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China’s booming exports mean Beijing can handle strong yuan

EconNov 19. 2020An aerial photograph shows vessels loaded with shipping containers docked at the Yangshan Deepwater Port in Shanghai on July 12, 2020. MUST CREDIT: Bloomberg photo by Qilai Shen. 

By Syndication Washington Post, Bloomberg · No Author · BUSINESS, WORLD, US-GLOBAL-MARKETS, ASIA-PACIFIC 
China’s ability to keep selling more of its goods abroad means officials will be in no rush to rein in their strongest yuan in more than two years.

The People’s Bank of China in November has refrained from using tools to limit the yuan’s advance, even as the currency heads for the longest run of monthly gains in six years. That’s a reversal from last month, when authorities made it cheaper to bet against the yuan and eased some control over the exchange rate, moves that were interpreted as part of Beijing’s effort to rein in appreciation.

One theory points to evidence that the rallying yuan isn’t actually hurting Chinese exporters. Demand is surging globally for everything from hazmat suits to medical instruments, in large part produced in China. A gauge measuring the country’s outbound cargo prices soared to the highest level in six years this month, according to data from the Shanghai Shipping Exchange. In October, China’s export rose at the fastest pace since early 2019, beating estimates.

The resilience of exporters means China may not need to guide the yuan weaker after it soared more than 9% since late May. A stronger exchange rate also helps make imports cheaper and boosts domestic consumption, a goal President Xi Jinping hopes to achieve as he pushes for a self-reliant economy. Currency strength will also attract more foreign buyers to Chinese bonds and stocks, a vital step as Beijing seeks to promote the yuan’s global use.

“The PBOC is allowing the yuan to follow market demand and supply forces, because they are well aligned with China’s strong fundamentals,” said Dariusz Kowalczyk, senior emerging-markets strategist at Credit Agricole CIB. The Chinese currency will advance further next year due to the country’s economic rebound from the virus pandemic and a weaker dollar, he added.

Chinese exporters are resilient because they are receiving more orders of protective equipment and work-from-home electronics products from foreign buyers as the pandemic spreads, Nomura Holdings Inc. economists led by Ting Lu wrote in a note. China’s export growth could remain elevated for another few months, they said, as there’s no sign of improvements in virus control overseas.

Apart from strong exports, the yuan is also bolstered by China’s solid recovery from the pandemic, and capital inflows chasing onshore bonds’ wide interest-rate premium over yields seen elsewhere in the world. A Joe Biden win in the U.S. presidential election also raised hopes for friendlier China-U.S. ties, also a boon for the currency.

The PBOC isn’t eager to slow those gains. In the past nine sessions, the central bank set its reference rate less than 0.03% away from the average forecasts in Bloomberg surveys with traders and analysts. Prior to that, the fixing was weaker than expected for 10 days in a row, with the bias on Nov. 6 being the largest in more than a year. The rate — which limits the onshore yuan’s moves by 2% on either side — is an important tool for Beijing to guide sentiment.

Beijing took more fierce measures to rein in the rally last month. On Oct. 27, China said some lenders stopped using a factor used to smooth out volatility when submitting their fixing quotes. And earlier last month, the authorities scrapped a two-year rule that made it expensive to bet against the yuan, and allowed some domestic institutional investors to buy more overseas bonds and stocks.

The yuan dropped 0.43% to 6.5873 per dollar as of 5:12 p.m. in Shanghai.

“Better economic data gives the PBOC more room to let the yuan run hot,” said Jian Hui Tan, a foreign-exchange strategist at Informa Globalmarkets (S) Pte Ltd.

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Unemployment claims rise, as pandemic shutdowns increase nationwide

EconNov 19. 2020

By The Washington Post · Eli Rosenberg · NATIONAL, BUSINESS, US-GLOBAL-MARKETS 
The number of new unemployment claims last week rose last week to 742,000, an increase of 31,000 compared with the previous week, as rising coronavirus cases have spurred a new wave of restrictions and closures begin to weigh on parts of the economy.

Since Oct. 10, the weekly jobless claims have been slowly trending downward or remaining flat, according to the Labor Department data.

Claims have remained above the pre-pandemic record of 695,000, from 1982, for 35 weeks, although questions about backlogs, fraud and duplicate claims have complicated the data.

An additional 320,000 claims were processed for Pandemic Unemployment Assistance, the program for gig and self-employed workers.

Some 20.3 million people are still claiming some form of unemployment insurance.

The number of new claims has fallen from peaks in the Spring but remains historically high. Economists say they are concerned about the continued high level of job loss this deep into the pandemic, as the virus surges anew.

And the benefits that many are relying on to stay afloat are set to expire for an estimated 12 million people next month without action by Congress, potentially adding to the country’s economic woes at a critical time.

Claims have averaged 742,000 for the last four weeks, another potential sign that a recovery which has seen the unemployment rate drop further than economists’ projections could be in danger of stalling or reversing.

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USAid, private sector launch sustainability charter for coconut industry

EconNov 19. 2020

By The Nation

Backed by the US Agency for International Development (USAid), private sector leaders signed the coconut industry’s first global Sustainable Coconut Charter on Monday. The charter aims to improve farmers’ livelihoods, reduce carbon footprint of coconuts and boost supply in the Asia-Pacific region to meet rising global demand.

The charter, signed by AAK, Barry Callebaut, FrieslandCampina, Harmless Harvest Thailand, Nestlé and Unilever, outlines principles and sustainability goals in coconut supply chains, almost all of which start in Asia. It also aims to harmonise buyers’ requirements for supply chain partners.

Coconut consumption continues to grow globally, increasing its profile as a safe food. But rising demand coconut and coconut-oil-based products, as well as wider use of coconut in cosmetics, food and beverage, and pharmaceutical industries has forced a rapid growth in the coconut industry. One key challenge is sustainably replanting millions of coconut palms in Asia that are too old to produce fruit. 

“This charter is an important milestone on the way to improving coconut cultivation and farmers’ livelihoods. This is a challenge that must be tackled together to be successful,” said Massimo Selmo, chocolate producer Barry Callebaut’s global head of sourcing. 

“We are proud to have supported this valuable charter,” said Dr Steven G Olive, mission director of USAid’s Regional Development Mission for Asia. 

“The US government prioritises working through the private sector to catalyse market reform and reduce greenhouse gas emissions that warm our climate. Guiding tools, such as this charter, create a landscape approach for sustainability in Asia. USAid stands ready to scale this initiative and looks forward to more signatories joining.” USAid has supported this regional effort through Green Invest Asia, which helps agriculture and forestry businesses in Southeast Asia improve the sustainability and environmental stewardship of their operations by connecting them with like-minded investors.

“As early adopters, a separate public-private partnership between six companies and the German Development Agency [GIZ] has already committed to implementing the charter to improve sustainability in the Philippines’ coconut supply chain,” said Matthias Radek, GIZ’s chief adviser of agricultural projects.

Mathieu Chaumont from Harmless Harvest, a US-based firm that sells organic coconut water, ran a panel explaining how regenerative agriculture improves soil quality and combats global warming, one potential solution to safely boost dwindling coconut supply without increasing its carbon footprint.

Any individual or organisation committed to the charter’s ambitions and principles, and willing to contribute to the on-going development of more sustainable practices in the coconut industry is invited to be a signatory. 

Contact rchaiyosaeng@pactworld.org or visit www.sustainablecoconutcharter.com for more information.

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SET rises over positive news about Pfizer’s Covid-19 vaccine

EconNov 19. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,369.42 on Thursday, up 4.83 points or 0.35 per cent. The volume of total transactions was Bt82 billion with an index high of 1,375.02 and a low of 1,362.41.

In the morning session, an analyst at Krungsri Securities said he expected the day’s index to fall despite Pfizer announcing its Covid-19 vaccine is 95 per cent effective and that it would seek a regulatory review within days.

“The US move to impose fresh restrictions to curtail the spread of Covid-19 after the number of cases rose sharply will pull down the SET,” he predicted.

The top 10 stocks with the highest trade value today were KBANK, ADVANC, PTTGC, IVL, AOT, PTT, MINT, CPF, SCB and GULF.

As of 4.30pm, the price of oil dropped by US$0.44 or 1.05 per cent to $41.38 per barrel, while gold dropped by $13 or 0.69 per cent, to $1,860.90 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 25,634.34, down 93.80 points or 0.36 per cent.

China’s Shanghai SE Composite Index closed at 3,363.09, up 15.78 points or 0.47 per cent, while Shenzhen SE Component Index closed at 13,777.44, up 119.24 points or 0.87 per cent.

Hong Kong’s Hang Seng Index closed at 26,356.97, down 187.32 points or 0.71 per cent.

South Korea’s KOSPI Index closed at 2,547.42, up 1.78 points or 0.070 per cent.

Taiwan’s TAIEX Index closed at 13,722.43, down 50.86 points or 0.37 per cent.

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Central bank looks for ways to control the rising baht

EconNov 19. 2020The central bank’s governor Sethaput Suthiwartnarueput 

By The Nation

The Bank of Thailand is looking into ways of taming the strengthening baht, the central bank’s governor Sethaput Suthiwartnarueput said.

The Monetary Policy Committee (MPC) is concerned that the rapid rise of the Thai currency will further hurt the export sector, which is already badly affected by the Covid-19 pandemic, he added.

At a meeting on Wednesday, the MPC said it was worried that the rapid appreciation of the baht will affect the fragile economic recovery.

Hence, the committee said, it will closely monitor developments in foreign exchange markets and keep an eye on capital flows as well as consider the necessity of implementing additional appropriate measures.

Sethaput said the central bank was not ignoring businesses that are being adversely affected by the baht appreciation.

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Gold price drops amid positive news of Pfizer’s Covid-19 vaccine

EconNov 19. 2020

By The Nation

The price of gold dropped by Bt100 per baht weight in morning trade on Thursday after the price was unchanged at close on Wednesday, the Gold Traders Association reported.

As of 9.26am, the buying price of a gold bar was Bt26,800 per baht weight and selling price Bt26,900, while gold ornaments cost Bt26,317.76 and Bt27,400, respectively.

At close on Wednesday, the buying price of a gold bar was Bt26,900 per baht weight and selling price Bt27,000, while gold ornaments cost Bt26,408.72 and Bt27,500, respectively.

The spot gold price moved to US$1,871 (Bt56,778) per ounce in the morning, while the Comex (Commodity Exchange) gold price to be delivered in December dropped by $11.20 to $1,873.90 per ounce on Wednesday due to mass sell-offs of the precious metal in response to positive news of Pfizer’s Covid-19 vaccine.

The Hong Kong gold price meanwhile dropped by HK$120 to $17,290 (Bt67,680) per tael, the Chinese Gold and Silver Exchange Society reported.

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SET rises, but fresh US Covid restrictions cast shadow

EconNov 19. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index rose by 3.59 points, or 0.26 per cent, to 1,368.18 in the morning session on Thursday.

However, an analyst at Krungsri Securities expected the day’s index to fall in the morning session despite Pfizer saying its coronavirus vaccine is 95 per cent effective and the company would seek a regulatory review within days.

“The US move to impose fresh restrictions to curtail the spread of coronavirus after the number of virus cases increased sharply would pull down the SET to 1,340 points,” he predicted, adding that this is an opportunity to increase investment to speculate for profit when the index hits 1,400 points.

He recommended investors buy BTS, ERW, Ichi and Top, whose third-quarter performance was expected to improve.

The SET Index closed at 1,364.59 on Wednesday, up 14.78 points, or 1.09 per cent. Total transactions amounted to Bt66.93 billion, with an index high of 1,364.64 points and a low of 1,341.46.

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Baht under pressure from BOT measures

EconNov 19. 2020

By THE NATION

The baht opened at 31.31 to the US dollar on Thursday, unchanged from its closing rate on Wednesday.

The Thai currency is likely to move between 30.20 and 30.40, said Jitipol Puksamatanan, senior director of the chief investment office at SCB Securities.

On Wednesday night, the S&P 500 decreased by 1.2 per cent amid market concern over the dire Covid-19 situation in the US.

The Stoxx 600 Index increased by 0.4 per cent due to investors’ hopes that the EU would issue a fresh stimulus package, he said.

Meanwhile, the WTI crude oil price rose by 0.7 per cent, to $41.70 (Bt1,265) per barrel.

The dollar continued to weaken, and the US Ten-Year Treasury yield decreased by 2 basis points to 0.88 per cent. Investors decided to invest in the yen as a safe-haven asset. Bitcoin was trading at $17,000 (Bt51,5856) amid speculation.

In Thailand, the baht came under pressure from the Bank of Thailand’s (BOT) measures to prevent the currency from strengthening quickly. However, Jitipol said the recent movement of the baht was not mainly from speculation, so BOT will not implement strict measures targeting speculators.

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Stocks drop as NYC school closure saps sentiment

EconNov 19. 2020

By Syndication Washington Post, Bloomberg · Claire Ballentine · BUSINESS

U.S. stocks slumped as fresh restrictions to curtail the spread of coronavirus overshadowed signs that scientists are making fast progress toward a vaccine. The dollar held near its lowest level in two years.

The S&P 500 Index closed at its lows of the day after New York City shut schools because of rising infections. Pfizer Inc. advanced after saying that its covid-19 vaccine was 95% effective, paving the way for the company to apply for the first U.S. regulatory authorization for a coronavirus shot within days. Lowe’s Cos Inc. slumped after earnings trailed analysts’ expectations, while Target Corp. advanced on soaring sales.

Cryptocurrency mania continued its comeback, with Bitcoin surging past $18,000 for the first time since December 2017 before erasing its advance.

After gains that pushed stocks to record highs earlier this week, money managers remained focused on the latest coronavirus data showing disturbingly high infection rates in Europe and the U.S. Wednesday marked the first time the S&P 500 had dropped for two consecutive days since late October.

“Investors are taking a well-earned timeout after the news of the last couple weeks saw sentiment surge to levels that suggested excessive optimism,” said Adam Phillips, director of portfolio strategy at EP Wealth Advisors. “Progress toward a vaccine is promising and suggests a light at the end of the tunnel, but there’s no telling for sure how long that tunnel is.”

Elsewhere, equity gauges closed green across Europe. The pound continued its advance amid hopes of a Brexit deal and data showing stronger-than-expected inflation. The Nikkei 225 Stock Average lost 1.1% after Tokyo reported a record number of new covid-19 infections, but overall Asian stocks were slightly higher on the day.

These are the main moves in markets:

Stocks

–The S&P 500 Index fell 1.2% at 4 p.m. EST.

– The Stoxx Europe 600 Index rose 0.4%.

– The MSCI Asia Pacific Index increased 0.1%.

– The MSCI Emerging Market Index climbed 0.4%.

Currencies

– The Bloomberg Dollar Spot Index was little changed.

– The euro fell 0.1% to $1.1854.

– The British pound rose 0.2% to $1.3269.

– The Japanese yen strengthened 0.3% to 103.86 per dollar.

Bonds

– The yield on 10-year Treasurys rose two basis points to 0.87%.

– Germany’s 10-year yield rose one basis point to -0.56%.

– Britain’s 10-year yield rose one basis point to 0.33%.

Commodities

– West Texas Intermediate crude gained 0.6% to $41.69 a barrel.

– Gold fell 0.6% to $1,869.54 an ounce.

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SET rises despite gloom over Thai protests, Covid

EconNov 18. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,364.59 on Wednesday, up 14.78 points or 1.09 per cent. Total transactions amounted to Bt66.93 billion with an index high of 1,364.64 and a low of 1,341.46.

In the morning session, an analyst at Krungsri Securities expected the day’s index to fall to 1,340 points due to lack of positive sentiment.

“Uncertainty over political unrest in Thailand, rising Covid-19 cases worldwide and signs of overbought stocks will pressure the index,” he said.

The 10 stocks with the highest trade value today were KBANK, SCGP, MINT, PTT, GPSC, SAWAD, STGT, AOT, GULF and CPALL.

As of 4.30pm, the price of oil rose by US$0.31 or 0.75 per cent to $41.74 per barrel, while gold dropped by $4.60 or 0.24 per cent, to $1,880.50 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 25,728.14, down 286.48 points or 1.10 per cent.

China’s Shang Hai SE Composite Index closed at 3,347.30, up 7.41 points or 0.22 per cent, while the Shenzhen SE Component Index closed at 13,658.20, down 74.32 points or 0.54 per cent.

Hong Kong’s Hang Seng Index closed at 26,544.29, up 129.20 points or 0.49 per cent.

South Korea’s KOSPI Index closed at 2,545.64, up 6.49 points or 0.26 per cent.

Taiwan’s TAIEX Index closed at 13,773.29, up 180.28 points or 1.33 per cent.