Experts are divided over whether gold will hit the magic price of Bt30,000 per baht weight by the end of this year, as the global price nears US$2,000 per ounce.
Kritrat Hiranyasiri, chairman of MTS Gold said gold prices could rise further as investors react to the US-China trade war, Covid-19 pandemic, and central banks’ move to inject cash into the economic system.
“We expect the spot gold price to hit a new high of US$2,000 per ounce [soon],” he said.
“Also, we expect the SPDR Gold Trust, one of the world’s largest exchange traded funds, to buy more gold because it currently holds only 1,249 tonnes – lower than its holding during the 2008-11 financial crisis of 1,320 tonnes.”
He predicted the Thai price will hit Bt30,000 given that goldsmiths charge a Bt500 to Bt1,000 commission per baht weight and the price is currently at Bt29,550 per baht weight.
“Gold is considered a safe-haven asset because markets are volatile and the interest rate is low,” he added.
However, Gold Traders Association chairman Jitti Tangsitpakdee said the price may already be at its ceiling.
“There is only a small chance that gold will hit Bt30,000 per baht weight, because gold funds worldwide will sell gold to take profit resulting in falling prices,” he said.
The value of gold has rocketed by Bt7,000 per baht weight since the beginning of this year, generating returns of over 20 per cent.
“The price will only hit Bt30,000 if the global market price reaches US$2,020 per ounce,” Jitti added.
“However, we recommend that investors don’t place too much hope in gold and sell some to take profit, otherwise they face the same despair as eight years ago [during the last gold boom].”
Key challenges await incoming central bank governor Setthaput Suthiwart-Narueput as the country seeks a path to recovery from an unprecedented global crisis.
The Cabinet on Wednesday (July 29) approved the appointment of Setthaput, an economist, as the next Bank of Thailand (BOT) chief, taking over from Veerathai Santiprabhob whose five-year term expires at the end of September. Setthaput is also economic adviser to Prime Minister Prayut Chan-o-cha.
He will need no introduction to the scale of the task ahead; the Thai economy is reeling as millions are laid off and small and medium-sized businesses go under amid the Covid-19 fallout and flaws in implementing monetary and fiscal policies.
The central bank has already cut interest rates three times this year, to a historic low of 0.5 per cent. In April it launched a soft loan scheme worth Bt500 billion to help businesses survive the virus crisis.
However, a smaller-than-expected Bt100 billion worth of loans have so far been approved, while small and medium-sized businesses continue to shut in large numbers. The challenge to help workers and rescue businesses is thus a steep one.
Meanwhile, despite a sharp slowdown in exports and almost no foreign tourist revenue, the baht remains strong relative to regional currencies. The strong baht is inconsistent with weakening economic fundamentals and has hit Thai exporters and farmers, whose products are less competitive in the global market and earn less money due to the exchange rate.
Veteran economist and ex-finance minister Virabongsa Ramangkura is among many who have criticised the central bank and government for failing to halt the baht’s appreciation.
Next on Setthaput’s list of challenges will be financial stability.
Most observers expect bad debts in the banking sector to increase significantly post-Covid 19. Veerathai has already asked banks to halt payment of interim dividends and stop share buy-backs, to ensure they have enough capital. The good news is that the financial system was far more solid before coronavirus hit than the shaky state of Thai banks ahead of the 1997 financial crisis.
However, if the Covid-19 outbreak persists, more problems will emerge.
“One of the biggest challenges for the new central bank governor will be dealing with bad debt in the financial sector,” said Pipat Luengnaruemitchai, assistant managing director at Phatra Securities.
Monetary policy has been blamed for widening income equality as central banks around the globe inject massive liquidity into the market, driving up financial asset prices. In stark contrast, workers are losing their incomes to layoffs and furloughs as companies struggle for survival. The low interest rate is also hurting savers, especially the elderly whose income depends on bank savings.
The BOT forecasts the Thai economy will shrink 8.1 per cent this year while the International Monetary Fund projects the global economy will contract 4.9 per cent. A slower global recovery would also delay the Thai recovery. The BOT calculates it will take about two years for the Thai economy to return to its pre-pandemic level.
The central bank along with the Budget Bureau, Finance Ministry and National Economic and Social Development Council have a key role in formulating the annual budget. The challenge is how the new central bank governor can influence overall macro-economy policies.
Voters and outsiders have voiced growing dissatisfaction with Thailand’s economic management since the military coup in 2014. Among them is respected economist Virabongsa, who has slammed the current government for its lack of expertise in economic policies.
Finally, new governor Setthaput will face the “integrity challenge”.
The post of BOT governor demands high moral standards which were set by Puey Ungphakorn during his 12-year term in 1960s. Puey is credited as the founder of Thailand’s modern economy. At a time when the military enjoyed huge influence in Thai politics, he used his deep knowledge of economics along with personal influence derived from strong integrity to limit military meddling in economic management and stop generals plundering both state-owned and private enterprises. Given that the military still has a strong hand in national budget allocation – judging from the rise in defence spending since the 2014 coup – it will be interesting to see how the new governor deals with the issue.
The Stock Exchange of Thailand (SET) Index closed at 1,338.35 today (July 29), down 2.57 points or 0.19 per cent, while total transactions stood at Bt56.111 billion with an index high of 1,349.91 and a low of 1,337.03.
In the morning session, a stock analyst with Krungsri Securities said he expected the index to fall to between 1,325 and 1,330 points before rebounding due to the conflicts between the US Democrats and Republicans over the US$1-trillion economic stimulus.
“Uncertainty over the rising number of new Covid-19 cases in the US – which rose by 60,000 in just one day – will pressure investment,” he said. “However, the index will rebound from mass purchases of stocks whose second-quarter performance is expected to improve.”
The analyst also advised investors to monitor the US Federal Open Market Committee meeting today and tomorrow to see if it will maintain the interest rate at 0 to 0.25 per cent.
The top 10 stocks with the highest trade value today were KBANK, KCE, GULF, CBG, CPALL, IVL, OSP, STGT, BBL, and AOT.
As of 4.30pm, the price of crude oil rose by $0.43 or 1.05 per cent to $41.47 per barrel, while gold rose by $7.50 or 0.39 per cent, to $1,952.10 per ounce.
Other Asian indices were mixed:
Japan’s Nikkei Index closed at 22,397.11, down 260.27 points, or 1.15 per cent.
China’s Shanghai SE Composite Index closed at 3,294.55, up 66.59 points, or 2.06 per cent, while Shenzhen SE Component Index closed at 13,557.44, up 410.09 points, or 3.12 per cent.
Hong Kong’s Hang Seng Index closed at 24,883.14, up 110.38 points, or 0.45 per cent.
South Korea’s KOSPI Index closed at 2,263.16, up 6.17 points, or 0.27 per cent.
Taiwan’s TAIEX Index closed at 12,540.97, down 45.76 points, or 0.36 per cent.
The price of electronic shares surged by 8 per cent this morning (July 29) in response to strong second-quarter performance by Delta Electronics (Thailand).
The price of Delta’s shares rose by 11 per cent, KCE Electronics 8 per cent, Hana Microelectronics 5 per cent and SVI 5 per cent.
Delta, in its second-quarter performance announcement on July 24, said the company’s net profit was Bt2 billion, up 130 per cent year on year as its operating costs dropped by 4.2 per cent while sales increased by 3.5 per cent.
A stock analyst at UOB Kay Hian Securities said Delta’s gross profit margin was 27 per cent, better than the expected 22.
“We expect Delta’s gross profit margin to increase further in the second half of this year, so we increased the company’s profit forecast this year and next year to 61 per cent and 45 per cent, respectively,” the analyst said.
“Also, we advise investors to buy this stock at Bt124 per share.”
The analyst added that the strong performance in electronic stocks helped boost the Stock Exchange of Thailand Index in morning trade.
The Stock Exchange of Thailand (SET) Index rose by 8.15 points, or 0.61 per cent, to 1,349.07 in the morning session today (July 29).
A stock analyst at Krungsri Securities expected the index to fall to between 1,325 and 1,330 points before rebounding due to the conflict between US Republicans and Democrats over $1-trillion (Bt31.45 trillion) in economic stimulus measures.
“Also, uncertainty following the number of new Covid-19 cases in the US, with an increase of 60,000 in just one day, would pressure investment,” he said.
“However, the index will rebound from mass purchases in stocks whose second-quarter performance is expected to improve.”
The analyst advised investors to follow the US Federal Open market Committee meeting today and tomorrow, adding that the committee would maintain the interest rate at 0-0.25 per cent.
He recommended investors buy:
> Food and Electronic stocks that benefit from the weakening baht, such as CPF, GFPT, TU, TFG, Asian, KCE, Delta, Hana and SVI.
> Stocks whose second-quarter performance will improve, such as Top, PTTGC, SPRC, SCC, BGrim, CKP, CPF, TU, Tasco, STA, STGT, SPALI, AP, PRM, PTL, AJ, STark, CBG and TQM.
The SET Index closed at 1,340.92 on Friday, down 18.73 points, or 1.38 per cent. Total transactions amounted to Bt46.529 billion, with an index high of 1,350.93 and a low of 1,337.21.
The price of gold rose by Bt250 per baht weight in morning trade today (July 29), the Gold Traders Association reported.
As of 9.26am, the buying price of a gold bar was Bt28,950 per baht weight and selling price Bt29,050, while gold ornaments cost Bt28,425 and Bt29,550, respectively.
At close yesterday, the buying price of a gold bar was Bt28,700 per baht weight and selling price Bt28,800, while gold ornaments cost Bt28,182.44 and Bt29,300, respectively.
The Comex (commodity exchange) gold price to be delivered in August rose by US$13.6, or 0.7 per cent, to $1,944 (Bt60,004) per ounce at yesterday’s close.
Investors are still purchasing gold as a safe-haven asset amid uncertainty in this Covid-19 crisis and the conflict between US political parties over economic stimulus measures.
By Syndication Washington Post, Bloomberg · Rita Nazareth, Claire Ballentine, Sarah Ponczek · BUSINESS
U.S. stocks fell as traders assessed corporate earnings amid a resurgence in global coronavirus cases. Bonds rose.
The S&P 500 trimmed its monthly gain as worse-than-estimated results from McDonald’s Corp., 3M Co. and Harley-Davidson Inc. sent their shares slumping. Pfizer Inc. climbed after the drugmaker raised its earnings forecast and began a later-stage trial for a coronavirus vaccine with its German partner. Eastman Kodak Co. soared on news that it received a U.S. government loan.
Some of the largest companies report earnings this week, and investors will look for clues on whether a resurgence of covid-19 around the world will derail a recovery of corporate profits and the economy. The Federal Reserve extended most of its emergency lending programs by three months, through the remainder of 2020. A drop in consumer confidence added to evidence that the pace of the rebound is cooling as the virus interrupts reopenings in several states.
“We’ve seen a number of beneficiaries of the lockdowns and a lot of companies really hurt by the lockdowns,” said Bill McMahon, chief investment officer of active strategies for Charles Schwab Investment Management. “There is still a lot of uncertainty about the rest of the year in how they guide.”
The pandemic continues to rage in parts of the U.S., hot spots in Europe and across big emerging economies including India and Brazil. Governments are having to double down on the $11 trillion dollars worth of stimulus and unprecedented central bank support unleashed since the crisis began. The Fed is set to announce its rate decision Wednesday, and the market anticipates a dovish statement.
“There’s enough stimulus and support in the market from a monetary policy perspective, but also from fiscal, and that keeps a nice floor under the market,” said Amanda Agati, chief investment strategist for PNC Financial Services Group. “But we also think it’s going to be very difficult to make a lot of forward progress in this environment.”
Nasdaq’s biggest companies may struggle to surpass a performance milestone from the height of the 1990s dot-com era, according to Julian Emanuel, head of equity and derivatives strategy at BTIG LLC.
The Nasdaq-100 was leading the S&P 500 for a 10th straight month as of Monday, according to data compiled by Bloomberg. If the tech-heavy gauge hangs onto the lead through Friday, it will match a record streak between May 1999 and February 2000 — the final months before both indexes peaked. The latest run is at risk because of “poor share-price reactions to otherwise solid earnings reports” and other issues, he wrote.
These are some of the main moves in markets:
Stocks
– The S&P 500 decreased 0.6% as of 4 p.m. EDT.
– The Stoxx Europe 600 Index added 0.4%.
– The MSCI Asia Pacific Index advanced 0.4%.
Currencies
– The U.S. Dollar Index rose 0.1%.
– The euro declined 0.3% to $1.1716.
– The Japanese yen appreciated 0.3% to 105.08 per dollar.
Bonds
– The yield on 10-year Treasurys declined four basis points to 0.58%.
– Germany’s 10-year yield fell two basis points to -0.51%.
– Britain’s 10-year yield was unchanged at 0.109%.
Commodities
– The Bloomberg Commodity Index was little changed.
– West Texas Intermediate crude decreased 1.6% to $40.92 a barrel.
In a recent discussion, the Department of Industrial Promotion (DIP) and the Organisation for Small and Medium Enterprises and Regional Innovation, Japan (SME Support Japan) decided to match Thai and Japanese businesses to create an industrial bubble.
Nattapon Rangsitpon, DIP director general, said the industrial bubble will be operated through the T-GoodTech trading platform, which will link up with the J-Goodtech SME platform to match 4,000 Thai businesses with a Japanese business database of 20,000 members.
This system will also help publicise different businesses so they can be matched with different target markets.
DIP has recently been able to link up more than 70 businesses, accounting for up to Bt400 million in revenue from exports.
Thailand’s online trading system is expected to grow by more than 35 per cent this year, and should help strengthen the country’s industrial sector so it can advance in line with the global value chain.
More information is available via the Digital Industry Division at (02) 202 4562 or DIP’s Public Relations Department Office at (02) 202 4414-18 or by visiting https://www.dip.go.th/
The price of gold rose by Bt450 per baht weight in the morning trade on Tuesday (July 28), the Gold Traders Association reported.
As of 9.31am, the buying price of gold bars was Bt29,200 per baht weight and selling price Bt29,300, while gold ornaments cost Bt28,667.56 and Bt29,800, respectively.
At close on Monday, the buying price of gold bars was Bt28,750 per baht weight and selling price Bt28,850, while gold ornaments cost Bt28,227.92 and Bt29,350, respectively.
The COMEX (Commodity Exchange) gold price to be delivered in August rose by US$33.5 or 1.77 per cent to $1,931 (Bt60,973) per ounce at Monday’s close.
Gold closed at the highest as investors are still purchasing hold as a safe-haven asset amid uncertainty over US-China tensions, the Covid-19 pandemic and a weakening dollar.
China could become Thailand’s main competitor for rice export in the future, according to the Thai Rice Exporters Association.
The association’s honorary president, Chookiat Ophaswongse, said that the association was closely watching China’s rice exports, which had expanded in terms of volume over the past few years.
Last year China exported 2.7 million tonnes of rice, which is expected to reach 3.2 million tonnes this year.
He added that China’s export is expected to expand to between 5 million tonnes to 6 million tonnes in the next few years, thanks to its rice varieties and high yield.
He said that besides China, Myanmar is also rising fast as a major rice exporter. Myanmar has already exported 2 million tonnes this year and is expected to increase to 3 million tonnes next year.
He added that Thailand’s competitors have spent far higher than Thailand on rice research and development to improve quality and strains to make their rice fit well with market demand.
The association recently revised down its forecast for Thai rice exports this year from 7.5 million tonnes to 6.5 million tonnes.
Thailand’s rice exports in the first half of this year dropped 32 per cent year on year to 3.14 million tonnes, worth US$2.2 billion, according to the association.
Setthaput, an economist
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