The number of firms registering in the Eastern Economic Corridor (EEC) dropped 14.04 per cent to 4,879 in the first nine months of this year.
Their registered capital was Bt13.947 billion, down 29.70 per cent, said Department of Business Development director-general Tossapon Tangsubut.
The decline is due to Covid-19’s impact on the global economy, he added.
The property sector tops the rankings of new EEC registrations with 772 firms and total registered capital of Bt2.709 billion. Next comes the construction sector with 396 firms and Bt665 million in capital, and real estate agencies 189 firms and Bt508 million.
As of September 30, the EEC hosted a total 72,185 companies with combined capital of more than Bt1.944 trillion, up 1.91 per cent from the same period last year.
Of the total, 52,524 are located in Chon Buri with capital of Bt1.147 trillion, 13,810 are in Rayong with capital of about Bt609 billion, and 5,581 are in Chacheongsao with capital of Bt188.199 billion.
Meanwhile, the number of foreign businesses in the EEC rose one per cent over the past nine months to 526, with investment of Bt88.282 billion.
Foreign investment in the EEC via joint ventures with local partners is worth Bt790.205 billion. Japan tops the chart with Bt381.075 billion invested, followed by China at Bt90.298 billion, Singapore (Bt43.263 billion), the United States (Bt25.353 billion), and South Korea (Bt24.08) billion). Rayong boasts the largest share of foreign investment at 52.71 per cent.
Small businesses to bear brunt of cut in US GSP privileges, but all eyes on US presidential election
EconNov 01. 2020Biden VS Trump: US presidential election
By The Nation
The US decision to cut GSP privileges for Thailand would hit some small businesses hard but not impact overall Thai exports, while the US presidential election would significantly impact Thai exports and the economy, an economist said.
The latest round of the US cutting trade privileges under the Generalised System of Preferences would not hurt Thailand’s economy much, but it would have a large impact on small businesses depending on the US market, said Anusorn Tamajai, former dean of Rangsit University’s Faculty of Economics.
Although the US government announced on Friday the cut in tax privileges under the GSP programme for Thailand starting from December on 231 products, Thai exporters actually applied for GSP for only 147 products worth about $600 million to $700 million a year, he said.
With a 4 to 5 per cent tax rate added on those products, the value of export is estimated to be $640-960 million a year. Small businesses who export auto parts, car gears, rubber-made products, chemicals and thin aluminium sheets will be hit hard. They have to find alternative markets, he said. The share prices of listed firms engaging in these products may face a decline when the market opens on Monday, he predicted.
Anusorn believed that President Donald Trump had made his decision in order to gain popularity among American farmers, especially swine farmers. The Trump administration had cited Thailand’s lack of openness in the pork meat market for US products as reason for the GSP cut.
Thailand should brace for more GSP privilege cuts as Thailand currently received trade privileges on 638 products, he warned.
If Joe Biden wins the presidential election scheduled for November 3, his administration may use issues related to human rights, labour rights and democracy for bargaining on trade with Thailand, he said.
Biden has pledged to increase corporate tax from 21 per cent to 28 per cent and personal income tax for the top bracket from 37 per cent to 39 per cent, as well as introduce a capital gains tax on those who earn income of $1 million and more. The tax hike will be used to provide welfare for lower-income groups. The tax will impact large businesses. Biden, however, is unlikely to continue the trade war, and extreme nationalism of President Trump, so Biden’s policies will benefit the global economy as a whole. Biden will support renewable energy and clean energy. His policy to increase the minimum wage to $15 per hour will encourage more US firms to relocate labour-intensive manufacturing to Asia, he forecast.
Biden is expected to revive the Trans-Pacific Partnership initiated by former president Barak Obama. Or he may join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, said Anusorn.
Biden’s “Buy America” would not result in trade restrictions like Trump’s “America First” or “America Great Again” does, he noted, referring to Trump’s trade restrictions on China, Europe as well as Thailand.
If Trump wins the election, large corporates will benefit in the short run due to tax cuts. But Trump will intensify trade wars, which will hurt the global economy as a whole.
If the election is very close and results in a recounting of votes by a court order, the global market would be subjected to high volatility until early next year, he predicted.
If Biden wins, the US dollar is likely to weaken, and more money will flow to emerging markets and there will be a correction in the US stock markets. The rising cost for business stemming from Biden’s tax increase policy will be compensated by overall freer global trade. Rising income of labour will boost domestic demand. Investment in infrastructure projects will contribute to US growth. Biden is unlikely to engage in trade conflicts with Europe, as he did not show strong opposition to Europe’s attempt to collect digital taxes which will adversely impact US tech companies.
“The central bank should review its policy rate currently at 0.5 per cent and prepare for unconventional measures to deal with potential volatility in the global financial market,” said Anusorn, a former director at the Bank of Thailand.
If there is chaos in the US due to lack of clarity about the presidential election winner, it could worsen the global economy. And the Thai economy would suffer if the ongoing political crisis is not resolved peacefully. Therefore, preparing for an unconventional monetary policy is necessary, as the country’s fiscal position has been weakening, he added.
Prime Minister Prayut Chan-o-cha is satisfied with the government’s efforts to reduce poverty after a report by the National Economic and Social Development Council (NESDC) said the number of poor people in the country had declined last year, government deputy spokeswoman Traisuree Taisaranakul said on Saturday.
According to the NESDC report on poverty last year, the number of poor people dropped to 6.24 per cent (4.3 million) from 9.85 per cent (6.7 million) in 2018, she added. The report attributed it to the economic expansion and the government’s measures to help low-income people.
She said that the figure suggested that Thailand had met its goal in the 12th national economic and social development plan, which targets reducing the number of those below the poverty treshold to 6.5 per cent at the end of next year.
However, it remains to be seen if Thailand can maintain this pace until the end of next year as this year Thailand is suffering the severe impact of the Covid-19 pandemic outbreak, she added.
The United States is suspending $817 million in trade preferences for Thailand under the Generalized System of Preferences (GSP) programme due to a lack of sufficient progress in providing the US with “equitable and reasonable market access” for pork products.
The USTR said that despite 12 years of bilateral engagement, Thailand had yet to provide the US with equitable and reasonable market access for pork products, as outlined in a 2018 petition from the National Pork Producers Council requesting removal of GSP benefits.
GSP eligibility will be revoked for approximately one-sixth of Thailand’s GSP trade, representing $817 million in US imports under the GSP programme in 2019. The decision is effective from December 30, and will close the review option for Thailand.
The price of gold rose by Bt100 per baht weight in morning trade on Saturday, the Gold Traders Association reported.
As of 9.23am, the buying price of a gold bar was Bt27,650 per baht weight and selling price Bt27,750, while gold ornaments were priced at Bt27,151.56 and Bt28,250, respectively.
At close on Friday, the buying price of a gold bar was Bt27,550 per baht weight and selling price Bt27,650, while gold ornaments were Bt27,060.60 and Bt28,150, respectively.
The Comex (Commodity Exchange) gold price to be delivered in December rose by US$11.90, or 0.64 per cent, closing at $1,879.90 (Bt58,477) per ounce on Friday. However, the metal price dropped by 1.3 per cent this week and dropped by 0.8 per cent this month.
Gold price rose technically after falling in previous days. Meanwhile, it gained positive sentiment from mass buy-ups of the metal as a safe-haven asset in response to uncertainty over Covid-19’s impact on the economy.
Gold trims monthly loss with dollar slipping ahead of U.S. vote
EconOct 31. 2020One-hundred gram gold bars in an arranged photograph in London, on July 29, 2020. MUST CREDIT: Bloomberg photo by Chris Ratcliffe.
By Syndication Washington Post, Bloomberg · Yvonne Yue Li · BUSINESS, US-GLOBAL-MARKETS
Gold advanced, trimming a monthly loss, as the dollar slipped in the final days before next week’s pivotal U.S. presidential election.
Uncertainty remains high before the Nov. 3 vote, lifting the dollar’s appeal as a safe asset over bullion while a resurgence in coronavirus cases rips through the U.S. and Europe. The spread of Covid-19 is intensifying in the U.S., where new cases topped 86,000 to set a fresh daily record. In Europe, countries have begun to impose new restrictions in an effort to stem the crisis.
Gold “is really so closely tied to the dollar right now that it has no life of its own,” said Janet Mirasola, managing director at Sucden Futures.
Spot gold gained 0.8% $1,882.85 an ounce at 11:06 a.m. New York time, on track for a slight decline this month. Silver increased 1.4%, while platinum and palladium advanced.
Since hitting a record in August, gold’s advance has faltered, with prices losing momentum amid gains for the dollar. Holdings in exchange-traded funds backed by bullion remain close to an all-time high. The Bloomberg Dollar Spot Index was on track for a 1.1% rise this week.
“Increases in risk-off sentiment tend to buoy USD, which weakens gold and silver,” James Steel, chief precious metals analyst at HSBC Securities (USA) Inc., said in a note. “But we think this will only go so far.”
Over the longer term, gold will be supported by European Central Bank monetary policy that probably will include economic stimulus, according to Commerzbank AG analyst Daniel Briesemann.
By Syndication Washington Post, Bloomberg · Vildana Hajric · BUSINESS, US-GLOBAL-MARKETS
U.S. stocks dropped, capping their biggest weekly rout since March, after earnings from the largest tech companies disappointed investors concerned that a slowing economy will damp profit.
The Nasdaq 100 declined about 2.6% after Apple Inc.’s iPhone sales and Twitter Inc.’s user growth both missed estimates, though Google parent Alphabet Inc. jumped after reporting a rebound in advertising. The S&P 500 Index dropped 5.6% over the past five days, the worst-ever loss in the week leading to a presidential election. Ten-year Treasury yields jumped to the highest since June.
The tech slump, coming after an unprecedented run higher this year, is adding to volatility that’s likely to remain elevated heading into next week’s U.S. election. Global equities posted the worst weekly decline since March as lockdown measures in some countries and the lack of an agreement on U.S. stimulus dented sentiment. New U.S. coronavirus cases topped 89,000, setting a daily record.
“Today’s action is a reminder of just how fickle markets can be,” said Yousef Abbasi, global market strategist at StoneX. “The earnings themselves were not awful, but the market has priced tech to near perfection and thus one fly – maybe even a fruit fly – in the ointment could perpetuate a sell-off.”
In Europe, equities edged higher. Tech stocks also faltered as did Danish drug giant Novo Nordisk A/S, whose earnings disappointed analysts. Banks rose after Spain’s BBVA SA and the U.K.’s NatWest Group Plc reported improved pictures for soured loans.
Elsewhere, spot gold prices rose. Crude oil slumped in New York.
Here are the main market moves:
– – –
– The S&P 500 Index decreased 1.2% as of 4 p.m. New York time.
– The Nasdaq 100 Index dropped 2.6%.
– The Stoxx Europe 600 Index rose 0.2%.
– The MSCI Asia Pacific Index sank 1.7%.
– – –
– The Bloomberg Dollar Spot Index rose less than 0.1%.
– The British pound increased 0.2% to $1.2954.
– The Japanese yen fell 0.1% to 104.68 per dollar.
– – –
– The yield on 10-year Treasuries rose four basis points to 0.87%.
– Germany’s 10-year yield climbed one basis point to -0.63%.
– Britain’s 10-year yield increased four basis points to 0.26%.
– – –
– West Texas Intermediate crude fell 1.6% to $35.60 a barrel.
Fed has ‘arsonist and fireman’ reputation traders can’t ignore
EconOct 30. 2020The Marriner S. Eccles Federal Reserve building in Washington, D.C., on Aug. 18, 2020. MUST CREDIT: Bloomberg photo by Erin Scott.
By Syndication Washington Post, Bloomberg · Liz Capo McCormick · BUSINESS, US-GLOBAL-MARKETS
Many of the best-performing investment ideas in 2020 hinged on what the Federal Reserve was doing to fight the economic fallout from the coronavirus.
As 2021 approaches, a new theme is emerging: Finding ways to profit from — or at least survive — the eventual unintended consequences of the central bank’s unprecedented monetary accommodation and heavy hand in debt markets.
Near zero rates for potentially a decade raise the specter of financial stability risks. Fund managers are once again predicting asset bubbles and stock “melt-ups,” a debased U.S. dollar and a destabilizing acceleration in inflation, reigniting a debate about the dark side of easy monetary policy that raged after the 2008 crisis. There is already evidence that some of the risks are materializing with investors now questioning the classic 60/40 asset allocation strategy amid concerns that holders of long-term Treasurys could be in store for major pain.
“The Fed is both the arsonist and fireman,” said James Athey, fund manager at Aberdeen Standard Investments, which oversees more than $500 billion. “It’s fixing the prices of the assets that would normally be used to express concern in the informed-investor community about what the Fed is doing.”
Athey has become a bit of a gold bug, buying the precious metal for his personal account to hedge the inflation he sees coming from bubbles in housing and other asset prices. It’s a popular insurance strategy but, less conventionally at Aberdeen, he’s avoiding or outright shorting long-term Treasurys. He’s not alone. Hedge fund Penso Advisors says it’s lost faith in bonds to buffer a stock “melt up” that it and peers like LongTail Alpha see coming.
The Fed is “creating massive financial instability problems for the future,” Athey said.
Sure, debt investors have a proclivity to focus on the downside; after all, if a company or nation defaults, it’s their IOU that’s not getting repaid. But as ultra-low rates and a breakdown in the relationship between stocks and bonds imperil 60/40 portfolios — a strategy that’s returned 7% this year — asset managers are scoping out alternative, riskier hedges and looking for yield.
Like many roads to trouble, the Fed’s actions were paved with good intentions since America’s economy and markets needed a major policy jolt this year to overcome the shock of the pandemic.
The Fed slashed rates, launched nine emergency loan programs and has bought about $2 trillion in Treasurys since March. Together, these actions largely succeeded in stabilizing volatile markets and sustaining industries hammered by the pandemic. But the central bank also switched to a new average inflation targeting framework, likely pushing back the timing of an eventual increase in its benchmark rate and signaling the economy would be allowed to run hot.
As is the case with many actions the Fed takes, some backlash was inevitable and could ultimately prove unwarranted; rampant inflation failed to materialize after the 2008 crisis despite dire warnings. Still, BlackRock Inc.’s investment institute warned this month that global central banks’ massive stimulus actions have a “lack of proper guardrails” and the Fed’s footprint in markets this year has been undeniably huge.
Take a look at 30-year Treasurys. Yields are hovering at about 1.6%, roughly half the 2019 high, while the breakeven rate for the same maturity — a gauge of expected consumer price increases measured by the gap between inflation-linked and nominal yields — is near its highest since May 2019, and leveraged investors are plowing into the biggest bet ever on losses in Treasury bond futures. Meanwhile, the S&P 500 Index is up more than 50% from its trough in March, with tech stocks the key driver to gains. Greenlight Capital’s David Einhorn said in a letter to investors this week that technology stocks are in an “enormous” bubble.
A surge in virus cases and Washington policy makers’ inability to enact new stimulus until after the Nov. 3 presidential election has recently taken some froth out of risky assets and pushed yields lower. But many investors expect more fiscal spending to come, especially if Joe Biden is elected president and Democrats control both chambers of Congress.
Vineer Bhansali, founder of Newport Beach, California-based LongTail Alpha, expects a stock “melt up” will be part of the fallout since he believes the Fed will do more to buttress risk assets. The specialist in quantitative strategies, who delivered a return of more than 900% in March thanks to a savvy options play, is betting on a downward spiral in the dollar using long-term options, which are cheap and have more profit potential.
The Bloomberg Dollar Spot Index fell 5.6% in the past two quarters and is off about 10% since its high for the year on March 23.
“There’s been a regime shift in the Fed’s thinking, and they are saying financial stability concerns can come later,” said Bhansali. “The big move is going to come in the currency market, with the dollar weakening. That’s a way to devalue our debt that we owe everybody,” he said, citing what he views as an unwritten “pact” between the Fed and U.S. Treasury to tamp down the costs of financing massive deficits.
Ari Bergmann, founder of the $1.1 billion hedge fund Penso Advisors, also sees a stock “melt up,” and says bonds can’t be used to buffer losses anymore. The fund is hedging by tapping “convexity” — what he describes as trades that don’t cost much but have a lot of upside — in currencies and commodities and within equities themselves.
“This thing is musical chairs,” Bergmann said. “It’s a bubble that will be burst because there is no free lunch. If you look at the size of the Fed and other central banks’ balance sheets, somebody has to pay. And just look at the U.S. deficit, the world deficit.”
It’s simple math to see how big losses will be in the event yields turn significantly higher. The Bloomberg Barclays U.S. Treasury Index’s modified duration, which measures the percentage decline in bond prices with each percentage point yield rise, is about 7.2. That would translate into losses of about $655 billion for each one point yield jump, given the value of debt in the index is $9.1 trillion.
Of course, Jerome Powell and his colleagues at the Fed have made it clear they are watching out for unintended consequences. Richmond Fed President Thomas Barkin said this month that the emergence of financial-stability risks or overshoots in the Fed’s 2% inflation target would both be reasons for the central bank to raise rates. And inflation prognosticators have a mixed track record at best.
However, the toll of ultra-low rates has played out before. While lax lending standards and questionable financial practices had key roles in the housing bubble that sparked the 2008 crisis, the Fed’s reversal of persistently low rates also served as kindling for the painful downturn. Boston Fed’s Eric Rosengren said in a speech just this month that the build up of leverage and risk that followed the rate cuts from that crisis has made the current slump worse.
“The success of the Fed will be it’s own demise,” said Bergmann who’s been working in financial markets since the mid 1980s. “In the end, the story will be sad – with the only way to win being to make enough money on the way to getting there and having a clever hedging strategy.”
Hong Kong economy shows first signs of revival since protests began
EconOct 30. 2020Shipping containers sit at the Kwai Tsing Container Terminal in Hong Kong on Sept. 16, 2020. MUST CREDIT: Bloomberg photo by Billy H.C. Kwok.
By Syndication Washington Post, Bloomberg · Eric Lam · BUSINESS, WORLD, US-GLOBAL-MARKETS, ASIA-PACIFIC
Hong Kong’s economy showed the first signs of emerging from a crippling recession sparked by political unrest last year and deepened by the global pandemic.
Gross domestic product declined 3.4% in the third quarter from a year earlier, the government said in a statement Friday, better than the median estimate of a 5.6% contraction in a Bloomberg survey of economists. On a quarter-on-quarter basis, GDP rose 3%.
This marks the first time the quarter-on-quarter measure has risen since before the start of anti-government protests last year, as a third wave of virus infections subsided last month. The economy has been in its longest recession since the tumultuous period from 1997 to 1998 that included the handover to China and the Asia financial crisis.
The moderation in the decline in year-on-year GDP stems in part from a low base of comparison as well as factors including a reviving mainland China economy, stabilization of the virus in Hong Kong and stronger financial market activity, the government said.
“Looking ahead, the continued solid recovery of the mainland economy should render support to Hong Kong’s exports in the coming few months,” the report said. “Also, global demand and trade flows will further improve if the recovery of the major advanced economies sustains.”
Still, the recovery is nascent and Hong Kong will need more robust commerce and tourism to sustain a return to economic growth, economists say. Revised figures on GDP and more detailed statistics will be released Nov. 13.
“Hong Kong needs to see its border reopening with mainland China before the city can benefit from the rapid recovery there,” Tommy Wu, senior economist with Oxford Economics in Hong Kong, said before the data was released.
Hong Kong is among other economies in Asia including Singapore and South Korea that are starting to recover from months of anti-virus measures. Taiwan also reported growth figures Friday, which showed the economy strongly rebounding in the third quarter after bringing the Covid-19 pandemic under control and benefiting from a technology boom.
Hong Kong and Singapore have announced plans to create a travel bubble between the two cities that is targeted to launch next month, Chief Executive Carrie Lam said at a press briefing. People in both cities would be exempted from compulsory quarantine, replaced by coronavirus testing. The pact joins efforts in several markets in the region to loosen travel restrictions.
In an Oct. 25 blog post Financial Secretary Paul Chan said if the flow of people and commerce between Hong Kong and mainland China is safely restored, the city can be “revitalized substantially” even if the global economy remains constrained.
“The sustained rapid economic recovery in the mainland can be said to be the main force supporting the Hong Kong economy,” Chan said. “Only by effectively controlling the epidemic and thoroughly cleaning up local infection cases can we truly create an environment conducive to economic recovery.”
The government is pursuing a law that would make Covid-19 tests mandatory for some groups even as it slowly eases virus-related restrictions, Lam said at the briefing. Hong Kong is ready to re-open the border with China from a technical perspective, but it requires mutual consent, she said.
Meanwhile, Hong Kong’s efforts to stimulate the economy remain under scrutiny. The city has announced more than HK$310 billion ($40 billion) in relief this year, yet the prolonged recession has led to shuttered storefronts and unemployment at an almost 16-year high of 6.4% as of September. Joblessness is likely to rise further after Cathay Pacific Airways last week said it will slash more than 5,000 jobs and close a regional carrier.
The Bank of Thailand reports that the country’s third-quarter recovery continued in September as economic activity rose again.
Public spending continued to be the main driver of the economy, said the central bank’s report on “Economic and Monetary Conditions for September and the third quarter of 2020”.
Private consumption indicators rose to match the same period last year after recording negative growth for six consecutive months. This was down to improvement in household income and consumer confidence, as well as Songkran substitute holidays in September, said the bank.
The value of exported goods (excluding gold) in September fell by 3.7 per cent, a significant improvement on August’s contraction of 13.6 per cent.
Exports improved in almost all categories consistent with a recovery of demand in trading partner countries.
The value of imports excluding gold dropped fell by 6.7 per cent year on year but contracted less than last month.
However, Thailand received no foreign tourist arrivals for the sixth consecutive month after the travel ban was imposed at the end of March, the bank noted.
On overall economic stability, headline inflation was less negative mainly due to falling energy prices. Core inflation fell slightly.
The labour market slightly improved as workers registering for furlough payments fell but jobless social security claims remained high.
The current account registered a surplus mainly from gold exports.
Biden VS Trump: US presidential election 
Government deputy spokeswoman Traisuree Taisaranakul 
One-hundred gram gold bars in an arranged photograph in London, on July 29, 2020. MUST CREDIT: Bloomberg photo by Chris Ratcliffe. 
The Marriner S. Eccles Federal Reserve building in Washington, D.C., on Aug. 18, 2020. MUST CREDIT: Bloomberg photo by Erin Scott. 
Shipping containers sit at the Kwai Tsing Container Terminal in Hong Kong on Sept. 16, 2020. MUST CREDIT: Bloomberg photo by Billy H.C. Kwok. 
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