Investors have been advised to keep an eye on the government, as the domestic political situation and their move to launch economic stimulus measures could affect the Stock Exchange of Thailand (SET) Index next week.
The SET Index on Friday (August 28) closed at 1,327.05, down 3.50 points or 0.26 per cent, while total transactions stood at Bt54.671 billion.
An analyst at Asia Plus Securities expected the index next week to fluctuate in a narrow range between 1,310 and 1,350, as the index would be under pressure from the political situation in the country.
“International factors, the global economy and listed companies’ profit are still not worrisome during this time,” the analyst said.
“We advise investors to follow the government’s move whether they will issue additional economic stimulus measures or not.”
The price of gold on Friday stood at US$1,957.65 per ounce, while the price in Thailand was Bt28,850 per baht weight.
An analyst at YLG Bullion International advised investors to buy gold for short-term speculation when the price moves to a support line between $1,909 and $1,932 per ounce.
“If the price rises to the resistance line between $1,963 and $1,976 per ounce, investors can sell some of the metal,” the analyst said.
“Gold price could fall if it cannot rise over the resistance line, so investors should set up the stop loss point if it does not materialise as expected.”
By Syndication Washington Post, Bloomberg · Vildana Hajric, Claire Ballentine · BUSINESS
U.S. stocks capped the week with fresh highs and the dollar weakened to a more than two-year low as the Federal Reserve’s new inflation approach rippled through global markets.
The benchmark S&P 500 closed at an all-time high for a sixth consecutive trading session, while the Nasdaq Composite also reached unseen levels a day after Jerome Powell signaled that the Fed will stay accommodative for longer through more tolerance toward consumer-price increases. The Dow Jones industrial average turned positive for the year. The Stoxx Europe 600 Index retreated as the euro strengthened against the dollar, which posted its worst daily decline in about three months against a basket of its peers. Gold advanced.
“Stocks seem to be enjoying the best of both worlds as they are seeing signs of improving economic momentum while monetary stimulus continues to be very accommodative — and more fiscal stimulus is likely on the way,” said Yousef Abbasi, global market strategist at StoneX. “Yesterday’s action by the Fed likely provides risk-assets with the assurance they need — easy money is here to stay.”
The greenback was also hurt by a surge in the yen on news that Japanese Prime Minister Shinzo Abe will resign due to health reasons. European bonds pared earlier declines after a euro-area economic-confidence measure improved.
Powell’s shift provided another tail wind for stocks globally, which are heading for a fifth week of gains as investors monitor progress on vaccine developments for the pandemic. It also helped move the U.S. yield curve to its steepest in two months.
Treasury securities mostly rebounded from Thursday’s rout, benefiting from some buying to match duration changes in benchmark indexes at month-end.
“The Fed still has the market’s back and the market is responding positively to that prospect,” said Tracie McMillion, head of global asset allocation strategy for Wells Fargo Investment Institute. “That was confirmation that yes, we are going to see these lower rates for longer.”
Elsewhere, crude oil fluctuated as Hurricane Laura weakened while crossing over land in the refinery and LNG-rich Gulf of Mexico region. Emerging-market currencies gained, with South Africa’s rand strengthening as much as 2%.
Here are the main market moves:
Stocks
The S&P 500 Index rose 0.7% to 3,507.95 as of 4:01 p.m. EDT, hitting the highest on record with its seventh consecutive advance.
The Dow Jones industrial average increased 0.6% to 28,653.32, the highest in about six months.
The Nasdaq Composite Index gained 0.6% to 11,695.63, the highest on record.
The Stoxx Europe 600 Index decreased 0.5% to 368.80, the lowest in a week.
Currencies
The Bloomberg Dollar Spot Index sank 0.9% to 1,161.61, the lowest in more than two years on the largest decrease in more than three months.
The euro jumped 0.6% to $1.1898, the strongest in more than a week on the biggest increase in a month.
The Japanese yen appreciated 1.1% to 105.36 per dollar, the strongest in more than four weeks on the largest jump in five months.
Bonds
The yield on two-year Treasurys decreased two basis points to 0.13%, the lowest in more than two weeks on the biggest tumble in more than 11 weeks.
The yield on 10-year Treasurys declined two basis points to 0.73%, the first retreat in a week and the largest drop in more than a week.
The yield on 30-year Treasurys decreased less than one basis point to 1.51%, the first retreat in a week.
Commodities
West Texas Intermediate crude dipped 0.1% to $42.98 a barrel.
Gold strengthened 1.8% to $1,963.79 an ounce, the highest in more than a week on the biggest increase in more than a week.
Copper increased 1.3% to $3.03 a pound, hitting the highest in more than a week with its fifth straight advance and the largest climb in more than a week.
The central bank’s latest debt-relief measure will cost banks Bt10 billion a year, Kasikorn Research Centre said on Friday.
On Thursday, the Bank of Thailand announced a debt consolidation measure to allow borrowers to bundle their credit card, personal and mortgage loans into one sum. Borrowers can then utilise collateral in their mortgage loans to restructure their debt total with financial institutions. This will cut their interest on personal loans from the usual 16-25 per cent to the minimum retail rate (MRR) of 5.75 to 8.8 per cent, said the central bank. Borrowers will be also allowed to extend their debt payment period.
“The debt relief will greatly benefit retail borrowers, but is expected to reduce banks’ income from interest by 1.67 per cent annually,” said Thanyalak Vacharachaisurapol, deputy managing director at Kasikorn Research.
For the rest of this year, bank revenue from interest payments is expected to drop by 0.56 per cent, she added.
Annual revenue from loan interest in the banking sector totals around Bt700 billion.
Thanyalak said banks will get some benefit from the debt consolidation as it may enable them to reduce their reserves-against-risk assets.
Meanwhile, Kittipat Chonwut, CEO of personal loans company J Fintech, said he supports the central bank’s measure and will advise J Fintech borrowers to refinance their debts with banks. But banks would first have to accept their requests, he cautioned.
J Fintech has loaned money to about 8,000 people affected by the Covid-19 fallout. The company also joined a previous central bank scheme designed to help borrowers restructure their debts. Kittipat said only 100-200 J Fintech borrowers were asking for more support and their combined debt was not large.
Inflation targeting framework a boon for Thailand, says BOT
EconAug 28. 2020Titanun Mallikamas, assistant governor of the BOT’s Monetary Policy Group
By The Nation
The Bank of Thailand (BOT) has highlighted how its inflation targeting policy allows flexibility in pursuing multiple objectives, after its US counterpart adopted the same policy.
On Thursday, the US Federal Reserve announced a landmark switch to flexible inflation targeting – the same monetary policy used by Thailand.
Titanun Mallikamas, assistant governor of the BOT’s Monetary Policy Group, commented that the FED had changed its monetary policy framework to better align with new economic conditions.
The change will allow the bank to keep interest rates lower for longer, stimulating economic recovery to reduce unemployment.
The BOT’s Monetary Policy Committee (MPC) uses Thailand’s flexible inflation targeting framework to ensuring price stability in the medium term, and also to stabilise economic growth and preserve financial stability.
Flexible inflation targeting can take care of multiple policy objectives using different policy tools, depending on the nature and magnitude of shocks, explained Titanun.
In the current context, it allows the use of policy tools other than the interest rate, such as financial sector measures which include soft loans and debt restructuring, to ensure that growth, inflation, and financial stability objectives are met.
The BOT also routinely reviews the monetary policy framework to ensure it keeps pace with changing economic and financial environments, he added.
The Stock Exchange of Thailand (SET) Index closed at 1,323.31 today (August 28), down 3.50 points or 0.26 per cent. Total transactions amounted to Bt54.673 billion with an index high of 1,337.61 and a low of 1,319.45.
In the morning session, a stock analyst at Krungsri Securities expected the US Federal Reserve’s move to relax inflation policy while maintaining a low interest rate would push the index up to 1,335 before it fell back.
“Also, the index gained positive sentiment from news of a Covid-19 test kit,” he said.
The 10 stocks with the highest trade value today were MINT, PTT, KBANK, BBL, AOT, GULF, BAM, CPALL, SCB and SCC.
As of 4.30pm, the price of oil fell by US$0.02 or 0.05 per cent to $43.02 per barrel, while gold rose by $34.70 or 1.80 per cent, to $1,967.30 per ounce.
Other Asian indices were mixed:
Japan’s Nikkei Index closed at 22,882.65, down 326.21 points or 1.41 per cent.
China’s Shang Hai SE Composite Index closed at 3,403.81, up 53.69 points or 1.60 per cent, while the Shenzhen SE Component Index closed at 13,851.32, up 316.23 points or 2.34 per cent.
Hong Kong’s Hang Seng Index closed at 25,422.06, up 140.91 points or 0.56 per cent.
South Korea’s KOSPI Index closed at 2,353.80, up 9.35 points or 0.40 per cent.
Taiwan’s TAIEX Index closed at 12,728.85, down 68.46 points or 0.53 per cent.
Nakhon Ratchasima is still in crisis because the province has lost more than 70 to 80 per cent of working capital due to the Covid-19 outbreak, which has resulted in the stagnation of the provincial economy, chairperson of the local chamber of commerce Chatchawan Wongjohn said on Friday (August 28).
He added that discussions with local sectors revealed that more government stimulus measures are necessary to help revive the local economy, which will take at least two to three years to recover.
The meeting agreed that the government has to offer support to small businesses as soon as possible and that this has to be more on a long-term basis.
Thailand will not be fully reopened to foreign tourists along the lines of the so-called “Phuket Model” any time soon because the government has to consider too many details, deputy government spokesperson Traisulee Traisoranakul said on Friday (August 28).
She added that the government needs to consider many factors, including guidelines, screening processes and measures to prevent the spread of Covid-19 to ensure there is no second wave of infections.
She added that Phuket residents and Thai tourists can rest assured that no steps to reopen the country have been taken and that utmost precaution will be taken when borders are reopened.
According to the Phuket Model, tourists will be allowed to land on the island, but they will have to undergo a 14-day quarantine first and their travel zones will be limited. Entry will also only be limited to tourists from Covid-free countries.
U-shaped recovery forecast for Thailand, with GDP shrinking by 10 per cent
EconAug 28. 2020KResearch’s executive chairman Dr Charl Kengchon, centre, along with deputy managing director Thanyalak Vacharachaisurapol, second from left, deputy managing director, Dr Siwat Luangsomboon, right, assistant managing director Nattaporn Triratanasirikul, left, and assistant managing director Kevalin Wangpichayasuk, second from right, tell the press about the economic situation in the third quarter of 2020.
By The Nation
Kasikorn Research Centre (KResearch) believes that the Thai economy may have seen its trough in the second quarter based on a quarter-to-quarter basis.
The country’s GDP this year is expected to have a 10-per-cent contraction, while the economy is likely to show a U-shaped recovery compared to the same period last year.
The food and beverage, electrical appliances, hotel and restaurant sectors are still causes of concern.
Nattaporn Triratanasirikul, KResearch assistant managing director, said the Thai economy has been mired in uncertainty in the midst of the Covid-19 crisis, the strengthening of the baht and domestic political issues.
Hence, KResearch has revised down its Thai economic projection for 2020 to -10 per cent from the previous -6 per cent. Given the fluid situation, any economic recovery may be U-shaped, while policymakers face the dilemma of determining how to tackle the economic crisis.
On one hand, they must carefully consider the need for additional stimulus measures that are both timely and sufficient to sustain the economy – now at the base of the U shape – so the economy can emerge from the doldrums sooner rather than later. On the other hand, these measures, if implemented, come at a hefty cost and may balloon public debt. Moreover, the possibility of a second-wave of Covid-19 poses another challenge as the country is gradually reopened.
Though the government has future spending plans in place, they are primarily geared towards economic rehabilitation and job creation. Therefore, public debt is not a cause for concern at this time. Meanwhile, the Monetary Policy Committee may not cut its policy rate anytime soon and instead choose to respond to specific events it deems appropriate, especially after the debt moratorium measure expires in the third quarter.
Thanyalak Vacharachaisurapol, KResearch’s deputy managing director, said, “Loans within the Thai commercial banking system are projected to grow 6.5 to 8 per cent in 2020, compared to the 2.3-per cent pace reported at the end of 2019. Such atypically high growth has been driven by relief measures and increased loan applications from the business sector to enhance liquidity, rather than real economic activity. In fact, close attention must be paid to asset quality as NPLs may lean towards 3.5 per cent by the end of 2020, against 3.23-per cent recorded at the end of June 2020. Despite the government’s need to mobilise massive funds from the financial market, existing tools of the Bank of Thailand will likely help prevent any impact on interest rates within the system, while current deposits in the banking system have grown approximately 9 to 10 per cent over the figure for 2019.”
Moreover, the government is expected to issue measures to assist debtors whose financial burdens have increased, particularly in boosting employment for SMEs, following the first six to eight months during which the government issued liquidity boosting measures totalling Bt360 billion.
The effectiveness of these additional measures will depend on either customers’ level of credit risk mitigation, or the relaxation of risk assessment criteria of target customers for financial institutions. Aside from ample liquidity in the system, commercial banks’ capital remains robust, with a Tier 1 capital ratio of 15.8 per cent, greater than the minimum requirement of 8.5 to 9.5 per cent and even higher than that of many developed countries.
This ensures that the banking system will continue to serve as a leading mechanism in supporting customers during this crisis.
Regarding business trends, Kevalin Wangpichayasuk, KResearch assistant managing director, noted that while business income may have improved in certain areas in line with the gradual lifting of lockdown measures and the government’s stimulus packages, the situation is far from a return to normalcy.
The three business sectors deemed to be most vulnerable at present are: food and beverage, electrical appliances, and hotels and restaurants – these groups may be due to receive continued fina
The Stock Exchange of Thailand (SET) Index rose by 6.96 points, or 0.52 per cent, to 1,333.77 in morning session on Friday (August 28).
A stock analyst at Krungsri Securities expected the index to rise to 1,335 before falling from the US Federal Reserve‘s move to change its approach to inflation to support the US labour market and economic crisis, while still maintaining the interest rate at low level.
“Also, the index gained positive sentiment from the positive news of a Covid-19 test kit,” he said.
He recommended that investors buy stocks whose third-quarter performance will improve, such as CPF, GFPT, TU, ASIAN, KCE, HANA, DELTA, HMPRO, GLOBAL, DOHOME, COM7, JMT, CHG, BCH, PTG, PLANB, CBG and TASCO.
The SET Index on Thursday rose by 4.26 points, or 0.32 per cent, closing at 1,327 with total transactions of Bt52 billion from speculation in shares which gained positive sentiment.
The price of gold dropped by Bt50 per baht weight in morning trade on Friday (August 28), the Gold Traders Association reported.
As of 9.24am, the buying price of a gold bar was Bt28,550 per baht weight and selling price Bt28,650, while gold ornaments cost Bt28,030.84 and Bt29,150, respectively.
At close on Thursday, the buying price of a gold bar was Bt28,600 per baht weight and selling price Bt28,700 while gold ornaments cost Bt28,081.48 and Bt29,200, respectively.
The Chinese Gold and Silver Exchange Society said that Hong Kong gold price dropped by HK$150, opening at $17,830 (Bt71,865.93) per tael on Friday morning.
The Comex (Commodity Exchange) gold price to be delivered in December dropped by US$19.9, or 1.02 per cent, closing at $1,932.6 (Bt60,360.27) per ounce yesterday.
Gold price closed in negative territory from mass sell-offs of the metal after US Federal Reserve chairman Jerome Powell announced on Thursday changes to its approach on inflation. His remarks were in keeping with market expectation.
Titanun Mallikamas, assistant governor of the BOT’s Monetary Policy Group 
KResearch’s executive chairman Dr Charl Kengchon, centre, along with deputy managing director Thanyalak Vacharachaisurapol, second from left, deputy managing director, Dr Siwat Luangsomboon, right, assistant managing director Nattaporn Triratanasirikul, left, and assistant managing director Kevalin Wangpichayasuk, second from right, tell the press about the economic situation in the third quarter of 2020. 
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