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U.S. initial jobless claims decline by the most in five weeks

EconNov 12. 2020A holiday shop in Bryant Park in New York on Nov. 10, 2020. MUST CREDIT: Bloomberg photo by Gabriela Bhaskar. 

By Syndication Washington Post, Bloomberg · Olivia Rockeman · BUSINESS, US-GLOBAL-MARKETS
Applications for U.S. state unemployment benefits fell by the most in five weeks, signaling the gradual recovery in the labor market is continuing despite a record surge in covid-19 infections.

Initial jobless claims in regular state programs totaled 709,000 in the week ended Nov. 7, down 48,000 from the prior week, Labor Department data showed Thursday. On an unadjusted basis, the figure decreased by about 21,000.

Continuing claims — the total number of Americans claiming state unemployment assistance — fell by 436,000 to 6.79 million in the week ended Oct. 31. But the number of people claiming support in programs offering extended assistance continued to increase as more Americans exhausted their regular state benefits.

The main figures were below economists’ projections for 731,000 initial claims and 6.83 million continuing claims, according to the median estimates in Bloomberg surveys.

While initial claims remain more than triple pre-pandemic levels, the data suggest the labor-market rebound is holding up after a stronger-than-forecast jobs report for October. Gains could prove more challenging in coming months, amid signs that colder weather and the coronavirus’s uncontrolled spread are further discouraging activities like indoor dining and travel, while the lack of fresh government stimulus challenges many households and businesses.

U.S. stock futures pared losses following the report, while Treasury yields remained lower and the dollar was little changed.

The number of Americans receiving Pandemic Emergency Unemployment Compensation, the 13-week program for those who have exhausted state benefits, increased about 160,000 to 4.14 million in the week ended Oct. 24.

Continuing claims for Pandemic Unemployment Assistance, which provides benefits to self-employed and gig workers, increased about 101,000 to 9.43 million. In total, 21.2 million Americans were claiming some kind of unemployment benefit — which includes state programs, extended benefits, work-sharing and PUA — during the week ended Oct. 24, down slightly from the prior week.

A separate report Thursday showed that the consumer price index was unchanged in October, below forecasts that called for a modest gain, reflecting cheaper gasoline, declining medical-care costs and lower clothing prices.

For initial jobless claims, the biggest declines last week were in Georgia, Kentucky and Texas. States reporting increases included California, Washington and Massachusetts.

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BOT allows financial institutions to make dividend payments in line with overall economic stability, impact on stakeholders

EconNov 12. 2020

By The Nation

The Bank of Thailand’s deputy governor Ronadol Numnonda said on Thursday that the central bank has come up with guidelines for 2020 dividend payments, which takes into account financial institutions’ capital plans and stress test results for 2020-2022. 

He said results show that financial institutions have adequate levels of capital and loan-loss provisions to withstand the impact of Covid-19. 

Furthermore, financial institutions have enhanced their awareness and readiness to deal with uncertainty by continuously increasing their loan-loss provisions. 

According to data, the coverage ratio for non-performing loans (NPL) and bank for international settlements (BIS) ratio for the Thai banking system in the third quarter of this year are 150 per cent and 19.8 per cent respectively. 

However, owing to high uncertainty in the near future, the BOT is supporting preventive measures by allowing financial institutions to pay dividends for 2020 that do not exceed last year’s pay-out ratio and are at 50 per cent of this year’s net profit. 

This is in line with the guidelines of many overseas regulators and will benefit financial institutions’ shareholders, depositors and debtors in the long run.

This policy will also help ensure the Thai financial system’s resilience as well as maintain a high level of capital to safeguard against uncertainties and serve as an important mechanism to support economic recovery as the Covid-19 situation improves.

The central bank had previously issued an order asking banks to suspend interim dividend payment in the fallout of the Covid-19 outbreak.

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SET sheds almost 10 points after rising in previous days

EconNov 12. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,336.31 on Thursday, down 9.03 points or 0.67 per cent. Total transactions amounted to Bt97.24 billion with an index high of 1,341.57 and a low of 1,327.17.

In the morning session, an analyst at Krungsri Securities expected the day’s index to fluctuate between 1,335 points and 1,357 despite news that a Covid-19 vaccine was almost ready, which helped attract foreign funds into the market.

“Uncertainty over the US lockdown to contain Covid-19, and signs of overbought stocks will pressure the index,” he said.

He added that foreign stock and oil markets were currently facing corrections following sharp rises, as investors waited for fresh positive sentiment.

The 10 stocks with the highest trade value today were SCGP, KBANK, AOT, PTT, MINT, CPALL, ADVANC, STGT, TASCO and BDMS.

As of 4.30pm, the price of oil dropped by US$0.32 or 0.77 per cent to $41.13 per barrel, while gold rose by $2.90 or 0.16 per cent, to $1,864.50 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 25,520.88, up 171.28 points or 0.68 per cent.

China’s Shang Hai SE Composite Index closed at 3,338.68, down 3.52 points or 0.11 per cent, while the Shenzhen SE Component Index closed at 13,792.07, up 71.90 points or 0.52 per cent.

Hong Kong’s Hang Seng Index closed at 26,169.38, down 57.60 points or 0.22 per cent.

South Korea’s KOSPI Index closed at 2,475.62, down 10.25 points or 0.41 per cent.

Taiwan’s TAIEX Index closed at 13,221.78, down 40.41 points or 0.30 per cent.

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BoI launches new promotion to woo EV manufacturers, ready to send Tesla a special invite

EconNov 12. 2020

By The Nation

At a meeting last week chaired by Prime Minister Prayut Chan-o-cha, the Board of Investment (BoI) agreed to a new round of investment promotion for electric vehicles (EV) in a bid to lure Chinese automakers as well as woo world-famous EV manufacturer Tesla with an eight-year corporate income tax exemption.

The previous BoI plan (2017-2019) supported the manufacture of EV and hybrid EVs in the form of passenger cars, trucks and buses, while the new plan covers more vehicles, including motorbikes, motor tricycles and boats.

Under the new promotion, tax exemption will be granted under the following criteria:

• Manufacturers of battery operated or hybrid electric vehicles that have invested more than Bt5 billion will be entitled to corporate income tax exemption for eight years.

• Manufacturers with an investment of less Bt5 billion will be granted corporate income tax waiver for three years, provided they manufacture at least three types of parts for electric vehicles.

• Manufacturers of electric motorcycles with batteries will get a three-year waiver on corporate income tax.

• Manufacturers of electric buses and electric trucks with batteries get a three-year corporate income tax exemption.

In addition to tax exemptions, every EV-related business will get additional benefits based on specific conditions, such as the production of key vehicle parts or investment in research and development.

“The promotion of electric vehicle production will help make Thailand a hub for trade and investment as well as a global production base. Also, businesses will be given a chance to efficiently adapt to developments, so they are in line with the competition,” said BoI secretary-general Duangjai Asawachintachit.

Under the new plan, BoI hopes to attract new investors such as the Chinese automaker Great Wall Motor. It is also planning to encourage Tesla to set up a production base in Thailand.

Tesla currently has production bases in the United States, Germany and China, but has provided no clear indications on whether it plans to invest in the ASEAN region. It recently sent a team to study investment conditions in different countries.

BoI’s first investment promotion was quite successful with 26 automakers showing interest in the projects, worth an investment of more than Bt78 billion.  

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SET, SEC work on easing rules so foreign companies can be listed in Thai stock markets

EconNov 12. 2020

By The Nation

The Stock Exchange of Thailand (SET) and Securities and Exchange Commission (SEC) are working on improving regulations so foreign companies can be listed in the Thai stock market.

SET president Pakorn Peetathawatchai expects foreign holding companies, infrastructure funds and Real Estate Investment Trusts (REITs) to be able to raise funds both in primary and secondary markets by next year.

He said SET also plans to set up a third stock market to help start-ups, small and medium enterprises (SMEs) and social enterprises to raise funds. This third stock market should be ready to go into operation by the second or third quarter next year.

“Currently we have SET and the Market for Alternative Investment, but we don’t have any foreign companies listed, so we need to help bring foreign firms into the Thai stock market,” he said.

“Meanwhile, we are working on setting up a new stock market to help start-ups and SMEs raise funds, but it is not easy because small companies have many risks.”

Pakorn added that the SET, SEC and the Bank of Thailand have established the Thai Institute of Directors to help listed companies report their information effectively, to ensure proper corporate governance and corporate social responsibility.

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Capital Nomura expert expects foreign investors to sell $114m of Thai stocks after MSCI move

EconNov 12. 2020

By The Nation

An expert at Capital Nomura Securities (CNS) expects foreign investors to sell approximately US$114 million of Thai stocks after MSCI reduced its investment in Thai stocks to 1.87 per cent from 1.91 per cent, which will be effective on November 30.

Related story:

Thai stocks listed in MSCI indices attract foreign investors

CNS director of investment research and its investor services division Koraphat Vorachet said MSCI had reduced investment in PTT, CP All, Airports of Thailand (AOT), Siam Cement (SCC), Advanced Info Service (Advanc), Bangkok Dusit Medical Services (BDMS), PTT Exploration and Production (PTTEP) and Intouch Holdings (Intuch), but increased its investment in Asset World Corporation (AWC).

Koraphat expected foreign investors to buy Sri Trang Gloves (STGT) and Delta Electronics (Delta) shares amounting to $43 million and $75 million, respectively, that were listed in the MSCI Global Standard Index and sell TMB Bank (TMB) and IRPC shares amounting to $38 million and $42 million, respectively, that were delisted from the index.

MSCI meanwhile moved IRPC from its Global Standard Index to its Global Small Cap Index.

“We expect the Stock Exchange of Thailand (SET) to face correction for one week before MSCI’s move takes effect on November 30 this year. Therefore, investors should avoid stocks that MSCI has reduced investment in as well as those that were delisted from MSCI’s indices. Meanwhile, investors should speculate on stocks that MSCI has increased investment in,” Koraphat advised.

He said the SET faces volatility despite the inflow of foreign funds as domestic institutional investors were adjusting their portfolios to suit the situation.

The SET Index closed at 1,345.34 on Wednesday, up 4.10 points, or 0.31 per cent. Total transactions amounted to Bt117.15 billion, with an index high of 1,356.83 points and a low of 1,331.39.

Foreign investors and securities accounts made net buys of Bt7.23 billion and Bt771 million, respectively, while institutional and individual investors made net sells of Bt4.22 billion and Bt3.78 billion, respectively.

Foreign investors have bought back Thai stocks totalling Bt28.43 billion for three consecutive days.

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SET Index falls, faces pressure over US virus situation, overbought stocks

EconNov 12. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index fell by 8.37 points, or 0.62 per cent, to 1,336.97 in the morning session on Thursday.

An analyst at Krungsri Securities expected the day’s index to fluctuate between 1,335 points and 1,357 despite the positive news that a Covid-19 vaccine was almost ready, which helped attract more foreign funds into the market.

“Uncertainty over the US curfew to contain the spread of Covid-19 and signs of overbought stocks would pressure the index,” he said.

He added that foreign stock and oil markets are currently facing correction after rising sharply in previous days as investors were waiting for fresh positive sentiment.

He recommended investors buy STGT, STA, EPG, Com7, Synex, Hana and TVO, whose third-quarter performance is expected to improve.

The SET Index closed at 1,345.34 on Wednesday, up 4.10 points, or 0.31 per cent. Total transactions amounted to Bt117.15 billion, with an index high of 1,356.83 points and a low of 1,331.39.

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Gold price drops amid strong dollar, US stock market rise

EconNov 12. 2020

By The Nation

The price of gold dropped by another Bt150 per baht weight in morning trade on Thursday, the Gold Traders Association reported.

As of 9.27am, the buying price of a gold bar was Bt26,700 per baht weight and selling price Bt26,800, while gold ornaments cost Bt26,226.80 and Bt27,300, respectively.

At close on Wednesday, the buying price of a gold bar was Bt26,850 per baht weight and selling price Bt26,950, while gold ornaments cost Bt26,363.24 and Bt27,450, respectively.

The spot gold price moved to US$1,869 (Bt56,487) per ounce in the morning after the price dropped by $14.80 to $1,861.60 per ounce at Wednesday’s close due to a strengthening dollar and mass sell-offs of the safe-haven asset amid the rise in the US stock market, especially the Nasdaq Index, which increased by more than 2 per cent.

The Hong Kong gold price meanwhile dropped by HK$100 to $17,260 (Bt67,283) per tael this morning, the Chinese Gold and Silver Exchange Society reported.

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Stocks rise to 10-week high with rally in Big Tech

EconNov 12. 2020

By SyndBloomberg · Rita Nazareth, Claire Ballentine · BUSINESS, US-GLOBAL-MARKETS 

ication Washington Post,

Stocks climbed as giant tech companies rallied in a shift back to the safety trade that has powered this year’s gains amid speculation the economic recovery will be slow with a virus resurgence.

The S&P 500 rose to the highest since Sept. 2, while the Nasdaq 100 jumped more than 2%. Heavyweights Apple Inc. and Amazon.com Inc. surged alongside some stay-at-home shares that were hit hard by this week’s sell-off such as Zoom Video Communications Inc. The Dow Jones industrial average underperformed, and banks slumped. The Russell 2000 Index of smaller stocks halted a two-day rally which was driven by expectations that a return to normal would be on the horizon after positive vaccine developments. Treasury futures were little changed, with the cash market closed for a U.S. holiday. The dollar advanced.

With fears of further economic pain growing amid the threat of tougher measures to contain the virus, traders piled back into companies with solid balance sheets and a suite of products that benefit from social distancing. New York City’s average of people testing positive for covid-19 is approaching the safety threshold that would force a shutdown of schools, with the mayor citing one “last chance” to halt a second wave. The pandemic has killed more than 1.2 million people around the world since late January and sent the economy into the worst recession in living memory.

“We are still going to be in for a slower economic growth environment,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management. “We could see some reopening rollback as the Covid case counts continue to climb.”

While the recent rotation into cheaper value stocks slowed down on Wednesday, JPMorgan Chase & Co. strategists said the shift into those companies can endure much longer after years of lagging behind growth shares. There’s still room for further normalization as a large part of the initial rally was driven by the short-covering of short-momentum strategies — which buy the past year’s winners and sell its losers, according to them.

“Our equity strategy team believes that we are on the cusp of a sustained rally in value comparable to what we saw in 2016-2017,” said strategists including Davide Silvestrini and Marko Kolanovic. “This rotation has room to continue much further given the material underperformance we have witnessed in recent years.”

Elsewhere, talks between OPEC and its allies are zeroing in on a delay to next year’s planned oil-output increase of three to six months, according to several delegates. Saudi Arabia and Russia, leaders of the 23-nation coalition, have already indicated publicly that they are thinking twice about easing production cuts in January as the resurgent pandemic hits fuel demand.

These are some of the main moves in markets:

Stocks

– The S&P 500 gained 0.8% as of 4 p.m. EST.

– The Stoxx Europe 600 Index climbed 1.1%.

– The MSCI Asia Pacific Index advanced 0.6%.

Currencies

– The Bloomberg Dollar Spot Index climbed 0.2%.

– The euro decreased 0.4% to $1.1771.

– The Japanese yen depreciated 0.1% to 105.44 per dollar.

Bonds

– Germany’s 10-year yield fell two basis points to -0.51%.

– Britain’s 10-year yield rose one basis point to 0.413%.

Commodities

– The Bloomberg Commodity Index advanced 0.1%.

– West Texas Intermediate crude advanced 0.1% to $41.41 a barrel.

– Gold weakened 0.7% to $1,863.29 an ounce.

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BOT urges banks to boost digital services

EconNov 12. 2020

Siritida Panomwon Na Ayudhya

By The Nation

The Bank of Thailand (BOT) wants to see commercial banks boost their digital services in order to match the increasing demand for online transactions, said Siritida Panomwon Na Ayudhya, the central bank’s assistant governor, Payment Systems Policy and Financial Technology Group.

She added that the central bank had witnessed a decline in errors and downtime of commercial banks’ digital platforms in the third quarter as their digital services improve.

The BOT and commercial banks are closely monitoring digital service transaction traffic so they can respond quickly to any problems that may arise, she added.