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SET soars up almost 1.5% on hopes of US stimulus, vaccine, rising oil (nationthailand.com)

SET soars up almost 1.5% on hopes of US stimulus, vaccine, rising oil

EconDec 03. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,438.32 on Thursday, up 20.37 points or 1.44 per cent. Total transactions amounted to Bt82 billion with an index high of 1,439.22 and a low of 1,420.69.

In the morning session, an analyst at Krungsri Securities expected the day’s index to fluctuate between 1,410 and 1,430 points amid hope of a US economic stimulus package, the UK’s approval of Pfizer’s Covid-19 vaccine and the rising oil price.

“However, the SET will face volatility due to a tight valuation as the index’s price-to-earnings ratio [P/E] is 28 times,” said the analyst.

He advised investors to follow the Opec+ meeting, which he predicts will extend the cap on oil production of 7.7 million barrels per day by three to six months.

“The extension will help tackle market oversupply and benefit oil prices and shares related to the oil business,” he added.

The 10 stocks with the highest trade value today were PTT, KBANK, IVL, BAM, PTTEP, CPALL, IRPC, ADVANC, SCC and AOT.

As of 4.30pm, the price of oil rose by US$0.12 or 0.27 per cent to $45.40 per barrel, while gold rose by $12.70 or 0.69 per cent, to $1,842.90 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 26,809.37, up 8.39 points or 0.031 per cent.

China’s Shang Hai SE Composite Index closed at 3,442.14, down 7.24 points or 0.21 per cent, while Shenzhen SE Component Index closed at 13,970.68, up 9.11 points or 0.065 per cent.

Hong Kong’s Hang Seng Index closed at 26,728.50, up 195.92 points or 0.74 per cent.

South Korea’s KOSPI Index closed at 2,696.22, up 20.32 points or 0.76 per cent.

Taiwan’s TAIEX Index closed at 13,977.09, down 12.05 points or 0.086 per cent.

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Central bank revises rules to meet international standards, aiming to strengthen bank capital and brace for uncertain future (nationthailand.com)

Central bank revises rules to meet international standards, aiming to strengthen bank capital and brace for uncertain future

EconDec 03. 2020Nawaron Dejsuvan, assistant governor for BOT’s Financial Institutions Policy Group 

By The Nation

The Bank of Thailand (BOT) has amended regulations on eligibility criteria for regulatory capital, so it is in line with international standards.

Nawaron Dejsuvan, assistant governor for BOT’s Financial Institutions Policy Group, said that the central bank has amended regulations on eligibility criteria for financial instruments qualified as banking capital. Though the capital level of the domestic banking system is high, with a BIS Ratio in September standing at 19.43 per cent, commercial banks will need to build up their capital cushion to withstand unanticipated events in the future. 

The eligibility criteria of financial instruments are revised in line with international standard as follows:

•    Additional Tier1 (AT1) capital instrument is a financial instrument with no maturity date. Issuing banks are allowed to pay interest or other returns to holders without prior approval from the BOT, provided the banks’ BIS Ratio is higher than the ratio prescribed by the BOT.

•    Tier 2 capital instrument is subordinated debt that can be redeemed after a minimum of five years from the date of issuance. The BOT has revoked the clause giving banks the right to postpone the schedule for the payment of interest. 

The purpose of the amendments is to assuage investors’ concerns regarding the payment of interest. As a result, banks can raise capital more easily which in turn will boost their capital levels and liquidity. Banks should, therefore, be able to provide additional loans to businesses and households to support economic recovery. 

Call the Regulatory Policy Department at (02) 283 5874, (02) 283 5878 or (02) 283 5312 for more information. 

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SET extends gains after falling at previous close (nationthailand.com)

SET extends gains after falling at previous close

EconDec 03. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index rose by 6.29 points, or 0.44 per cent, to 1,424.24 in the morning session on Thursday.

An analyst at Krungsri Securities expected the day’s index to fluctuate between 1,410 and 1,430 points amid hopes for a US economic stimulus package, UK approval of Pfizer’s Covid-19 vaccine and a rising oil price.

“However, the SET would face volatility due to tight valuation as the index’s price-to-earnings ratio [P/E] was 28 times,” he predicted.

He advised investors to follow the Opec+ meeting as he expected the organisation to extend by three to six months the period of capping oil production at 7.7 million barrels.

“The extension will help tackle market oversupply and benefit oil prices and shares related to the oil business,” he added.

He recommended investors buy:

> PTTEP, PTTGC, TOP, IVL and SPRC that benefit from a rising oil price.

> Ichi, TKN, CBG and TNP that benefit from the “Khon La Khrueng” (Let’s Go Halves) scheme.

> MINT, CENTEL and AOT that benefit from positive news of a Covid-19 vaccine.

The SET Index closed at 1,417.95 on Wednesday, down 2.92 points, or 0.21 per cent. Total transactions amounted to Bt78 billion, with an index high of 1,430.49 points and a low of 1,415.10.

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Gold price flat amid weakening dollar, hopes of US economic stimulus package (nationthailand.com)

Gold price flat amid weakening dollar, hopes of US economic stimulus package

EconDec 03. 2020

By The Nation

The price of gold was unchanged in morning trade on Thursday after rising by Bt450 per baht weight at close on Wednesday, the Gold Traders Association reported.

As of 9.25am, the buying price of a gold bar was Bt26,050 per baht weight and selling price Bt26,150, while gold ornaments cost Bt25,574.92 and Bt26,650, respectively.

The spot gold price moved to US$1,828 (Bt55,213) per ounce in the morning, while the Comex (Commodity Exchange) gold price to be delivered in February rose by $11.30 to $1,830.20 per ounce on Wednesday on hopes of an upcoming US economic stimulus package and the weakening dollar.

The Hong Kong gold price meanwhile rose by HK$50 to $16,910 (Bt65,885) per tael, the Chinese Gold and Silver Exchange Society reported.

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Stocks post another record high; oil halts slide (nationthailand.com)

Stocks post another record high; oil halts slide

EconDec 03. 2020A sign for Wall Street in New York, MUST CREDIT: Bloomberg photo by Michael Nagle. 

By Syndication Washington Post, Bloomberg · Vildana Hajric, Claire Ballentine

U.S. stocks registered a record high for a second consecutive day amid renewed optimism over U.S. stimulus talks and a rebound in crude oil. Treasury yields rose, while the dollar touched a more than two-year low.

The S&P 500 edged up 0.2%, closing at an all-time high, led by gains in energy companies including Exxon Mobil Corp. and Chevron Corp. Salesforce.com Inc. weighted on tech-heavy Nasdaq indexes with analysts calling its purchase of Slack Technologies Inc. expensive. House Speaker Nancy Pelosi and Senate Democratic leader Charles Schumer called for immediate talks and said a bipartisan $908 billion aid proposal should be the foundation for negotiations.

“It’s a push-and-pull of market positioning,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management’s Ascent Private Wealth Group. “It’s just this two step forward, one step back that we’ve watched in the stock market for a number of months now.”

Oil snapped a three-day slide after a surprise decline in U.S. crude inventories and signals that OPEC+ made progress toward a widely anticipated deal on output curbs. Earlier, Pfizer Inc. climbed after its shot was cleared for deployment in the U.K. as soon as next week.

Britain’s pound slumped after the European Union’s chief Brexit negotiator Michel Barnier reportedly told envoys the outcome of any deal is still too close to call.

After vaccine breakthroughs fueled record monthly gains for global stocks, markets appear to have priced in an improved health outlook, and investors are turning some of their attention to bonds. One of the year’s biggest spikes in Treasury yields on Tuesday has spurred speculation about the potential impact of rising rates on stocks and corporate debt.

Federal Reserve Chair Jerome Powell indicated Wednesday that there was no rift between the central bank and Treasury Secretary Steven Mnuchin over the ending of emergency lending programs. Powell emphasized the need for more stimulus before a Congressional committee.

“We’re watching the size of the fiscal stimulus package and the timing of it, which is really important,” said Michael Greenly, a senior portfolio manager at UBS Private Wealth Management. “We’re also watching if there’s going to be longer restrictive social distancing policies, which could affect the economy on some levels. But even with that, the recent data’s suggested that the economic recovery is continuing.”

Elsewhere, the offshore yuan erased gains after President-elect Joe Biden told the New York Times he won’t soon remove tariffs on Chinese goods. Gold rose for a second day.

Bitcoin hovered around $19,000 after nearly reaching $20,000 on Tuesday.

Here are some of the main moves in markets:

Stocks

The S&P 500 Index rose 0.2% to 3,668.99 as of 4:01 p.m. EST, the highest on record.

The Dow Jones industrial average climbed 0.2% to 29,884.78.

The Nasdaq Composite Index was little changed at 12,349.37.

The Stoxx Europe 600 Index declined 0.1% to 391.69.

The MSCI All-Country World Index jumped 0.3% to 626.59, the highest on record.

Currencies

The Bloomberg Dollar Spot Index dipped 0.1% to 1,135.62, the lowest in more than two years.

The euro rose 0.3% to $1.2102, the strongest in more than two years.

The Japanese yen depreciated 0.2% to 104.51 per dollar, the weakest in more than a week.

The British pound fell 0.4% to $1.3366, the largest drop in almost three weeks.

Bonds

The yield on 10-year Treasuries rose two basis points to 0.94%, the highest in three weeks.

Germany’s 10-year yield gained one basis point to -0.52%, the highest in three weeks.

Britain’s 10-year yield increased one basis point to 0.354%, the highest in three weeks.

Commodities

West Texas Intermediate crude gained 1.3% to $45.13 a barrel, the first advance in a week.

Gold strengthened 0.7% to $1,828.75 an ounce, the highest in more than a week.

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Extra Bt43.5bn approved for shopping subsidies (nationthailand.com)

Extra Bt43.5bn approved for shopping subsidies

EconDec 03. 2020

By The Nation

The Centre for Economic Situation Administration (CESA) has approved a budget of Bt43.5 billion for two economic stimulus schemes to boost consumers’ purchasing power and domestic consumption.

The budget will come from the country’s existing Bt1 trillion of funds borrowed to revive the economy after Covid-19.

Of the total, Bt22.5 billion will be spent on phase 2 of the “Kon La Khreung” (Let’s Go Halves) subsidised shopping scheme.

Phase 1 of the scheme, from October 23 to December 31, offers about 10 million citizens discounts of up to Bt150 per day on purchases at participating stores, capped at Bt3,000 throughout the period.

The remaining Bt21 billion will be spent to increase the subsidy state welfare card holders receive on purchases of consumer goods by an additional Bt500 per person per month for three months. This will be effective from January-March next year.

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Finance minister sees 4-4.5% growth for Thai economy next year (nationthailand.com)

Finance minister sees 4-4.5% growth for Thai economy next year

EconDec 03. 2020Finance Minister Arkhom Termpittayapaisith 

By The Nation

The Thai economy is expected to expand 4-4.5 per cent next year, said Finance Minister Arkhom Termpittayapaisith.

The economy will take two years to recover, while the tourism sector will take four years before recovering to pre-Covid-19 levels, he told a seminar on next year’s economic conditions, hosted by Prachachart Turakit newspaper on Wednesday.

He expected Thailand to see at least 8 million tourist arrivals next year, doubling to 16 million in 2022, 32 million in 2023 and 40 million in 2024.

He added that despite the brighter outlook, the ministry was not being complacent and has continued to launch or extend stimulus packages to revive an economy struggling under the impact of Covid-19.

Next year the ministry will focus on restructuring the tax system to boost revenue for state coffers, he said.

Related story:

Thai economy expected to grow 2%-4% next year Econ

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Phase 2 of shopping subsidy schemes put to Cabinet next week (nationthailand.com)

Phase 2 of shopping subsidy schemes put to Cabinet next week

EconDec 03. 2020

By The Nation

The second phases of two economic stimulus projects – “‘Let Go Halves” and the state welfare card shopping subsidy – were approved by the Centre for Economic Situation Administration (CESA) on Wednesday and will be put to the Cabinet next week.

Under phase 2 of Let’s Go Halves (Kon La Khreung), the number of participants eligible for the daily Bt150 shopping subsidy will be increased from 10 million to 15 million. The total subsidy limit per person will also rise from Bt3,000 to Bt3,500. The second phase will run from January 1 to March 31.

Those who participated in Shop Dee Mee Kuen (Shop and Payback) and holders of state welfare cards are not eligible for Kon La Khreung.

The Finance Ministry will reveal the registration day soon.

Under the second scheme, holders of the state welfare card will receive an additional Bt500 per person per month for purchases made at participating shops. The second phase will run for three months from January to March 2021.

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Thailand facing 3 core risks: BOT policy committee (nationthailand.com)

Thailand facing 3 core risks: BOT policy committee 

EconDec 03. 2020

By The Nation

The Bank of Thailand’s Monetary Policy Committee (MPC) has identified three issues of concern for the country – the rapidly rising baht, a bleak outlook for the financial system, and rising household debt.

The concerns were pinpointed in minutes of the MPC meeting on November 18, which were made public on Wednesday (December 2).

The minutes raised concern that the rising baht would hit the fragile economic recovery by eroding export profits, in turn affecting investment and employment. The baht is being lifted by capital inflows to Thailand and other emerging markets, driven by monetary easing and higher risk appetite in global financial markets. The baht was also being pressured upwards by long-term structural challenges of low investment causing a high current account surplus, together with the home bias behaviour of Thai investor, it said. 

The MPC recommended considering additional short- and long-term measures to rein in the baht.

The panel was also concerned the slow and uneven economic recovery could undermine the future stability of the financial system.

Business were more financially fragile, particularly in the tourism sector where economic activity remains much lower than pre-pandemic levels. Meanwhile, SMEs had limited access to credit due to higher credit risks.

Households remained vulnerable given high household debt and the slow recovery in income, which affected their ability to service debts. Nevertheless, credit assistance measures had partially relieved liquidity constraints on businesses and households affected by the pandemic, said the minutes.

The rising household debt-to-GDP ratio and slow recovery in incomes would delay the deleveraging process, which would have adverse impacts on consumption and economic growth in the medium term, according to the minutes. Household debt to GDP rose to 83.8 per cent in the second quarter this year.

Debt restructuring and economic restructuring should thus be accelerated to boost recovery in incomes in the post-Covid environment. Meanwhile an uneven recovery in income among sectors would result in worsening inequality problems and limit sustainable economic growth in the long term. Policy coordination among public agencies would play an important role in distributing liquidity where it is needed, such as by coordinating credit and financial measures implemented by the government and the Bank of Thailand. The MPC viewed that commercial banks, specialised financial institutions, and the Thai Credit Guarantee Corporation, were all playing crucial roles in curbing credit risks. This would help facilitate a broader distribution of ample liquidity in the system and support business adjustment to the post-Covid environment. 

The committee voted unanimously to maintain the policy rate at 0.5 per cent to support economic recovery while placing emphasis on the use of more targeted measures.

It identified three core risks to the Thai economy going forward: 

1. Domestic political uncertainties which could affect consumer and investor confidence. 

2. Progress in admitting foreign tourists to Thailand, which would likely be gradual depending on the Covid-19 situation in foreign countries and also vaccine development. 3. Heightened financial vulnerability of households and businesses following the phase-out of the support measures.

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Central Retail ploughing Bt10bn into 2021 expansion plan (nationthailand.com)

Central Retail ploughing Bt10bn into 2021 expansion plan

EconDec 03. 2020Chief executive officer Yol Phokasub 

By The Nation

Central Retail Corporation Plc, the flagship of Central Group, has set aside an investment budget of Bt10 billion next year for expansion in Thailand and overseas, said chief executive officer Yol Phokasub.

He added that the company was ready to expand branches and acquire businesses in Thailand and overseas thanks to its strong liquidity. 

The company’s online sales have grown 200 per cent monthly in line with the change of consumer behaviour following the Covid-19 outbreak, he added.