of commentary and economic indicators traders are parsing for clues on the Federal Reserve’s next move. With stocks at or near records on the back of extraordinary stimulus measures, Bostic said that another strong month or two of employment gains should prompt the central bank to taper its asset purchases, and that the Fed should move faster than in past episodes.
U.S. price data later this week will also be closely watched after Friday’s jobs report fanned expectations that unwinding will start soon.
At the same time, the spread of the highly contagious delta in corners of the world has raised concern the recovery from the pandemic will be derailed. New coronavirus cases in the U.S. surged to the highest weekly level since early February, while deaths increased the most since December.
“While we may see an increase in market volatility due to the delta variant, we believe the S&P 500 is still likely to see more gains through the end of the year,” said Barry Gilbert, asset allocation strategist at LPL Financial. “Widespread vaccine distribution and distancing measures have helped limit the variant’s impact, but we could still see some drag on economic growth as some restrictions are reintroduced and consumers potentially become more cautious.”
David Donabedian, chief investment officer of CIBC Private Wealth Management, said he also equities marching higher.
“There’s clearly more focus and concern on the delta variant of covid, but, to this point, markets have appraised that as a manageable risk and instead are leaning on a strong economy, a boom in corporate profits — not just currently reported but upwardly revised for the rest of this year and next year — and a belief that stocks still are the asset class to be,” Donabedian said. “The market is climbing the wall of worry.”
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These are the main moves in markets:
Stocks
– The S&P 500 rose 0.1% as of 4 p.m. EDT
– The Nasdaq 100 fell 0.5%
– The Dow Jones industrial average rose 0.5%
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– The MSCI World index rose 0.1%
Currencies
– The Bloomberg Dollar Spot Index was little changed
– The euro fell 0.2% to $1.1719
– The British pound was little changed at $1.3835
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– The Japanese yen fell 0.3% to 110.58 per dollar
Bonds
– The yield on 10-year Treasurys advanced two basis points to 1.35%
– Germany’s 10-year yield was little changed at -0.46%
– Britain’s 10-year yield was little changed at 0.59%
Commodities
– West Texas Intermediate crude rose 2.9% to $68.44 a barrel
– Gold futures rose 0.2% to $1,730.20 an ounce
Published : August 11, 2021
By : Syndication Washington Post, Bloomberg · Kamaron Leach, Vildana Hajric
Senate passes boost for infrastructure in victory for Biden
The Senate passed a $550 billion infrastructure plan that would represent the biggest burst of spending on U.S. public works in decades and notch a significant victory for President Joe Bidens economic agenda.
The bipartisan 69-30 vote Tuesday was a breakthrough that has eluded Congress and presidents for years, despite both parties calling infrastructure a priority and an issue ripe for compromise.
The bipartisan spirit will quickly give way, however, as Senate Majority Leader Chuck Schumer immediately pivoted to a partisan budget resolution that will lead to a $3.5 trillion package of social spending and tax increases.
Senate passage of the infrastructure bill came after months of negotiations and days of slow-moving Senate debate during which Republicans opposed to the legislation forced Democrats to run out the clock on procedural motions.
“It’s been a long and winding road but we have persisted and now we have arrived,” Schumer said before the vote. The spending in the legislation will “strengthen every major category of our country’s physical infrastructure.’
The bill still faces hurdles in the House, which is scheduled to be on break until Sept. 20. House Speaker Nancy Pelosi, under pressure from progressives who want their priorities addressed, has said she will not allow a vote on the bipartisan package until the Senate has passed the broader economic plan. Moderates, meanwhile, are clamoring for the House to take up the bill sooner than that. The House may also seek changes to the infrastructure bill.
Still, the Senate vote after months of fraught negotiations was a crucial first step for both Biden’s economic agenda and his broader hopes of showing the world Washington can work again to solve big problems after a particularly divisive era in American politics.
If the infrastructure package ultimately clears both chambers, every state would feel the effects. It includes about $110 billion in new spending for roads and bridges, $73 billion for power grid upgrades, $66 billion for rail and Amtrak, and $65 billion for broadband expansion. It also provides $55 billion for clean water and $39 billion for transit.
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Biden had dispatched top aides to negotiate directly with a group of Republican and Democratic senators putting the bill together and engaged personally with meetings and phone calls. The vote also is a significant achievement for Schumer and the bipartisan group of 22 senators led by Republican Rob Portman of Ohio and Democrat Kyrsten Sinema of Arizona, who stepped in after initial negotiations between the White House and Republicans collapsed in June.
Republicans can claim a victory in that the package includes big spending on their priorities without raising taxes, while Biden can lay claim to an accomplishment decades in the making without including unpopular gas taxes or other levies that would have hit the middle class.
The Senate was unable to get unanimous consent to approve a bipartisan effort to replace a cryptocurrency tax reporting provision with a more narrowly targeted measure that would require certain digital currency exchanges to report data to the Internal Revenue Service. The cryptocurrency industry said the original version unfairly targeted them and was too broad in scope.
Other bipartisan attempts to alter the bill, including an amendment that would allow state and local governments to use some of their unspent Covid relief funds on infrastructure projects, also fell by the wayside.
The Congressional Budget Office said the infrastructure legislation would add $256 billion to the federal budget deficit over the next decade. The CBO has previously forecast the deficit would hit $3 trillion this year alone before narrowing to $1.15 trillion in 2022.
Republicans who opposed the plan as too expensive cited the CBO’s prediction of additional debt and warned the bill could spur additional inflation.
But some of the senators who drew up the legislation contended the bill would be paid for by a variety of means that the CBO couldn’t account for.
“The new spending under the bill is offset through a combination of new revenue and savings, some of which is reflected in the formal CBO score and some of which is reflected in other savings and additional revenue identified in estimates, as CBO is limited in what it can include in its formal score,” Portman and Sinema said in a joint statement.
With the bipartisan deal out of the Senate, Schumer will turn immediately to the task of teeing up consideration of Biden’s $3.5 trillion economic package, a partisan drive to overhaul policies on climate change, taxes, health care, immigration and other areas.
Schumer plans to force a vote on the fiscal blueprint that helps them trigger a Senate procedure that would short-circuit a GOP filibuster. Republicans in turn can make the process painful by forcing numerous amendment votes via an all-night process knows as a vote-a-rama.
The Biden administration and Democratic leaders want to pack that resulting package, which would move forward after the August recess, with tax hikes on the wealthy and corporations to pay for spending on a broad social agenda, including child care, middle class tax cuts, paid family leave and subsidies for higher education.
But Biden and Schumer will need every Democratic vote in the 50-50 Senate, including moderates like Joe Manchin of West Virginia and Sinema, who insisted on and led the push for the bipartisan deal but aren’t sold on the price tag or all of Biden’s proposed tax hikes.
Pelosi’s repeated warning that the chamber won’t act on the infrastructure legislation until Senate Democrats finish the budget package is the backstop for liberals insisting their priorities, which were largely left out of the bipartisan deal, get through the Senate in turn.
House Transportation Committee Chair Peter DeFazio also has warned he is not satisfied with the current version of Senate’s bipartisan infrastructure bill, and without changes it will sit in the House, “for a very long time.”
Democrats have decided not to tee up a debt limit increase with only Democratic votes as part of their budget blueprint. They could instead try to force Republicans to help raise the debt limit by attaching it to a must-pass bill to keep the government open after Sept. 30.
Published : August 11, 2021
By : Syndication Washington Post, Bloomberg · Steven T. Dennis, Laura Litvan, Laura Davison
SET up slightly as Thailand’s infection rate eases
The Stock Exchange of Thailand (SET) Index closed at 1,542.62 on Tuesday, up 2.43 points or 0.16 per cent. Transactions totalled THB81.61 billion with an index high of 1,551.61 and a low of 1,539.40.
In the morning session, Krungsri Securities predicted the index on Tuesday would fluctuate between 1,530 and 1,550 points amid hopes of the lockdown being eased as the domestic Covid-19 infection rate falls.
It added that the index would be boosted by mass buy-ups of export-related stocks and shares in companies whose second-quarter business turnover is expected to improve.
“However, the falling oil price and outflow of foreign funds would pressure the index,” Krungsri Securities said.
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The 10 stocks with the highest trade value today were GULF, PTT, ADVANC, INTUCH, PTTGC, 7UP, KBANK, ACE, CPF and TU.
Other Asian indices were mixed:
Japan’s Nikkei Index closed at 27,888.15, up 68.11 points or 0.24 per cent.
China’s Shanghai SE Composite Index closed at 3,529.93, up 35.30 points or 1.01 per cent, while the Shenzhen SE Component Index closed at 15,057.59, up 116.15 points or 0.78 per cent.
Hong Kong’s Hang Seng Index closed at 26,605.62, up 322.22 points or 1.23 per cent.
South Korea’s KOSPI closed at 3,243.19, down 17.23 points or 0.53 per cent.
Taiwan’s TAIEX closed at 17,323.64, down 161.51 points or 0.92 per cent.
Govt extends help to cabbies, taxi cooperatives hit by lockdown
The Cooperative Promotion Department has tied up with several agencies to offer free parking spots as well as low-interest loans to help cabbies and taxi cooperatives survive the Covid-19 crisis.
Wisit Srisuwan, the department’s deputy director-general, said many cabbies were out of a job due to the lack of customers. Also, some 3,000 cabs are parked in protest outside several government offices such as Finance, Transport, and Agriculture and Cooperatives Ministries, CAT Telecom and Royal Irrigation Department.
Wisit said the department is urging the State Railway of Thailand to provide new free parking spots for taxi to help ease the cost of parking fees.
“Cabbies can also now borrow cash from the cooperative development fund at 1 per cent interest, so they can do other jobs to generate income during the ongoing crisis.
“The department has also cooperated with the Labour Ministry to help cabbies and drivers of other public-transport vehicles like motorbikes, three-wheelers and minibuses to get a 5,000-baht cash allowance under Article 40 of the labour law,” he said.
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Govt extends help to cabbies, taxi cooperatives hit by lockdown
He said organisations and individuals requiring transportation can call taxi cooperatives to hire taxis. Thailand has 59 taxi cooperatives with 50,974 members and 19,555 vehicles.
Deposit protection slashed from THB5 million to THB1 million
The Deposit Protection Agency (DPA) will cut back protection from THB5 million to THB1 million per depositor from Wednesday, the Bank of Thailand (BOT) said on Monday.
The move aims to reduce inequality and make room for the government to allocate budget for economic activities, BOT deputy governor Ronadol Numnonda said.
Ronadol confirmed that financial institutions were still able to grant deposit protection to up to 98 per cent of depositors.
He added that this move was in line with Section 53 of Deposit Protection Agency Act BE 2551 (2008).
“Currently, each depositor is granted deposit protection of up to THB5 million, but the protection will be reduced to a maximum of THB1 million per depositor from Wednesday, which is suitable for the current situation and in line with laws,” he explained.
He said this move would encourage depositors and financial institutions to pay attention to risk management, reduce inequality and facilitate the government in allocating budget to support economic activities.
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He said Thai financial institutions are in a strong position, which can be seen from the capital adequacy ratio of 20 per cent, higher than in other regional countries.
“They also have high liquidity to cope with volatility in the economy due to the Covid-19 crisis,” he added.
The Stock Exchange of Thailand (SET) Index rose by 3.98 points, or 0.26 per cent, to 1,544.17 on Tuesday morning.
The SET Index closed at 1,540.19 on Monday, up 18.47 points or 1.21 per cent. Transactions totalled THB69.89 billion with an index high of 1,543.71 and a low of 1,525.29.
Krungsri Securities predicted the index on Tuesday would fluctuate between 1,530 and 1,550 points amid hopes of the lockdown being eased as domestic Covid-19 cases are declining.
It added that mass buy-ups of stocks related to export, and stocks of companies whose second-quarter business turnover is expected to improve, would help boost the index.
“However, falling oil price and outflow of foreign funds would pressure the index,” Krungsri Securities said.
It advised investors to follow the US Consumer Price Index for July as consensus expectation is that it would rise by 4.3 per cent year on year.
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It recommended selective buying as an investment strategy:
▪︎ HANA, KCE, TU, CPF, GFPT, ASIAN, EPG, SUN and NER, which benefit from the weakening baht.
▪︎ BCH, CHG, BDMS, DOHOME, CKP, CBG, OSP, ICHI, BEC, GUNKUL, JWD, WICE, SONIC, TTA, RCL, SINGER, JMT and JMART, whose second-quarter business turnover is expected to improve.
Amid weak sentiment, baht seen sliding towards 34 to the dollar
The baht opened at 33.46 to the US dollar on Tuesday, its lowest in three years, weakening from Monday’s closing rate of 33.41.
The Thai currency was likely to move between 33.40 and 33.55 during the day, Krungthai Bank market strategist Poon Panichpibool said.
He said the baht might weaken further if importers accumulated dollars to hedge their risk from the baht sliding quickly and sharply.
Poon believed the Thai currency could easily fall to 34 to the US dollar in the short term, if the Covid situation worsens and dollar gains momentum. The dollar momentum would depend on the US Federal Reserve reducing quantitative easing or the US economy performing better than expected.
Poon did not expect the baht to strengthen soon as it continued to face downward pressure until the virus situation got better, which he expected to be in early September.
Govt extends help to cabbies, taxi cooperatives hit by lockdown
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