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Stocks push higher; dollar weakens versus majors

EconJan 13. 2021

By Syndication Washington Post, Bloomberg · Claire Ballentine, Kamaron Leach

U.S. stocks edged higher and benchmark Treasury note yields lingered at 10-month highs as investors mulled the prospects of the economic recovery and vaccine rollout.

The S&P 500 was little changed, with energy and consumer discretionary shares leading gainers. The Dow Jones Industrial and Nasdaq Composite were up more than the benchmark index. Crude oil approached a 11-month high as the dollar weakened following a three-day rally. Corn futures surged by the exchange limit to the highest level for a most-active contract since May 2014.

The mood across markets wasn’t overly negative as investors assess how the rise in Treasury yields changes the financial landscape. While progress on a vaccine gives reason to be hopeful, there are lingering concerns over the speculative excess and froth that’s driven stock markets to all-time highs in the middle of a pandemic.

“What I think investors are most focused on is the digesting of what is shifting fiscal policy,” said David Bianco, chief investment officer of the Americas at DWS Group. “We’re beginning to lose the anchor on some long-term key benchmark interest rates.”

Yields on Treasury 10-year notes pared an earlier rise after a government auction of $38 billion of the securities was met with solid demand. The spread between the rate on the two- and 10-year notes had risen every single day this year as investors bet on additional U.S. fiscal stimulus, spurring more bond issuance and higher yields on longer-maturity Treasuries.

In Washington, the House was set Tuesday to issue a largely futile ultimatum to Vice President Mike Pence demanding he invoke constitutional authority to remove President Donald Trump from office, as a prelude to an expected vote to impeach the president for the second time in little more than a year.

“I wrap up the market’s concerns into an easy-to-remember acronym – EIEIO – which stands for EPS-Impeachment-Energy Prices-Interest Rates-Overvaluation,” said CFRA Research Chief Investment Strategist Sam Stovall. “The market is vulnerable to a setback as many measures are at extremes, encouraged by the ‘Blue Ripple’s’ push for additional stimulus.”

Elsewhere, Europe’s Stoxx 600 Index traded little changed. After Bitcoin suffered steep declines on Monday, the largest cryptocurrency continued its wide swings.

In Asia, China’s CSI 300 Index rallied to a 13-year high, driven by a surge in financial and securities stocks. The yuan reached the highest since 2018 versus a basket of trading partners’ currencies on upbeat growth prospects.

Malaysia’s stock benchmark slipped as much as 1.6% after the nation’s king declared a state of emergency until August.

These are some of the main moves in markets:

Stocks

The S&P 500 Index was little changed at 3,801.19 as of 4:06 p.m. EST.

The Dow Jones industrial average rose 0.2% to 31,068.69.

The Nasdaq Composite Index climbed 0.3% to 13,072.43.

The Stoxx Europe 600 Index was little changed at 408.61.

The MSCI All-Country World Index jumped 0.3% to 660.66.

Currencies

The Bloomberg Dollar Spot Index sank 0.6% to 1,120.16, the biggest dip in almost six weeks.

The euro increased 0.5% to $1.2205, the largest increase in more than three weeks.

The British pound jumped 1.1% to $1.3667, the strongest in more than a week on the biggest jump in more than two months.

The Japanese yen strengthened 0.5% to 103.73 per dollar, the first advance in a week and the largest climb in more than five weeks.

Bonds

The yield on 10-year Treasurys dipped one basis point to 1.13%, the first retreat in more than a week.

Germany’s 10-year yield gained three basis points to -0.47%, the highest in more than four months.

Britain’s 10-year yield increased four basis points to 0.352%, reaching the highest in almost six weeks on its sixth straight advance and the biggest climb in almost three weeks.

Commodities

West Texas Intermediate crude increased 1.7% to $53.15 a barrel, hitting the highest in almost a year with its sixth consecutive advance.

Silver strengthened 2.7% to $25.57 per ounce, the first advance in a week.

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Bitcoin rebounds while leaving everyone in dark on true worth

EconJan 13. 2021

By Syndication Washington Post, Bloomberg · Eric Lam

Bitcoin rebounded after Monday’s steep plunge left investors grasping for clues about what lies ahead for the world’s largest cryptocurrency.

The digital coin rose 4.9% to $35,616 as of 11:30 a.m. in London, following yesterday’s 11% slide. The latest bout of roller-coaster volatility recalls past boom and bust cycles including the 2017 bubble, and has investors debating whether this is a healthy correction or the end of the latest bull run for cryptocurrencies.

“We think a pull back is healthy,” said David Grider, lead digital strategist with Fundstrat Global Advisors, who added he doesn’t think the recent price action indicates that Bitcoin has already topped out.

Investors who bought the digital coin a year ago are still sitting on gains exceeding 300%. Pinpointing who is mainly responsible for the rally is one of the many crypto mysteries — Bitcoin funds, momentum chasers, billionaires, day traders, companies and even institutional investors have all been cited.

Just as hard is working out what caused the recent two-day drop of as much as 26%. For some, a bounce in the dollar may be among the reasons. The greenback has snapped a prolonged losing streak after rising U.S. government bond yields bolstered its allure.

“There’s signs that retail investors are taking profit,” said Ryan Rabaglia, the global head of trading at OSL. “Heightened volatility is often correlated with an uptick in retail participation.”

At the same time, the world remains awash with monetary and fiscal stimulus, and some of that wall of money could yet gravitate to crypto assets. Bitcoin believers continue to tout the digital currency as a viable hedge for inflation risk and the potential debasement of fiat currencies. Some forecasts for its long-term price range from $146,000 to $400,000.

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Thai auto industry ready to roll after dismal 2020

EconJan 13. 2021

By The Nation

The Thai automotive industry is likely to expand 3-4 per cent in 2021-23 after a tough 2020, Krungsri Research Centre said.

Last year, businesses were hit hard by the spread of Covid-19, which led to car production falling by 32-33 per cent, or 1.35 million to 1.37 million units. Domestic sales dropped to about 710,000 vehicles, down 30-31 per cent, and vehicle exports fell by 700,000 vehicles, by 34-35 per cent.

The auto industry in 2021-23 will have supporting factors such as domestic sales that are expected to grow at an average of 3-4 per cent in line with the economic conditions that gradually recover, the research centre said.

It is expected that the demand for commercial vehicles would expand well, benefiting from the growth of the construction sector, online retail business, and logistics business.

In addition, auto companies plan to continuously launch new models, including electric cars and combustion engine cars.

However, the sales growth rate is likely to be limited due to fall in purchasing power, but consumers are expected to recover gradually in line with the economic direction, the centre said. Household debt remains high and financial institutions remain strict in approving credit.

The automobile export market is expected to grow on average 4-5 per cent, driven by the gradual global economic recovery. In addition the Asean Free Trade Area support for export in the region, as well as establishing mutual recognition agreements in the Asean region on inspection and certification of automotive and parts safety standards, would help reduce the re-inspection process, the centre said.

Risk factors to be watched include uncertainty over the trade conflict between the US and China, and the Philippines — one of the major export markets — raising tariffs on imported cars from Thailand in response to a trade dispute over pricing of imported cigarettes by Manila, as well as many governments around the world pushing policies to support the use of electric cars, which may affect Thailand’s car exports, almost all of which are combustion engines.

New car dealers expect that in the next three years (2021-2023), business revenue is likely to see limited growth. Revenue from new car sales will expand in line with domestic car sales, with expected average growth of 3-4 per cent per year.

Revenue from maintenance and distribution centres would tend to decline following the decline in the number of registered cars aged less than five years, despite demand for car maintenance based on car age and distance, the centre said. There is still a risk that some car users may switch to general car repair shops.

In addition, the business is also under pressure from the automotive policy, including the policy for dealers to invest in improving showrooms and service centres to meet standards. It will increase the cost burden of operators and the policy to penetrate the online market. This may lead to more intense competition between dealers because buyers have easy access to information.

The second-hand car market will be sluggish in the first nine months of this year. Due to price competition, operators will release stocks due to their need to reduce the interest burden and the cost of maintenance. However, at the end of the year, low used-car prices would motivate purchases, the centre said.

In addition, buyers are concerned about the risk of using public vehicles due to Covid-19, and may decide to buy a used car.

However, the trend of the used-car market in 2021-23 is expected to grow in line with the recovery of purchasing power in the country. The price of used cars will gradually increase due to the slowdown in the supply of old cars in the first car market.

The competition is likely to become more intense as it is expected that more new entrepreneurs will enter the market from the expansion of multinational companies and affiliates of the carmakers which may pressure business performance, most of which are SMEs.

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3 types of Thai export to grow this year: Commerce Ministry

EconJan 13. 2021

By The Nation

Thai exports of farm products, products related to working from home, and products to combat Covid-19 will continue to grow this year, said the Commerce Ministry’s Trade Policy and Strategy Office on Tuesday.

Among Thai exports expected to grow are rice, canned food, pet food, computers, rubber gloves and medical products, said Pimchanok Vonkorpon, the office’s director-general.

However, Thailand would continue to closely monitor the Covid-19 situation in its major trading partners, she added.

CLMV (Cambodia, Laos, Myanmar and Vietnam) markets have yet to recover from the pandemic, she noted.

She advised exporters to reap benefits from Thailand’s competitive edge as a member of the Regional Comprehensive Economic Partnership Summit (RCEP).

The country should also seek ways to expand its market share in the major economies of the US, China, Germany, Japan and the UK, she added.

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Banks offer debt holidays, extra loans, rate cut to borrowers affected by Covid second wave

EconJan 13. 2021Bank of Thailand deputy governor Ronadol Numnonda

By The Nation

With the Cabinet approving a slew of Covid-relief measures on Tuesday, banks also joined forces to support borrowers.

Chatchai Sirilai, president of the Government Housing Bank (GHB), said it will offer mortgage borrowers who have already received relief, discounts of 25, 50 or 75 per cent on instalment payments for six months. They can apply for the discount between January 15 and 29.

Those unable to pay debts or in the process of debt restructuring could apply for instalment discounts, from January 15 to February 26.

Customers who had not yet received bank relief measures could apply for instalment discounts from February 1-26.

Meanwhile the Government Savings Bank will offer debt holidays and interest rate cuts for customers in 28 red-zone provinces hit by Covid.

The GSB will also launch Bt10 million in soft loans for the self-employed, who will be able to borrow up to Bt50,000 collateral-free.

The GSB still has more than Bt20 billion in soft loans available from the first-wave pandemic – Bt7.8 billion for the tourism industry, Bt4.2 billion for tourism recovery and SME loans of Bt10 billion. Borrowers can apply until June 30.

The Small and Medium Enterprise Development Bank of Thailand has agreed to extend its debt holiday until March this year from October last year. A further six months suspension of repayments will then be offered to some borrowers. The bank will also offer Bt6 billion in two-year loans at 3 per cent interest.

Meanwhile the Thai Credit Guarantee Corporation will offer loan guarantees totalling Bt100 billion to small businesses and those affected by the virus outbreak. Banks can claim up to 35 per cent on the value of loans that turn bad.

The Bank for Agriculture and Agricultural Cooperatives is offering Bt11 billion in low-interest emergency loans.

The Export-Import Bank of Thailand will offer debt-repayment suspension of up to six months for its customers.

Bank of Thailand deputy governor Ronadol Numnonda said the central bank has asked commercial banks, non-bank lenders and state-run banks to support both workers and businesses affected by the virus fallout.

Banks will allow credit card debtors to pay in 48 instalments with annual interest of not more than 12 per cent. For personal loans, customers could pay in 48 instalments or more with annual interest not more than 22 per cent.

Some banks and non-bank lenders have already extended debt payments with up to 99 instalments, he revealed.

Borrowers who put up their vehicles as collateral will be offered a cut of at least 30 per cent on instalments with annual interest not more than 22 per cent. Hire purchase borrowers can delay debt payment by up to three months. Mortgage borrowers can delay payment of principal and interest by three months, or extend debt payment by three months with a rate cut.

Banks will also offer new assistance for corporate clients both large and small. They will receive debt restructuring, debt holidays, or changes from short-term to longer-term debt, he said.

Banks will also offer loans to support liquidity for businesses. Banks should also consider allowing SMEs to delay debt payment on loans of up to Bt100 million.

Borrowers could apply for assistance until June 30.

“The central bank wants to see banks and clients accelerate debt restructuring, which will be the answer to the problem in the long run,” he said.

Approximately 11 million bank accounts worth a combined Bt5.6 trillion received assistance during the first Covid outbreak until the end of November last year. Of these, 10 million accounts worth Bt3.2 trillion are owned by retail clients.

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SET rallies despite drop in foreign funds, uncertainty over US stimulus measures

EconJan 12. 2021

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,539.85 on Tuesday, up 3.36 points or 0.22 per cent. The volume of total transactions was Bt90.16 billion with an index high of 1,542.65 and a low of 1,528.50.

In the morning session, an analyst at Krungsri Securities expected the index to fall to between 1,525 and 1,530 points due to uncertainty over the rollout of US economic stimulus measures amid political turmoil and China’s move to lock down Hebei province after 103 Covid-19 cases were found.

“Besides, the decline in foreign funds flow will pressure the index,” he said.

The top 10 stocks with the highest trade value today were PTT, GPSC, PTTGC, PTTEP, EA, AOT, IVL, AEONTS, KTC and KBANK.

As of 4.30pm, the price of oil rose by US$0.69 or 1.32 per cent to $52.94 per barrel, while gold rose by $7.50 or 0.41 per cent, to $1,858.30 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 28,164.34, up 25.31 points or 0.090 per cent.

China’s Shanghai SE Composite Index closed at 3,608.34, up 76.84 points or 2.18 per cent, while Shenzhen SE Component Index closed at 15,460.03, up 344.65 points or 2.28 per cent.

Hong Kong’s Hang Seng Index closed at 28,276.75, up 368.53 points or 1.32 per cent.

South Korea’s KOSPI Index closed at 3,125.95, down 22.50 points or 0.71 per cent.

Taiwan’s TAIEX Index closed at 15,500.70, down 56.60 points or 0.36 per cent.

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The 10 standout stocks of 2020

EconJan 12. 2021

By The Nation

Bangkokbiznews on Tuesday zoomed in on the top 10 stocks that generated the highest returns in 2020.

They are:

1. Delta Electronics (Delta): Share price of the electronic components manufacturer and distributor increased by 808.41 per cent with the highest price of Bt838 per share and lowest at Bt27.

2. Wow Factor (W): Share price of this electronic components manufacturer increased by 575 per cent with the highest price of Bt0.29 per share and lowest at Bt0.02.

3. Singer Thailand (Singer): Share price of the sewing machine and home appliance distributor increased 377.06 per cent with the highest price of Bt29.25 per share and lowest at Bt3.62.

4. Asiasoft Corporation (AS): Share price of the online game and mobile game operator increased by 360.32 per cent with the highest price of Bt6.85 per share and lowest at Bt0.78.

5. Regional Container Lines (RCL): Share price of this container shipping company increased by 301.13 per cent with the highest price of Bt15.40 per share and lowest at Bt1.66.

6. Yggdrazil Group (YGG): Share price of this computer graphic business increased by 254 per cent with the highest price of Bt20 per share and lowest at Bt3.22.

7. I&I Group (IIG): Share price of this digital and technology consultant increased by 240.91 per cent with the highest price of Bt27.50 per share and lowest at Bt12.60.

8. Silicon Craft Technology (SICT): Share price of this microchip manufacturer increased by 194.20 per cent with the highest price of Bt7.15 per share and lowest at Bt3.54.

9. Ziga Innovation (Ziga): Share price of this pre-zinc structural steel pipe electrical conduit manufacturer and distributor increased by 178.43 per cent with the highest price of Bt3.14 per share and lowest at Bt0.57 per share.

10. AgriPure Holdings (APure): Share price of this holding company, whose main businesses are manufacturing and distribution of agro products, increased by 171.79 per cent with the highest price of Bt2.56 per share and lowest at Bt0.45.

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Decline in foreign funds inflows to pressure SET Index

EconJan 12. 2021

By The Nation

The Stock Exchange of Thailand (SET) Index fell by 1.24 points, or 0.08 per cent, to 1,535.25 in the morning session on Tuesday.

An analyst at Krungsri Securities expected the index to fall to between 1,525 and 1,530 points due to uncertainty over the rollout of US economic stimulus measures amid political turmoil and China’s move to lock down Hebei province after 103 Covid-19 cases were found.

“Besides, the decline in foreign funds flow would pressure the index,” he said.

He recommended that investors buy:

▪︎ PSL, TTA and RCL, which would benefit from the rise in freight rate.

▪︎ KBANK, SCB, BBL and BLA, which benefit from rising US bond yield.

▪︎ PTTEP, PTTGC, TOP and IVL, which benefit from rising oil price and improved fourth-quarter performance.

The SET Index closed at 1,536.49 on Monday, up 0.05 points. Total transactions amounted to Bt93.80 billion with an index high of 1,550.75 and a low of 1,527.75.

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Gold stays firm after buy-ups stall previous losses

EconJan 12. 2021

By The Nation

The price of gold was unchanged in morning trade on Tuesday, after falling by Bt50 per baht weight at close on Monday, the Gold Traders Association reported.

As of 9.25am, the buying price of a gold bar was Bt26,300 per baht weight and selling price Bt26,400, while gold ornaments were priced at Bt25,832.64 and Bt26,900, respectively.

Spot gold price moved to US$1,847.5 (Bt55,731) per ounce in the morning, while the Comex (Commodity Exchange) gold to be delivered in February rose by $15.4 to $1,850.8 per ounce on Monday, thanks to mass buy-ups of the precious metal after its price fell sharply in the previous week, as well as the fall in the US stock market.

Hong Kong gold price dropped by HK$50 to $17,070 (Bt66,402) per tael, the Chinese Gold and Silver Exchange Society reported.

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Stocks drop from record highs

EconJan 12. 2021

By Syndication Washington Post, Bloomberg · Vildana Hajric, Kamaron Leach

U.S. stocks fell for the first time in five sessions as investors started the week in a cautious mood with equity prices near all-time highs.

The S&P 500 was led lower by the real estate and consumer discretionary sectors, while energy companies were the biggest gainers in the benchmark index. Eli Lilly & Co. lifted heath-care shares. The dollar strengthened against all its major peers, with demand supported by elevated Treasury yields.

Weighing on the minds of investors are worries that equities are running too hot and valuations are stretched at a time when major parts of the world are grappling with the worst of the covid-19 pandemic.

“Keep in mind though, after big runs like we saw last week, it’s natural for the market to take a breather,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “Traders looking for new opportunities may be wise to look beyond behemoth tech stocks.”

Benchmark Treasury yields topped 1% last week on bets that Democratic lawmakers will enact big spending packages to drive the economic recovery out the pandemic. The move reset expectations for a range of asset classes and sparked debate over whether higher yields might jeopardize the current environment of easy financial conditions.

Ten-year U.S. yields climbed to almost 1.14% on Monday, the highest level since March.

“Ultimately it goes back to the 10- year,” wrote KC Rajkumar and Jahanara Nissar of Lynx Equity Strategies. A higher yield “points to higher inflation down the road — which is negative for stocks. We are not there yet, but as the 10-year inches higher — the closer we get.”

Twitter Inc. fell after the social media platform permanently banned President Donald Trump after a mob invaded the Capitol building last week. Mirabaud Securities analyst Neil Campling said the ban shows the company is making editorial decisions, and opens the door to more regulation of social media under the next administration.

Shares of Facebook Inc., which also suspended Trump’s account, also declined. Meanwhile, House Democrats Monday introduced a resolution to impeach Trump for a second time, setting up a vote this week unless Vice President Mike Pence uses his constitutional authority to remove the president.

Bitcoin tumbled, with prices sliding as much as 20% on Monday. Some investors have said the digital currency’s recent gains defy logic and the U.K.’s financial watchdog issued a statement that consumers in crypto should be prepared to lose all their money. The token traded down about 14% at $32,835.

Elsewhere in markets, the MSCI Asia Pacific Index slipped. Commodities were broadly lower on the back of the stronger dollar, with West Texas Intermediate oil trading near $52 a barrel.

These are some of the main moves in markets:

Stocks

The S&P 500 Index declined 0.7% to 3,799.61 as of 4 p.m. EST, the first retreat in a week.

The Dow Jones industrial average dipped 0.3% to 31,008.69, the first retreat in a week.

The Nasdaq Composite Index declined 1.3% to 13,036.43, the largest drop in a week.

The Stoxx Europe 600 Index sank 0.7% to 408.41, the biggest dip in three weeks.

The MSCI All-Country World Index sank 0.7% to 658.67, the first retreat in a week and the largest decrease in three weeks.

Currencies

The Bloomberg Dollar Spot Index rose 0.5% to 1,126.98, the highest in two weeks.

The euro sank 0.5% to $1.2156, the weakest in almost four weeks on the largest decrease in more than a week.

The British pound declined 0.3% to $1.3521, the weakest in almost two weeks.

The Japanese yen depreciated 0.2% to 104.17 per dollar, the weakest in more than a month.

Bonds

The yield on 10-year Treasurys gained two basis points to 1.13%, reaching the highest in about 10 months on its seventh straight advance.

Germany’s 10-year yield gained two basis points to -0.50%, the highest in two months.

Britain’s 10-year yield gained 31 basis points to 0.309%, its fifth straight advance and the biggest advance on record.

Commodities

West Texas Intermediate crude dipped 0.3% to $52.10 a barrel, the first retreat in a week.

Copper declined 3% to $3.56 a pound, the lowest in a week.