The price of gold rose by Bt100 per baht weight in morning trade today (July 7), the Gold Traders Association reported.
As of 9.29am, the buying price of a gold bar was Bt26,150 per baht weight and selling price Bt26,250, while gold ornaments cost Bt25,681.04 and Bt26,750, respectively.
At close yesterday, the buying price of a gold bar was Bt26,050 per baht weight and selling price Bt26,150, while gold ornaments were priced at Bt25,574.92 and Bt26,650, respectively.
The price under Comex (Commodity Exchange) to be delivered in August rose by US$3.5, or 0.2 per cent, to $1,793.5 (Bt55,660) per ounce at close yesterday.
Investors were buying gold as a safe haven asset due to uncertainty amid an unhealthy increase in new Covid-19 cases worldwide and the weakening dollar.
The Stock Exchange of Thailand (SET) Index rose by 15.50 points, or 1.13 per cent, to 1,387.77 in the morning session today (July 7).
A stock analyst at Krungsri Securities expected the index to rise between 1,385 and 1,400 points on hopes of a V-shaped economic recovery after many countries eased their lockdown measures.
“The market gained positive sentiment after news that the US services index in June rose to 57.1, while euro zone retail sales in May increased by 17.8 month-on-month and the China services purchasing managers’ index in June rose to 58.4,” the analyst said.
“However, we advise investors to beware of market volatility as the number of US coronavirus cases continue to increase, causing some states to postpone moves to ease lockdown measures,” he added.
He recommended that investors buy:
– Energy stocks that benefit from the rising crude oil price, such as PTT, PTTEP, Top, PTTGC, IRPC, SPRC and IVL.
– Marine shipping stocks that benefit from a rising freight rate, such as PSL, TTA, RCL, AMA and PRM.
– Stocks that benefit from the Cabinet’s domestic tourism stimulus measures, such as Mint, Centel, ERW, AOT and AAV.
– Stocks whose second-quarter performance are expected to improve, such as Top, PTTGC, SPRC, BGrim, CKP, Tasco, STA and SPALI.
The SET Index dropped by 1.86 points, or 0.14 per cent, on Friday, closing at 1,372. Total transactions amounted to Bt71 billion.
Net buys by foreign investors amounted to Bt384 million in stocks and Bt10 million in bonds. There were 7,124 net TFEX SET50 contracts.
By Syndication Washington Post, Bloomberg · Vildana Hajric · BUSINESS, US-GLOBAL-MARKETS
U.S. stocks jumped, with gains in tech shares pushing the Nasdaq Composite to a record high. The dollar fell for a fifth day and Treasurys dipped.
The S&P 500 Index posted its fifth-straight increase, its longest winning streak since December, as Amazon.com Inc. shares rose past $3,000 for the first time. Tesla Inc. extended a five-day rally to more than 40%. The dollar slid to the weakest since June 10 as risk-on sentiment sapped demand for havens.
The Stoxx Europe 600 Index climbed 1.6% while developing-nation stocks added 2.5% as a huge rally in Chinese markets pushed a global equity benchmark toward a one-month high.
Stock markets started the week in an upbeat mood after a front-page editorial in China’s Securities Times on Monday said that fostering a “healthy” bull market after the pandemic is now more important to the economy than ever. The Shanghai Composite Index posted its biggest advance since 2015, fueling bullish spirits around the world, even as investors kept a wary eye on the coronavirus infections sweeping across parts of the U.S.
“Investors have recognized that as bad as the economy in the U.S. is, it’s not as bad as what people thought it would look like in March and April,” said Nancy Prial, the co-chief executive officer at Essex Investment Management. “The market has started to sense we might see better than anticipated results fairly broadly across a wide spread of companies.”
The MSCI World Index is now at the highest level since early June, with investors putting their faith in an economic recovery powered by historic government stimulus.
But of course there’s a long way to go before the economy gets back to normal. Goldman Sachs Group Inc. cut estimates for U.S. growth this quarter and said consumer spending appears likely to stall this month and next. Still, economists led by Jan Hatzius said other economies have proved it’s possible to resume activity and changes in behavior such as wearing masks will help too.
Elsewhere, copper was on the cusp of erasing this year’s losses after virus-related disruptions tightened supplies. Precious metals advanced.
Alicia Levine, chief strategist at BNY Mellon Investment Management, said she’s telling clients to stay in the stock market amid stimulus measures from the Federal Reserve and U.S. government.
“That is still our message,” Levine said in an interview on Bloomberg TV and Radio. “It’s extraordinary. I think we’re all scratching our heads, but the market is telling me you’ve got to be in it.”
These are the main moves in markets:
Stocks
– The S&P 500 Index increased 1.6% at the close of trading in New York.
– The Stoxx Europe 600 Index gained 1.6%.
– The MSCI Asia Pacific Index climbed 2.2%.
– The MSCI Emerging Market Index climbed 2.6%.
Currencies
– The Bloomberg Dollar Spot Index declined 0.3%.
– The euro gained 0.5% to $1.1307.
– The British pound rose 0.1% to $1.2492.
– The Japanese yen rose 0.1% to 107.37 per dollar.
Bonds
– The yield on 10-year Treasurys rose one basis points to 0.68%.
– Germany’s 10-year yield was little changed at -0.44%.
– Britain’s 10-year yield rose one basis point to 0.2%.
Commodities
– West Texas Intermediate crude fell 0.1% to $40.61 a barrel.
Thai funds that invested in small- and mid-cap stocks have generated better returns in the first half of the year than funds that invested in large-cap stocks during the Covid-19 crisis, experts said.
The Covid-19 outbreak caused a severe impact on the Thai stock market during the first half of this year, causing the Stock Exchange of Thailand (SET) Index to dropped below 1,000 points. Although the index has rebounded, the index still contracted 15.2 per cent.
According to Morningstar Research (Thailand) data, as of June 30 this year the top 10 Thai funds that invested in large-cap stocks generated the highest returns of minus 5.17 per cent and the lowest of minus 9.80 per cent, while the top 10 Thai funds that invested in small- and mid-cap stocks generated the highest returns of 7.75 per cent and the lowest of minus 2.70 per cent.
Among Thai funds that invested in small- and mid-cap stocks, two Krungthai Asset Management (KTAM) funds, namely Krung Thai mai Equity Fund (KT-mai) and Krung Thai Mid-Small Cap Equity Fund (KTMSEQ), generated returns of 7.75 per cent and 3.29 per cent, respectively.
Thai funds that invested in small- and mid-cap stocks were able to generate outstanding returns because the Market for Alternative Investment (mai) and SET indices in the first half of this year dropped to minus 3.8 per cent and minus 12.7 per cent, respectively.
Meanwhile, the SET100, SET50 and SET indices dropped sharply to minus 16.4 per cent, minus 17.2 per cent, and minus 15.2 per cent, respectively.These funds had focused on investment in financial, hospitals and public utility stocks that escaped from the Covid-19 fallout and have a very small proportion of investment in large-cap stocks.
On the contrary, returns of Thai funds that invested in large-cap stocks at more than 70 per cent decreased due to the decline in commercial bank and energy stocks. Commercial bank stocks were pressured by rising bad debt, while energy stocks were pressured by falling crude oil price.
Chayanee Juengmanon, senior analyst at Morningstar Research (Thailand), said that the Covid-19 outbreak had caused a severe impact on large businesses’ performances, especially commercial banks and energy companies, resulting in the decline in returns of funds that invested in large-cap stocks.
“However, funds that invested in small- and mid-cap stocks have risks more than funds that invested in large-cap stocks during the market volatility, so we advise investors to evaluate funds whether the fund is capable of taking risks or not before investing,” she said.
Meanwhile, Somchai Amornthum, the assistant to the chief executive officer of the Strategic Asset Allocation and Fund Marketing Department at KTAM, said that funds that invested in small- and mid-cap stocks had become popular among investors because small- and mid-cap stocks gained positive sentiment from the government’s lockdown easing.
“However, these funds would be under pressure from market volatility as we expect the index this year to move sideways between 1,350 and 1,450, while the index next year is expected to rise to 1,530,” he said.
“Therefore, we advise investors to gradually invest in funds that have invested in small- and mid-cap stocks to speculate on returns in the long term for more than three years.”
Jul 07. 2020From left, economists Yunyong Thaicharoen, Charl Kengchon, Burin Adulwattana and Somprawin Manprasert share their views on the economic outlook post-Covid crisis at an exclusive roundtable hosted by Nation Group and Nation TV on July 2.
By The Nation
Up to 30 per cent of total bank loans may be restructured under the government’s scheme, while local corporates may need up to Bt1.7 trillion liquidity injection to survive the Covid-19 fallout, economists warned, predicting that it will take a while for the economy to fully recover.
The Thai economy this year is expected to contract even deeper than it did during the 1997 Asian financial crisis, said Charl Kengchon, executive chairman at Kasikorn Research Centre.
The Bank of Thailand recently projected that the GDP will contract 8.1 per cent, though there is a risk that it will drop even further due to the threat of a second wave of Covid-19 infections, he said at an exclusive roundtable hosted by the Nation Group and Nation TV on July 2.
This crisis is different from the one in 1997-1998, because banks now are far stronger, he said.
“The most important thing to focus on now is the asset quality, as restructured debts were estimated to be 21 per cent of Bt15 trillion of total bank loans in the first quarter, and it might spike to 29.9 per cent in the second quarter,” he said.
Though the government has implemented financial aid to support corporates, these measures wrap up in October. If by then the economy rebounds and businesses survive, then banks will not have much trouble with the quality of assets, but if it doesn’t, then banks will have huge problems with a large number of debts needing restructuring. This is when we will see if the government implements extra support measures, he said.
“Everyone is like a Covid-19 patient, surviving with the help of ventilators, but what happens after that is still not clear. Nobody knows if businesses will be able to come back,” he said.
Another key issue is the rate of unemployment, Charl said, adding that businesses need large sums of money to keep their employees, so the government may need to provide more support via the national budget.
It is also the government’s job to boost confidence in the economy, so banks are willing to lend and affluent consumers are willing to spend. Thus, changes to the tax policy may be necessary, he added.
Somprawin Manprasert, head of Krungsri Research and chief economist at Krungsri Bank, said the government has been successful in controlling the spread of the virus, but it was at the cost of an economic downturn.
“How long can we continue to live like this?” he asked. “According to stress-test trials, we found that corporates need an injection of Bt1.7 trillion to survive the crisis. As many as 90,000 companies are suffering from liquidity squeeze,” he said, adding that the government’s repeated stimulus packages may not answer the problem – an injection of cash would be better.
“If government policies fail to address economic woes, the recovery will be L-shaped, and it may take more than three years for the economy to recover,” he warned.
The Krungsri Research team has predicted that the economy will contract 10.3 per cent this year, only growing 2.9 per cent next year, before expanding 4 per cent in 2022. The economy is only expected to return to pre-crisis levels in 2023.
Despite Thailand having large international reserves, economic policies have not yet been effective in using available resources, he added.
Burin Adulwattana, chief economist at Bangkok Bank, said the impact the virus has had on the economy is possibly the worst in 120 years.
“A stronger baht is also making exports worse, while other economies are also weakening, and the Thai tourism and auto industries are contracting sharply,” Burin said.
The expected number of foreign arrivals is only expected to hit 9 million, compared to more than 30 million yearly normally, he said.
The economy has also been constrained by the dwindling labour force, while the country becomes an ageing society, he said.
Planned investment in the Eastern Economic Corridor (EEC) may not be enough to upgrade the economy into a 4.0 economy that is driven by information technology.
While 30 per cent of the labour force is in the agriculture sector, which accounts for just 8 per cent of GDP, the challenge is to boost their productivity or help them migrate to the industrial sector.
The high tax environment does not encourage highly-skilled foreign workers to move to Thailand either, he said, adding that they prefer to work in Hong Kong or Singapore where the tax rate is much lower.
Yunyong Thaicharoen, first executive vice president of Economic Intelligence Centre (EIC) at Siam Commercial Bank, said the ongoing crisis is worse because it affects both demand and supply sides. Though the government has started relaxing lockdown restrictions, debts and fragility of small and medium-sized enterprises (SMEs) remain issues of concern.
“Recovery will be U-shaped because Thailand depends too much on the global market, while every country is affected now. We have revised our projection of the GDP to contract 7.3 per cent from the previous projection of a 5.6 per cent shrinking,” he said.
Though the government has responded quickly in supporting the economy, its next step should be to support targeted groups that need immediate help, he said. While further lowering interest rates may not help much, the most important thing is to help banks gain more confidence and give liquidity support to SMEs, he said.
“Covid-19 has exposed the Thai economy’s weak point, which is our limited technology capacity. China, for instance, successfully upgraded its technology and so it was able to restore consumer confidence quickly. Now Thailand’s biggest challenge is to have a clear roadmap and strong cooperation between public and private sectors,” he added.
Jul 06. 2020Jerome Powell, chairman of the Federal Reserve, during a news conference in Washington on March 3, 2020. MUST CREDIT: Bloomberg photo by Andrew Harrer. Location: Washington, United States
By Syndication The Washington Post, Bloomberg · Christopher Condon
Jerome Powell isn’t “even thinking about thinking about” raising interest rates, but investors still wonder what it would take for the Federal Reserve chair to start taking his foot off the gas.
U.S. central bankers dropped some strong hints on the answer to that question this past week.
The minutes of the Federal Open Market Committee’s June 9-10 meeting, released July 1, showed “a number” of policy makers favor tying future moves for interest rates and asset purchases to inflation. They even suggested they’ll wait until inflation overshoots the Fed’s 2% target before making substantial changes.
That surprised some Fed watchers, but perhaps it shouldn’t have.
Just before the covid-19 pandemic hit, officials were heading into the home stretch of an extended policy framework review that was already pointing to a major shift in the way the Fed interprets its price-stability mandate.
Chided for long overestimating where they forecast inflation would go — only to see it fall repeatedly short — several FOMC members had resolved to push it at least modestly above target.
That the lessons from the framework review — rooted deeply in fundamental ideas about how the economy has changed over decades — would merge into the FOMC’s month-to-month decision making was probably inevitable. But it was uncertain when and how that might happen.
The recent minutes make clear these two rivers are poised to flow together in coming months as officials lay out guidelines for future policy.
“If you say you’re going to adopt this new framework, what do you do to show people that it means something?” said Michael Feroli, chief U.S. economist at JPMorgan Chase. “This is one way of backing it up.”
The discussion at the June FOMC meeting — at which officials forecast they’d keep rates near zero through 2022 — reflected a shift that had long been underway.
Following the Great Inflation of the 1970s and ’80s, the Fed’s posture was one of constant vigilance against upward-moving prices. Officials, and economists generally, came to realize only slowly that inflation had grown less and less responsive to shocks and especially to declines in unemployment.
The Fed’s favorite measure of price pressures averaged a scant 1.3% in the five years through 2019, even as joblessness dropped to a half-century low.
Gradually, policymakers became more alarmed that inflation was, in fact, running too low — to the point where it was robbing the Fed of its ability to fight recessions by keeping interest rates too close to zero even in good times.
The framework review was the Fed’s attempt to find new ways of lifting long-term inflation back to the 2% target.
In January of this year, the FOMC hadn’t quite finalized that review, so no official conclusions had yet been made nor official policy changes put in place. But a number of committee members made clear they wanted to do away with the old approach of always aiming to move inflation precisely to 2%, without regard to past misses.
Having undershot for so long, many now wanted to push inflation a bit above the long-run goal, seeking inflation that averaged 2% over time.
“It was more than tolerating inflation above target, it was actively setting policy to achieve outcomes higher than the target for a period of time,” said Michael Gapen, chief U.S. economist at Barclays Capital.
Within that context, it’s not surprising that the minutes reveal a preference to build an inflation threshold into the coming forward guidance.
“A number of participants spoke favorably of forward guidance tied to inflation outcomes that could possibly entail a modest temporary overshooting of the committee’s longer-run inflation goal,” the minutes read.
The record also went on to show that “various participants” stressed the importance of completing the framework review “in the near term” along with revising the Fed’s Statement on Longer-Run Goals and Monetary Policy Strategy. Officials have said that document would be altered to reflect the major conclusions of the review.
Stephen Stanley, chief economist at Amherst Pierpont Securities, said the framework review nudged policy makers into favoring forward guidance that incorporates inflation goals instead of unemployment goals, or a combination.
“Putting more emphasis on the inflation number is a function of some of the changes they’ve come around to that, in turn, were mainly related to how they view how the structure of the economy has changed,” he said.
What the minutes do not reveal is whether the Fed is likely to keep fastened to zero until inflation overshoots 2%, or simply keep rates below what they judge to be a neutral setting until that point.
JPMorgan’s Feroli expects they’ll stay at zero.
“It would be an aggressive step, but probably one that’s warranted if you believe the logic behind inflation averaging,” he said.
Jul 06. 2020Dr Somprawin Manprasert, head of Krungsri Research and chief economist
By THE NATION
Krungsri Research has revised down its forecast for Thailand’s GDP growth to minus 10.3 per cent for this year from its previous forecast of minus 5 per cent because it expects more of a downside from the prolonged slowdown of economic activities as a result of the Covid-19 outbreak.
The effects of the outbreak are expected to last longer than originally believed and its repercussions are expected to be felt in several sectors.
Dr Somprawin Manprasert, head of Krungsri Research and chief economist, said: “Despite zero new infections in Thailand for more than a month and the easing of the lockdown, as well as measures such as social distancing and ban on international flights, economic activities continue being depressed.
“Hence, Krungsri Research has revised this year’s economic growth forecast to a contraction of 10.3 per cent, lower than the 1998 Asian financial crisis, but expects a gradual recovery with a growth of 2.9 per cent in 2021.”
Globally, Covid-19 cases have exceeded 10 million, and with the possibility of a second wave of the pandemic in many countries, the ban on international flights will be in place longer than initially expected, which will greatly undermine the tourism sector.
Thailand relies heavily on tourism revenue, making it one of the countries badly affected by the Covid-19 outbreak. Foreign arrivals in Thailand are expected to drop by 83 per cent this year.
Though Thailand plans to open its borders under a “travel bubble” policy, the number of tourist arrivals is likely to be less than 1 million per month until the middle of 2021.
The slowdown of economic activities and the subsequent negative consequences may affect about 80 per cent of employment during the peak of Covid-19 outbreak, compared to the previous forecast of 50 per cent. In the last quarter of this year, about 30 per cent of the employment sector is likely to be affected, compared to the previous forecast of 10 per cent, which will undermine household income and consumers’ purchasing power.
Though the reduction of policy interest rate to a record low of 0.5 per cent and the easing of monetary measures may lessen the economic impact to some degree, debts of households and businesses are expected to rise shortly after the economic stimulus measures come to an end.
“Apart from the impact of the Covid-19 outbreak, which could weigh the economy down by 10.6 percentage points this year, the delays in infrastructure investments and drought crisis could drag GDP growth down by 1 and 0.4 percentage points respectively. Though stimulus measures could add about 1.7 percentage points to economic growth this year, the fiscal and monetary easing measures are unlikely to fend off an economic recession and may not be large enough to encourage household spending and private investment,” he said.
“Therefore, Krungsri Research expects the Thai economy to be in a U-shaped recovery, there is a higher risk of the recovery being more L-shaped because the pandemic is likely to hit the economy harder and longer than previously forecast,” Somprawin added.
Thailand’s export of jewellery and ornaments between January and May this year surged 108.01 per cent year on year to US$9.579 billion (Bt298 billion), according to Deputy Commerce Minister Weerasak Wangsuphakijkosol.
However, if gold shipments are not included, export of jewellery and ornaments have actually dropped 34.8 per cent to $1.984 billion. Shipment of gold, however, has risen 386.1 per cent to $7.595 billion.
He attributed the drop in exports to the Covid-19 pandemic, which has forced several countries to enforce lockdown measures. As a result, consumers have been cautious about spending.
The demand of gold, however, has risen as people are rushing to buy this asset as a safe haven at a time when the economy is sapped. He added that if there is no second wave of Covid-19 infections and countries continue to ease lockdown measures, Thailand’s jewellery and ornament exports should pick up in the second half of this year.
Jul 05. 2020A chain secures locked gates in front of a shuttered store in Madrid, Spain, on May 7. MUST CREDIT: Bloomberg photo by Paul Hanna
By Syndication Washington Post, Bloomberg · Enda Curran · BUSINESS, US-GLOBAL-MARKETS
The world economy is entering the second half of 2020 still deeply weighed down by the coronavirus pandemic with a full recovery now ruled-out for this year and even a 2021 comeback dependent on a lot going right.
It’s a scenario few if any predicted at the start of the year when most economists were banking on another year of expansion and a U.S. and China trade agreement was meant to give corporate and investor confidence a shot in the arm.
Instead, the rare pandemic forced swathes of the global population into what the International Monetary Fund dubs ‘The Great Lockdown.’ Central banks and governments responded with trillions of dollars in unprecedented support to prevent markets from melting down and to keep furloughed workers and struggling companies afloat until the virus passed.
Even with those rescue efforts, the world is still suffering its worst economic crisis since the Great Depression. While some gauges of manufacturing and retail sales in major economies are showing improvement, hopes for a V-shaped rebound have been shattered as the reopening of businesses looks shaky at best and job losses risk turning from temporary to permanent.
It’s an economic trajectory Federal Reserve Bank of Richmond President Thomas Barkin has likened to riding the elevator down, but needing to take the stairs back up.
“There is a real danger of confusing rebound with recovery,” Carmen Reinhart, the World Bank’s chief economist, said at the Bloomberg Invest Global conference on June 23. “True recovery means you are at least as well off as you were before the crisis started and I think we are a long way off that.”
Much depends on the spread of the coronavirus, a vaccine for which remains out of grasp. The World Health Organization warns the worst of the pandemic is still to come as cases top 10 million and deaths have risen beyond 500,000. And even in countries where the virus appeared contained, fresh flare ups are frequent.
The IMF estimates that by the end of this year 170 countries – or almost 90% of the world – will have lower per capita income. That’s a reversal from January, when it predicted 160 countries would end the year with bigger economies and positive per capita income growth.
It’s now likely that global gross domestic product by the end of 2021 will in many cases still be lower than where it was at the end of 2019, according to HSBC Holdings Plc economists led by Janet Henry. Bloomberg Economics describes it as ‘Goodbye Victory V, Hello Worry W.’
Central bankers remain on the alert to do more. Federal Reserve Chairman Jerome Powell has warned the outlook is “extraordinarily uncertain” and European Central Bank President Christine Lagarde has spoken of a “restrained” recovery that will change parts of the economy permanently.
To be sure, there are pockets of recovery that could gain traction. Morgan Stanley economists are sticking to forecasts of a V-shaped recovery, pointing to positive surprises in recent economic data, especially in the U.S. and euro region.
Global markets are split between investors who are betting on a V-shape recovery, and those expecting significant dislocations. The MSCI All-Country World Index of global stocks has gained nearly 40% from a March low, but is still down about 6% this year, as investors bet policy stimulus around the world will cushion the economic impact from the pandemic. U.S. 10-year Treasury yields have tumbled by more than 100 basis points this year to around 0.67%.
Lessons on how the recovery plays out are being drawn from Asia where the virus has been brought under control but the rebound has been mixed.
In South Korea, which flattened its infection curve months ago, the emergence of new virus clusters is casting a chill on shoppers.
China’s manufacturing activity climbed in June, as did other manufacturing gauges across the region, yet new orders continue to show weakness.
That worrisome outlook means businesses are navigating in the dark, according to Joerg Wuttke, president of the EU Chamber of Commerce in China, who expects the uncertainty to last for another couple of years.
“The recovery is not V, it is not W, it is looking like the top of a chainsaw,” he said. “Up and down and up and down and painful all the way.”
It also means that fast-expanding emerging economies won’t be the global growth engine they have been, with the World Bank predicting this group of countries will shrink 2.5% – their worst performance in data that starts in 1960. Latin America is now on the front lines of the virus.
A complete rebound to pre-crisis levels looks impossible until the virus is controlled – an outlook that’s especially true for sectors such as tourism, transport and entertainment where restrictions are expected to linger.
The hit to labor markets has been worse than initially estimated and will be impossible to repair in the second half of 2020 even under the most optimistic scenario, according to the International Labour Organization. It last week estimated that working hours in the second quarter were 14% lower than before the virus, equivalent to a loss of 400 million full-time positions.
Although U.S. companies added 4.8 million people to payrolls in June, only three in 10 jobs lost have been recovered and initial applications for unemployment benefits remain elevated. More than 2.8 million Americans lost their jobs for good in June.
“While a near-term mechanical bounce in economic activity in response to the easing of lockdown measures looks likely, we expect the subsequent climb to be long and arduous,” said Joachim Fels, global economic adviser at Pacific Investment Management Co.
There are other challenges too.
Record levels of debt will restrain how much additional support governments can roll out – on top of the $11 trillion fiscal stimulus already in train.
Governments are grappling with how to extend or terminate costly near-term measures to fund wages and keep companies alive, while at the same time gearing up for longer-term stimulus to drive a recovery.
That borrowing won’t come without side effects, such as keeping zombie companies going, according to Alicia Garcia Herrero, chief Asia Pacific economist with Natixis SA.
“If there is no clean-up of debt, going back to pre-crisis levels will take even longer,” said Garcia Herrero.
Meantime, central banks have slashed interest rates to new lows with some embracing negative borrowing costs. In a bid to cap market rates, multiple types of assets have been bought and policy makers continue to tweak their tool kit with hints of more innovation to come.
Morgan Stanley predicts $13 trillion in cumulative central bank balance-sheet expansion from the U.S., euro region, Japan and U.K. through the end of 2021.
Even with those steps, it’s too soon to conclude they will be enough, said Kazuo Momma, who used to be in charge of monetary policy at the Bank of Japan.
Experts advised investors to keep an eye on the US-China trade war and Covid-19 situation,as it could affect the baht and the Stock Exchange of Thailand (SET) Index next week.
The baht this week (June 29 to July 3) weakened to between Bt30.87 and Bt31.145, compared to the dollar due to strong US economic data.
US nonfarm payrolls in June rose more than analysts expected by 4.8 million jobs, while the US unemployment rate dropped for two consecutive months.
However, the US economy still faces slowdown risks because of the increasing number of new Covid-19 cases in the US.
A currency analyst at CIMB Thai Bank expected the baht next week to move between Bt30.80 and Bt31.30, advising investors to monitor the Covid-19 situation in the US, and conflict among countries, especially the US and China.
The SET Index on Friday (July 3) closed at 1,372.27, down 1.86 points or 0.14 per cent.
A stock analyst at Phillip Securities (Thailand) expected the index next week to fluctuate sideways between 1,340 and 1,400 due to mixed sentiments.
“For factors in foreign countries, the market is still under pressure from the US-China trade war and the second coronavirus wave in the US,” the analyst said. “For factors in Thailand, the market would benefit from the government’s tourism stimulus packages.”
The price of gold on Friday stood at US$1,774.56 per ounce, while the price in Thailand was Bt26,100 per baht weight.
A gold analyst at YLG Bullion International advised investors to sell some gold if the price rose over the resistance level between $1,779 and $1,790 per ounce.
“Meanwhile, we advise investors to buy gold for short-term speculation if the price does not drop below the resistance line between $1,747 and $1,758 per ounce,” the analyst said.
From left, economists Yunyong Thaicharoen, Charl Kengchon, Burin Adulwattana and Somprawin Manprasert share their views on the economic outlook post-Covid crisis at an exclusive roundtable hosted by Nation Group and Nation TV on July 2.
Jerome Powell, chairman of the Federal Reserve, during a news conference in Washington on March 3, 2020. MUST CREDIT: Bloomberg photo by Andrew Harrer. Location: Washington, United States
Dr Somprawin Manprasert, head of Krungsri Research and chief economist
A chain secures locked gates in front of a shuttered store in Madrid, Spain, on May 7. MUST CREDIT: Bloomberg photo by Paul Hanna
SootinClaimon.Com 