The Stock Exchange of Thailand (SET) Index nose-dived by 20.97 points or 1.33 per cent to 1,555.63 on Thursday morning.
Krungsri Securities predicted the index would descend to between 1,565 and 1,570 points due to a falling oil price amid uncertainty over the Opec+ bloc’s production policy, as well as news that there could be a nationwide lockdown in response to the Centre for Covid-19 Situation Administration’s remark that the number of virus cases in Thailand could soar by 10,000 per day.
The Public Health Ministry reported on Thursday morning that there were 7,058 new Covid-19 cases in the past 24 hours, 68 of which were found in prisons.
In addition, the outflow of foreign funds in line with a weakening baht would pressure the index, Krungsri Securities said.
It recommended investors buy:
▪︎ Hana, KCE, TU, CPF, Asian and EPG, which benefit from the weakening baht.
▪︎ BCH, CHG, BDMS, HMPro, Global, BEM, CKP, CBG, Ichi and GPSC, whose second-quarter business turnover is expected to improve.
The SET Index closed at 1,576.60 on Wednesday, down 14.83 points or 0.93 per cent. Transactions totalled THB82.47 billion with an index high of 1,587.70 and a low of 1,574.14.
The baht opened at 32.36 to the US dollar on Thursday, weakening from Wednesday’s closing rate of 32.28.
The Thai currency is likely to move between 32.30 and 32.40 during the day, Krungthai Bank market strategist Poon Panichpibool said.
Poon reiterated that the baht was being pressured by the Covid-19 situation in Thailand and the slow distribution of vaccines. He predicted the crisis would worsen compared to the previous outbreaks, as the Public Health Ministry reported on Thursday that there were 7,058 Covid-19 cases in the past 24 hours.
Poon said the baht would reach 32.50 per US dollar after passing the 32.25 mark.
The price of gold in Thailand rose by THB50 per baht weight in the morning trade on Thursday.
The Gold Traders Association report at 9.24am showed buying price of a gold bar at THB27,500 per baht weight and selling price THB27,600, while gold ornaments were priced at THB26,999.96 and THB28,100, respectively.
At close on Wednesday, buying price of a gold bar was THB27,450 per baht weight and selling price THB27,550, while gold ornaments were priced at THB26,954.48 and THB28,050, respectively.
The record of the Federal Reserves meeting last month, which surprised investors with a hawkish pivot, will be scrutinized on Wednesday for any hints on when the central bank will pare back its support for the economy.
The Marriner S. Eccles Federal Reserve building in Washington, D.C., on June 26, 2021. MUST CREDIT: Bloomberg photo by Stefani Reynolds.
The Fed delivered a double-whammy at the June gathering after its quarterly economic forecasts showed officials expect two rate hikes in 2023 and Chair Jerome Powell announced the central bank was getting the taper debate into gear.
“We’re watching out for any clues that we might get regarding the tapering of asset purchases,” said Citigroup Global Markets chief U.S. economist Andrew Hollenhorst. “Any clues about the timing or the composition, but my expectations is that we won’t get too many details.”
Analysts will be combing through the minutes for details on tapering, including when it could start and what the pace might be — though that level of discussion might be more likely at upcoming Fed meetings, including its gathering later this month.
Minutes from the Fed’s June 15-16 meeting are scheduled to be released at 2 p.m. Washington time. Here’s what to watch out for:
– Taper timing: The Fed has been buying $80 billion of Treasuries and $40 billion of mortgage-backed securities every month in an effort to bolster the economy during the pandemic. After Powell indicated that the Federal Open Market Committee would start talking about when it might be appropriate to start reducing these purchases at subsequent meetings, a number of officials voiced support for starting the process sooner rather than later, including before the end of this year.
Atlanta Fed President Raphael Bostic said that the central bank could start slowing its asset purchases in the next few months as the economy recovers faster than expected from the pandemic.
The Dallas Fed chief, Robert Kaplan, has said he wants the process to start “soon,” so as to avoid excess risk taking in markets and so that the Fed won’t need more aggressive measures, including rate hikes, to halt financial excess later.
San Francisco Fed President Mary Daly, customarily a more dovish member of the committee and, along with Bostic, a voter on monetary policy this year, told the Associated Press last week that a start to tapering this year may be appropriate.
Kaplan and St. Louis Fed President James Bullard have also indicated they may be in favor of tapering MBS purchases first, as surging price increases in the housing market fan worry it is overheating.
– Inflation fears: The Fed has said since December that it would continue its bond purchases until it had achieved “substantial further progress” on its employment and inflation goals.
Some Fed officials have expressed concern with recent price increases amid a quickening reopening and supply-chain constraints, while most note that it’s likely temporary. The minutes may provide a clue on whether more officials are viewing the higher inflation readings as potentially longer-lasting.
Powell and others have said that the U.S. is likely to see robust payrolls growth this summer and into the fall. The economy has averaged more than 600,000 new jobs per month since January, including 850,000 in June, the biggest gain in 10 months, government data released last week showed.
Reports of businesses, especially in the restaurant industry, struggling to find workers indicate to some Fed officials that the labor market is tightening.
Morgan Stanley economist Ellen Zentner said in a note published Tuesday that the jobs report doesn’t indicate a big swing toward maximum employment, but does keep taper talks on the table.
“It keeps the Fed on track to hammer out the details on how to taper at its meeting later this month,” Zentner wrote, referring to the Fed’s July 27-28 meeting.
– Dot plot: Policymakers were also more hawkish in June about interest-rate tightening.
Besides the change to the 2023 median estimate, the dot plot — a graphical representation of each official’s rate forecast — also showed seven of the 18 members projecting a rate hike next year, versus just four in March. While it didn’t shift the median from no hike in 2022, it indicates building momentum for a hike sooner than previously expected.
Fed watchers will be on the lookout for any hint in the minutes of discussion around normalizing rates, including how policy makers are thinking about their new framework, which aims to average inflation at 2% over time and mitigate employment shortfalls.
Prices have risen substantially the last few months, with the Fed’s preferred gauge reaching 3.9% in May, while some measures of household inflation expectations have also mounted.
“Part of the idea with the new framework for monetary policy is to get those expectations higher and get them stably higher,” said Hollenhorst. “Are officials seeing this as too high, as something they need to respond to, as inflation expectations becoming unanchored? There could be a really interesting discussion there.”
The June meeting, with its surprises, geared markets up for what’s likely to be an eventful summer. In addition to the next FOMC meeting, the central bank hosts its annual policy retreat outside Jackson, Wyoming in late August. The event has served as a setting for important announcements in the past and is already being viewed as a potential venue for Powell to signal that taper is coming.
Published : July 08, 2021
By : Syndication Washington Post, Bloomberg · Catarina Saraiva
U.S. stocks rose to record highs and bonds gained after minutes from the Federal Reserves latest meeting showed policy makers continued to see elevated uncertainty and debated the tapering of debt purchases.
Ten-year U.S. note yields fell for a second day, dropping below 1.3% for the first time since February, amid concern the global inflation trade could be faltering. The S&P 500 and Nasdaq Composite swung between gains and losses after setting records. Energy shares were the big losers in the benchmark S&P.
“Markets are still enjoying this Goldilocks period that we are in, but I think this is peak momentum for the reopening trade,” said Don Calcagni, chief investment officer of Mercer Advisors.
Fed officials expected to continue to make progress on reaching its threshold to scaling back their massive asset purchases, the record of their June gathering showed. Various participants mentioned that they expected the conditions for beginning to reduce the pace of asset purchases to be met somewhat earlier than they had anticipated at previous meetings.
The June meeting marked a turn in the central bank’s comfort with inflation risks amid heightened price pressures as the economy reopens from the pandemic, buoyed by massive monetary and fiscal-policy support.
“They’re quite disconnected from the bond market,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors. “If more Fed officials are worried about inflation and see us making strong economic progress to where asset purchases can be tapered earlier then yields should be going up, not down.”
The dollar was little changed against a basket of major currencies. Oil fell amid the OPEC+ crisis, which has stymied efforts to raise production and buffeted prices.
Elsewhere, Bitcoin gained and gold advanced for a sixth day. Australian and New Zealand bonds rallied. Asian stocks fell, with Chinese tech firms in Hong Kong retreating after Beijing’s cybersecurity probe of ride-hailing giant Didi Global Inc.
Here are some events to watch this week:
– The Group of 20 finance ministers and central bankers meet in Venice on Friday
– China PPI and CPI data released on Friday
These are some of the main moves in markets:
– – –
– The S&P 500 rose 0.3% to a record high as of 2:36 p.m. New York time
– The Nasdaq 100 rose 0.2% to a record high
– The Dow Jones Industrial Average rose 0.1%
– The MSCI World index rose 0.1%
– – –
– The Bloomberg Dollar Spot Index was little changed
– The euro fell 0.1% to the lowest since April 2
– The British pound was little changed at $1.3806
– The Japanese yen strengthened 0%, rising for the fourth straight day, the longest winning streak since June 29
– – –
– The yield on 10-year Treasuries declined three basis points to the lowest since Feb. 18
– Germany’s 10-year yield declined three basis points to the lowest since April 9
– Britain’s 10-year yield declined three basis points to the lowest since Feb. 17
– – –
– West Texas Intermediate crude fell 1.7% to $72.11 a barrel
– Gold futures rose 0.6%, climbing for the fifth straight day, the longest winning streak since May 20
Published : July 08, 2021
By : Syndication Washington Post, Bloomberg · Claire Ballentine, Kamaron Leach
The governments move to collect tax on stock trading would affect the Stock Exchange of Thailand (SET)s competitiveness, Asia Plus Securities (ASPS) said on Wednesday.
Earlier this week, Bloomberg and Reuters reported that Thailand is considering a tax of 0.11 per cent on share sales of more than 1 million baht per month by individual investors.
ASPS said the government has suspended such tax collection since 1991.
The Fiscal Policy Committee and SET have declined to comment on the tax, it added.
“FPO director-general Kulaya Tantitemit said her office cannot reveal which tax was being considered by the Finance Ministry, but said the improvement will help enhance the country’s competitiveness,” ASPS said.
“Meanwhile, SET president Pakorn Peetathawatchai refused to comment on this case, saying the SET had no authority to make a decision.”
ASPS said the tax would generate revenue of up to 20 billion baht per year from high-worth investors who trade up to 3 million baht per month.
“The government can generate about 12 billion baht based on transactions of 11.3 trillion baht in the first half of this year,” ASPS said.
However, ASPS said taxing stock sales would affect SET’s competitiveness as returns on investment would drop due to higher transaction costs, triggering a decline in transactions.
“We have to wait for government agencies to clarify this case, but we believe that they will not implement guidelines soon,” ASPS added.
SET down almost 1% as oil falls and Thai infections rise
The Stock Exchange of Thailand (SET) Index closed at 1,576.60 on Wednesday, down 14.83 points or 0.93 per cent. Transactions totalled THB82.47 billion with an index high of 1,587.70 and a low of 1,574.14.
In the morning session, Krungsri Securities forecast the day’s index would drop to between 1,580 and 1,585 points in response to the falling oil price amid uncertainty over Opec+’s production policy.
The weakening baht, volatile foreign fund flows and the higher number of Covid-19 cases in Thailand are also pressuring the index, Krungsri Securities said.
The 10 stocks with the highest trade value today were MENA, BBL, KBANK, SCB, CPALL, PTTEP, PTT, IVL, AOT and CHG.
Other Asian indices were down except in mainland China:
Japan’s Nikkei Index closed at 28,366.95, down 276.26 points or 0.96 per cent.
China’s Shanghai SE Composite Index closed at 3,553.72, up 23.46 points or 0.66 per cent, while the Shenzhen SE Component Index closed at 14,940.05, up 272.40 points or 1.86 per cent.
Hong Kong’s Hang Seng Index closed at 27,960.62, down 112.24 points or 0.40 per cent.
South Korea’s KOSPI closed at 3,285.34, down 19.87 points or 0.60 per cent.
Taiwan’s TAIEX closed at 17,850.69, down 62.38 points or 0.35 per cent.
New national shipping firm will not boost Thailand’s competitiveness, warns TCC
The Thai Chamber of Commerce (TCC) is advising the government against setting up a national shipping firm in a bid to boost Thailand’s competitiveness.
Phumin Harinsut, TCC’s vice-chairman, said Thailand had established a shipping company in the World War II era which was eventually closed in 2011.
“This company had to hire foreign shippers to deliver government products because it did not have its own vessels,” he said.
Instead, he said, the government should consider the services of maritime transport and freight forwarder, TMN Company, in which the government already holds a 30 per cent stake.
He said TMN has three vessels and has ordered a 240-meter-long oil tanker with a capacity of 105,000 tonnes, which will be delivered on July 14.
“TMN has been making oil deliveries for PTT and has the ability to generate revenue for Thailand,” he said.
Phumin also advised the government to establish a national fleet of ships, so it can boost its competitiveness.
“The government should also launch measures to help boost Thai shipping companies’ competitiveness against their foreign counterparts,” he added.
SET slips, under pressure from weakening baht, erratic foreign fund flows, virus situation
The Stock Exchange of Thailand (SET) Index fell by 6.09 points or 0.38 per cent to 1,585.34 on Wednesday morning.
Krungsri Securities predicted the index would drop to between 1,580 and 1,585 points due to a falling oil price amid uncertainty over the Opec+ bloc’s oil production policy.
A weakening baht, volatile foreign fund flows and a higher number of Covid-19 cases in Thailand are also pressuring the index, Krungsri Securities said.
It recommended investors buy:
▪︎ Hana, KCE, TU, CPF, Asian and EPG, which benefit from the weakening baht.
▪︎ BCH, CHG, BDMS, HMPro, Global, BEM, CKP, CBG and Ichi, whose second-quarter business turnover is expected to improve.
The SET Index closed at 1,591.43 on Tuesday, up 12.15 points or 0.77 per cent. Transactions totalled THB69.48 billion with an index high of 1,594.15 and a low of 1,585.34.
Covid-19 crisis, strengthening dollar pressure baht
The baht opened at 32.29 to the US dollar on Wednesday, weakening from Tuesday’s closing rate of 32.20.
The Thai currency is likely to move between 32.25 and 32.40 during the day, Krungthai Bank market strategist Poon Panichpibool said.
Poon said the baht was still under pressure from the dollar and the Covid-19 situation especially in Thailand. Foreign investors have been selling their assets in the country as they are concerned about the virus crisis, he added.
Poon also said the financial market was in a risk-off state and this would increase demand for dollars in the short term. He explained that the demand comes in a bid to avoid market fluctuation. Meanwhile, the dollar is strengthening in this situation.
Poon predicted the baht would at maximum weaken to 32.50 per dollar after already reaching the 32 level.
He said exporters would sell their dollar holdings when the baht moved near 32.25-32.30.
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