BGRIM posts new high profit in Q2 as power sales soar, 7 strategic initiatives to become world-class energy producer gains momentum
The second quarter’s net profit was record high, at 56.5% higher than the preceding first quarter’s level, while earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 9.4% over the same corresponding period last year to 3,524 million baht.
B.Grimm Power Plc (BGRIM)’s net profit attributable to major shareholders in the second quarter of this year leaped 50% to 1,022 million baht, driven largely by the upsurge in power sales. However, including the unrealised foreign exchange losses, the earnings declined slightly over the same period last year to 1,011 million baht.
The second quarter’s net profit was record high, at 56.5% higher than the preceding first quarter’s level, while earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 9.4% over the same corresponding period last year to 3,524 million baht.
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Dr Harald Link, Chairman and President of BGRIM, said the 47.4% jump in its electricity sale to industrial customers in Thailand, which reached a peak of 831 gigawatt-hours in the second quarter, contributed significantly to BGRIM’s improved bottom line.
There were robust power demand particularly from customers in automotive parts, tyres, home appliances and industrial gases sectors. There were also connections to the system of new industrial customers under the power purchase agreements involving 21.2 MW in the second quarter of this year. That raised the overall capacity delivery for the first half of this year to 31.5 MW, compared with not less than 40 MW targeted for the entire 2021.
Contributing to BGRIM’s second-quarter profitability were the commercial start-up of the company’s solar farm in Cambodia in December 2020, the power plant optimisations of Amata B.Grimm Power (Rayong) 1 Co Ltd (ABPR1) and Amata B.Grimm Power (Rayong) 2 Co Ltd (ABPR2) in the second half of 2020. Cost controls had reduced sale and administrative expenses by 17.6% from the same period last year.
Meanwhile, the average price of natural gas, the main fuel of BGRIM’s generation, had dropped by 8.9% in the quarter to result in lower production costs.
Dr Link added that BGRIM has recently unveiled new seven strategic initiatives to become a world-class energy producer based primarily on its mission of “Empowering the World Compassionately.”
The mission is meant to create value for the society in the form of “Sustainable Utility Solution Provider” by producing quality energy, providing comprehensive services to meet the changing needs of customers as well as developing business cooperation with strong partners both at home and abroad.
In other development, BGRIM is due to put its Bo Thong Wind Farm 1&2, with an installed capacity of 16 MW, located in Mukdahan Province, online commercially this month.
There are 48 BGRIM power plants in commercial operation. The company aims to ramp up its total installed capacity from 3,058 MW at the end of 2020 to at least 7,200 MW by 2025 and further to 10,000 MW by 2030 in terms of power sale volumes with an annual revenue target of more than 100 billion baht.
BGRIM announced an interim dividend of 0.15 baht per share for the first half of 2021, payable on September 10 to eligible shareholders appearing on registration dated August 25.
Surge in Asia Pacific’s largest manufacturing centres driven by global demand
China strengthens its leading position as the most attractive manufacturing hub globally; Thailand sees improvement in cost profile
Asia Pacific’s largest manufacturing centers have rebounded strongly as economies across the globe have reopened and driven demand for key products, according to Cushman & Wakefield’s 2021 Global Manufacturing Risk Index, which assesses the most advantageous locations for global manufacturing among 47 countries in Europe, the Americas and Asia Pacific.
Dr. Dominic Brown, Head of Insight & Analysis, Asia Pacific at Cushman & Wakefield, said, “As the virus is brought under control, manufacturing centers have surged. China has been able to fill the void left by U.S. and European manufacturers, who were enduring their own lockdowns, to capture a larger share of global exports from approximately 13% in 2019 to 15% in 2020. Furthermore, exports from China in Q1 2021 were about 27% higher than Q2 2019, or the equivalent of USD 150 billion.”
“Other markets also capitalized on heightened demand for key products such as micro-processors, computer chips and pharmaceuticals. South Korea has benefited from the soaring value of semiconductors, stemming from strong demand and a global shortage of product with Information and Communication Technology (ICT) manufacturing up 16.8% year over year in January 2021. However, apparel producers around the region continue to struggle with low levels of demand impacting markets such as India and Indonesia, which have also been managing significant second and third waves of the virus,” noted Dr. Brown.
Within mainland China, two clear trends have been underway: (i) manufacturers moving up the value chain following large-scale investment into robotics, artificial intelligence and blockchain; and (ii) manufacturing of lower order goods moving outside of the country, predominantly into Southeast Asia. There has been a 5% increase in Jakarta’s industrial stock in the last year alone. There has also been increasing interest in India, especially given the country’s proven success in meeting outsourcing requirements.
Furthermore, Vietnam has become an increasing focus for manufacturers due to its regional centrality, sublime market integration, and favorable production costs – with Samsung, Apple, Nintendo, LG, Panasonic and Intel all locating in the country. Vietnam is also moving up the value chain, positioning itself as very attractive for mid-tech with its electronics sector.
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On this year’s baseline rankings, Thailand rates favourably on cost competitiveness. The country’s cost profile improved, moving Thailand to fifth place from the eighth and ahead of Malaysia, which has seen ongoing wage increases, the report noted. Gareth Michael Powell, Senior Director at Cushman & Wakefield, Thailand, said, “The Thai manufacturing sector has expanded in 2021 on improved domestic demand, a rapidly growing e-commerce sector, recovery of world trade volumes, and government-driven growth from budget disbursements and economic stimulus measures. We are optimistic about Thailand’s industrial property market outlook, given the upturn in external goods demand and exports remaining a key pillar of economic strength.”
2021 Manufacturing Risk Index Rankings – Key takeaways
Cushman & Wakefield’s annual Global Manufacturing Risk Index (MRI) scores each country against 20 variables that make up the three final weighted rankings which cover conditions, cost, and risk. The data underpinning the MRI comes from a variety of reliable sources, including the World Bank, United Nations, World Economic Forum and Moody’s Analytics.
Based on the analysis, China took the number one spot across all the four rankings, strengthening its leading position as the most attractive manufacturing hub globally.
• Bounce Back Rating: China and Singapore placed first and sixth respectively on The Bounce Back rating, which measures a country’s ability to restart its manufacturing sector. As business conditions continue to improve and with vaccinations underway, economic growth forecasts are generally being revised upwards.
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• Baseline Scenario: China retained the top position on the baseline scenario ranking as it continues to diversify its manufacturing base, moving up the value chain in order to focus on telecom, high-tech (40% of robots produced globally are made in China), and computers. Key manufacturing regions in China include Guangdong and Jiangsu, which focus on electronic components and automotive, while Zhejiang and Liaoning focus on chemicals and natural resources.
• Cost Scenario: While China also retains its lead position in this scenario, Vietnam and India were overtaken by Indonesia which moved up to second from fifth place, not least in part due to Jakarta’s declining rents seen over the past year. India also swapped places with Vietnam to rank third and fourth respectively. While wage costs in Vietnam remain cheaper than China, it is facing increasing competition from lower cost locations and will need to demonstrate its strengths in other areas of the manufacturing process, such as its geographical connectivity. Like Indonesia, Thailand’s cost profile improved this year, helping it move to fifth place and ahead of Malaysia, which has seen ongoing wage increases.
• Risk Scenario: Early and effective lockdowns to control the first wave of the pandemic helped China’s manufacturing sector rebound after Q1 2020. Strong performance of its manufacturing sector during the rest of 2020 contributed to a “better-than-expected” first place ranking on the risk scenario. The U.S. and Canada were pushed back to second and third place respectively while China jumped up from fifth place last year.
“The current pandemic has accelerated the growth of e-commerce while also exposing vulnerabilities in global supply chains. It is imperative for manufacturing companies to reassess current supply chain strategy and infrastructure to improve their resilience and stay competitive.” noted Tim Foster, Head of Supply Chain & Logistics Advisory, APAC, Cushman & Wakefield.
“A post-Covid-19 future is likely to see a heavier reliance on sophisticated technologies and tools that facilitate Industry 4.0, as companies seek to stay resilient, ensuring a wider diversification with smaller, geographically distributed manufacturing plants that are more resistant to disruption. With these advances, property developers are challenged to stay ahead, reshaping how facilities are designed and operated as they cater to the expansion of e-commerce as well as adopting a more holistic approach towards ESG considerations to address the growing group of environmentally conscious real estate users.” added Dennis Yeo, Head of Investor Services, APAC, Cushman & Wakefield.
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Looking ahead, ESG due diligence for suppliers has become an increasingly important part of a manufacturers’ risk management. In addition to protecting manufacturers from any losses incurred due to natural disasters, growing consumer consciousness about the impact of certain sourcing practices on the environment is feeding into decision making. In Europe, green consumerism is growing fast with nearly 800,000 products now displaying the EU’s Ecolabel logo. For this reason, Asia Pacific will need to follow Europe’s lead to help maintain the attractiveness of the region and help counter potential decision making to reshore or nearshore manufacturing out of the region.
Two sexual assault survivors spur Airbnb arbitration turnaround
For Sherry Dooley, Airbnb Inc.s announcement last week that it would no longer force guests into confidential arbitration to settle claims of sexual assault was disturbing. For Natalie White, it means she may get her day in court.
Both women filed lawsuits against the company in recent months claiming they were sexually assaulted inside properties rented on Airbnb. Dooley, a 55-year-old food-truck worker from Oregon, says she was raped by an intruder in an apartment in Colima, Mexico, in 2019. White, a 23-year-old medical student from New Jersey, says she was attacked by a host who tried to tear off her clothes in Los Angeles last year.
The women decided to speak publicly for the first time to call on the company to remove a longstanding forced-arbitration clause in its 10,000-word terms of service that neither of them said they were aware of when they used the platform. They said arbitration would silence their voices and keep the issue of sexual assault at Airbnb listings hidden.
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Airbnb said on Friday, after being informed of the women’s statements, that it would change its terms of service this fall to no longer require arbitration in cases involving the sexual assault or sexual harassment of guests and hosts. It also said it hasn’t enforced the policy since January 2019, although it didn’t make any announcement at the time or change the terms of service that its 150 million users must accept to register on the site.
That the company said it stopped using the binding arbitration clause in sexual abuse cases two years ago came as a surprise to Dooley. She agreed to shift her lawsuit into arbitration last September after a lawyer for the company threatened to file a motion in court enforcing the terms of service. “It kind of makes me angry,” said Dooley. “Feels like a runaround, and I’m the one stuck in the middle, being retraumatized over and over again.”
The announcement came after a Bloomberg Businessweek investigation of violent crimes, including rapes, at Airbnb listings. That story highlighted the lengths the home-share company will go to keep such incidents quiet — sometimes spending millions of dollars on settlement payouts and using the binding arbitration clause in its terms of service to block users from filing claims for damages in court. Only one case related to sexual assault had ever been filed against Airbnb in U.S. courts, the investigation found, after a review of electronically available state and federal cases since the company’s founding in 2008.
Ben Breit, an Airbnb spokesman, declined to comment about why the company waited until last week to announce it would update its terms of service to reflect the policy change. He said sexual assaults in Airbnb listings are “extremely rare.”
The use of forced arbitration has become a flashpoint in corporate America in recent years. The practice was established almost a century ago as a way for businesses to resolve conflicts without clogging the courts. By the 1990s, it had expanded to include consumer and employee disputes. Supporters say it’s a faster and cheaper way to settle disputes than through the courts. Critics say it favors companies because they get to set the terms and the outcomes are secret.
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Arbitration is “one of the ways large corporations exert power and control over survivors,” said Latifa Lyles, vice president for advocacy and survivor initiatives at the anti-harassment organization Time’s Up.Some companies distanced themselves from mandatory arbitration during the MeToo movement. Starting in 2017, Microsoft, Google, Facebook — and Airbnb — removed binding arbitration requirements for sexual assault and sexual harassment claims filed by employees. Uber Technologies and Lyft went even further, changing their terms of service to allow passengers and drivers to file such cases in court.
Uber’s change came in May 2018 after 14 women who claimed they’d been sexually assaulted by the company’s drivers wrote a letter to the board calling for the right to file claims in court. Chief Legal Officer Tony West said it wasn’t an easy decision. “We knew when taking these steps that we were taking on legal risk,” he said in an interview last week. Uber updated its terms of service to reflect the change because “we wanted to be absolutely clear that we meant what we said,” West said. Companies need to be “very public and very full-throated” about it to communicate to survivors that they have the right to sue.
Jeanne Christensen, a lawyer at Wigdor LLP who represented the 14 women, said she had hoped after Uber made the change that sharing-economy peer Airbnb would do the same. Airbnb’s business model, like Uber’s, is largely based on strangers meeting online and trusting one another enough to exchange money and connect offline.
Airbnb says it did follow suit in 2019. It just didn’t tell anyone, including its own safety team, the elite internal group that handles sexual assaults and violent crimes inside platform listings, according to two former safety agents. One, a former policeman who worked at the company from May 2018 to July 2020, said he raised concerns about the use of forced arbitration with management on numerous occasions. He said he had no idea Airbnb had stopped using the arbitration provision in sexual assault cases in 2019.
Neither did Dooley or her lawyer. Dooley said she used Airbnb to rent the upstairs unit of a two-story house in Colima, on Mexico’s central Pacific coast. The property had five-star reviews and was operated by a superhost, a badge of honor the company bestows upon its most experienced and trustworthy hosts. Dooley was asleep in the apartment when a man climbed an ungated exterior staircase and entered through a window that she said didn’t properly lock. The intruder threatened to stab her with a fork, attempted to sodomize her and “in a brutal fashion, repeatedly and forcibly raped her,” according to the lawsuit Dooley filed against Airbnb and the host in an Oregon state court in May 2020.
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The lawsuit says neither Airbnb nor the host properly investigated the security of the property. It says the company, which promotes itself as a safe platform, should have known that its “claims regarding safety were misleading and a misrepresentation of the truth.”Hours after the attack, Dooley said, she Googled “Airbnb and rape” and nothing came up. So, she emailed Airbnb Chief Executive Officer Brian Chesky, telling him what had happened and asking for help. A representative from the safety team reached out soon after, offering to refund the cost of her trip, pay for her flight home and cover any health or counseling expenses, she said.
No one has been arrested, and local police are still investigating, according to Dooley’s Mexico-based lawyer Maria Del Carmen Mata Magallanes. Airbnb deactivated the listing, but it didn’t ban the host because “he is not accused of wrongdoing,” Breit, the company spokesman, said. A lawyer for the host didn’t respond to a request for comment.
Four months after the lawsuit was filed, and more than a year after Airbnb said it stopped enforcing the arbitration clause in sexual assault cases, a lawyer representing the company said Dooley had to take the matter to arbitration. “To be clear, it is Airbnb’s position that your client is required to arbitrate her claims,” Klarice Benn, an attorney at the Abbott Law Group in Portland, Oregon, wrote to Dooley’s lawyer, Robert Callahan, last September, according to an email seen by Bloomberg. Benn threatened to file a motion to compel arbitration if Dooley didn’t go along with the move.
Dooley agreed to shift the case to arbitration. Now, Callahan said, he and his client feel “played and deceived.” To him, the company’s message was clear. “Everything Airbnb did through its counsel was perceived as blocking our access to the courts and moving us to arbitration,” Callahan said. He said the company is using “Orwellian double-speak” when it says it hasn’t enforced the arbitration clause in court since January 2019. “They can’t say upfront that they changed this when their actions are just the opposite.”
Benn didn’t respond to emails, and Airbnb declined to comment about how it handled the case.With her lawsuit shunted to arbitration, Dooley’s claims, like those against many other online service providers, will never be heard in court. “I had no idea when I clicked on that terms of service that I was clicking away my rights,” she said.
Neither did Natalie White. She sued Airbnb last month in Superior Court in Los Angeles, as well as the host who rented her a one-bedroom apartment, claiming she was sexually assaulted there in February 2020. White, who lives in Atlantic City, New Jersey, says in her lawsuit that the host, an actor named Zafer Alpat, barged into the apartment as she was packing to leave, pinned her down, and licked and kissed her while she resisted.
Alpat was arrested and charged with assault to commit a felony and false imprisonment by violence. He has pleaded not guilty to both counts and faces a preliminary hearing next month, according to the Los Angeles County District Attorney’s Office. Alpat declined to comment because of the pending litigation, his lawyer Daniel Titkin said in an email.
White said in a statement sent by her lawyer, Greg Kirakosian, that she rented a room through Airbnb believing it was safe to do so. “Unfortunately, I could not have been more wrong,” she said in the statement, which was written before the company announced its change of policy. Private arbitration is “silencing my voice as well as the voices of other victims,” White wrote. “I beg you, do not silence our stories and our quest for justice.”
Kirakosian praised Airbnb for listening to White’s plea. But he said the company needs to go further. “Our ultimate objective,” he said in an email, “is for Airbnb to make fundamental changes to their policies toward prevention of, and protection from, sexual assault.”
Breit, the Airbnb spokesman, said the company worked hard to support White after she reached out. He said the host, who had raised red flags for cleanliness and personality conflicts with previous guests, was barred from the platform. As for her lawsuit, Breit said, the choice of whether to arbitrate or not will be left to her.
Published : August 19, 2021
By : Syndication Washington Post, Bloomberg · Olivia Carville
Tencent sales grow slowest in two years as crackdown weighs
Tencent Holdings revenue increased at its slowest pace since 2019 after Chinas expanding tech crackdown hit its mobile gaming empire, overshadowing newer businesses from cloud to social ads.
Beijing’s months-long crackdown has ignited a trillion-dollar selloff in Chinese equities, up-ended online education and also pumped the brakes on growth across a swath of industries from advertising to car-sharing. This month, Alibaba Group Holding reported revenue that missed estimates for the first time in more than two years. Tencent’s sales rose 20% to 138.3 billion yuan ($21.3 billion) for the three months ended June, in line with the 138.2 billion yuan average forecast.
Growing scrutiny from Beijing and stiffening competition with the likes of ByteDance Ltd. has prompted China’s most valuable corporation to join arch-foe Alibaba in a spending spree, plowing a larger chunk of its profit into areas like cloud services, games, and short videos. While Tencent itself isn’t the target of any probe, its outsized influence in the modern Chinese economy has left it vulnerable as the crackdown quickly expanded from antitrust and e-commerce to data security and online content.
Net income was 42.6 billion yuan in the quarter, beating the 30.8 billion yuan projected thanks in part to a gain of more than 20 billion yuan on its investments around the world. Shares in Prosus, Tencent’s major shareholder, rose more than 4%.
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Last month, regulators ordered Tencent Music Entertainment Group to relinquish its exclusive licensing deals with label companies, and killed a Tencent-led merger of two rival game streaming platforms. State media then trained their sights on gaming addiction among China’s youth, spurring Tencent to introduce even-stricter child protections into its mobile titles. And portfolio startups like Yuanfudao and VIPKid may be forced to write down their valuations after Beijing banned tutoring firms teaching school subjects to kids from making profits.
Meanwhile, a recently launched campaign by the tech-industry overseer has reignited scrutiny over Tencent’s ubiquitous WeChat. The messaging, social media and payments service — which temporarily suspended new user registrations last month to undergo security upgrades — has long been criticized for walling off users from services operated by rivals such as Alibaba, one of the watchdog’s key points of contention.
And while President Martin Lau has said the company’s fintech arm remains focused on risk management when expanding into non-payment products, monetization could be limited if Beijing put one of its fast-growing divisions under scrutiny similar to Jack Ma’s Ant Group Co.
Tencent’s core gaming business increased sales by 12%, the slowest pace since the third quarter of 2019. It faces a tough comparison from a year ago, when it rode an internet boom during the height of the Covid-19 pandemic. That division, which accounted for about half of China’s video game market in 2020, still largely revolves around aging franchises Peacekeeper Elite and Honor of Kings, at a time when up-and-comers like MiHoYo churn out new hits. In a bid to shore up its slate, Tencent has scooped up slices of 76 gaming firms so far this year, most of which are lesser-known indie development studios, according to data tracked by researcher Niko Partners. That compares with just 31 gaming investments last year.
“The Chinese mobile gaming space is witnessing a structural change whereby game developers are more inclined to publish games on their own instead of licensing their titles to third-party publishers such as Tencent,” Nomura analysts including Jialong Shi wrote in a note before the results. “The huge success of some independent game developers such as Lilith Games and MiHoYo in publishing their self-produced titles have likely inspired other small developers to follow suit.”
Online advertising revenue increased 23%, as internet services and consumer staples clients outweighed a drop in education-related spending. Fintech and other business services climbed 40%, reflecting increasing digital payment transactions, the company said.
Published : August 19, 2021
By : Syndication Washington Post, Bloomberg · Zheping Huang
SET rises as hinted QE tapering hits other Asian markets
The Stock Exchange of Thailand (SET) Index closed at 1,553.18 on Friday, up 8.90 points or 0.58 per cent. Transactions totalled THB82.37 billion with an index high of 1,554.45 and a low of 1,545.92.
In the morning session, Krungsri Securities forecast the index on Friday would fluctuate between 1,535 and 1,555 points amid a mix of positive and negative sentiment.
It said the index would face downward pressure from the US Federal Reserve signalling tapering of its quantitative easing programme, the falling oil price and ongoing anti-government protests in Thailand.
“However, hopes of the lockdown easing as domestic Covid-19 cases stabilise, and the improving vaccination rate, will help boost the index,” Krungsri Securities said.
The 10 stocks with the highest trade value today were PTTGC, GULF, KBANK, AOT, PTT, INTUCH, ADVANC, DTAC, OR and SCB.
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Other East Asian indices were on the fall:
Japan’s Nikkei Index closed at 27,013.25, down 267.92 points or 0.98 per cent.
China’s Shanghai SE Composite Index closed at 3,427.33, down 38.22 points or 1.10 per cent, while the Shenzhen SE Component Index closed at 14,253.54, down 233.83 points or 1.61 per cent.
Hong Kong’s Hang Seng Index closed at 24,849.72, down 466.61 points or 1.84 per cent.
South Korea’s KOSPI closed at 3,060.51, down 37.32 points or 1.20 per cent.
Taiwan’s TAIEX closed at 16,341.94, down 33.46 points or 0.20 per cent.
The price of gold in Thailand dropped by THB50 on Friday morning.
The Gold Traders Association report at 9.28am showed buying price of a gold bar at THB28,050 per baht weight and selling price at THB28,150, while gold ornaments were priced at THB27,545.72 and THB28,650, respectively.
At close on Thursday, buying price of a gold bar was THB28,100 per baht weight and selling price THB28,200, while gold ornaments were priced at THB27,591.20 and THB28,700, respectively.
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Spot gold on Friday morning was moving at around US$1,783 (THB59,463) per ounce after Comex gold price at close on Thursday dropped by $1.3 to $1,783.1 per ounce, due to pressure from the appreciation of the US dollar, including the recent meeting results of the US Federal Reserve which signalled that it would start reducing the limit in the bond purchase programme under the quantitative easing (QE) measures this year.
Hong Kong gold, meanwhile, rose by HK$10 to $16,550 (THB70,849) per tael, the Chinese Gold and Silver Exchange Society reported.
SET expected to see fluctuation amid mixed signals
The Stock Exchange of Thailand (SET) Index rose by 8.61 points, or 0.56 per cent, to 1,552.89 on Friday morning.
The SET Index closed at 1,544.28 on Thursday, down 7.59 points or 0.49 per cent. Transactions totalled THB78.14 billion with an index high of 1,553.90 and a low of 1,543.75.
Krungsri Securities forecast the index on Friday would fluctuate between 1,535 and 1,555 points amid mixed positive and negative sentiments.
It predicted the index would be under pressure after the US Federal Reserve signalled it would reduce its quantitative easing programme, the falling oil price and ongoing anti-government protests in Thailand.
“However hopes of the lockdown being eased, as domestic Covid-19 cases stabilise, and the improving vaccination rate would help boost the index,” Krungsri Securities said.
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It recommended selective buying as an investment strategy:
▪︎ HANA, KCE, TU, CPF, GFPT, ASIAN, EPG and NER, which benefit from the weakening baht.
▪︎ PSL, TTA and RCL, which would benefit from a rise in the freight rate.
▪︎ AOT, CPN, CRC, HMPRO, AAV, BA, MINT, CENTEL, AMATA and WHA , which would benefit from the country’s reopening.
Exporters sale of dollars checks bahts slide despite strengthening US currency
The baht opened at 33.35 to the US dollar on Friday, unchanged from Thursday’s closing rate.
The Thai currency is likely to move between 33.30 and 33.45 during the day, Krungthai Bank market strategist Poon Panichpibool said.
Poon explained that the baht had not weakened in proportion with the strengthening of the dollar, as exporters continued to sell dollars, while investors were short-selling the Thai currency as the Covid-19 situation has almost reached its worst point.
He said the baht was likely to fluctuate and weaken due to the Covid-19 crisis and the rising dollar, amid demand for safe-haven assets and the Federal Reserve’s likely decision to reduce quantitative easing (QE) this year.
Investors’ stocks might be affected if the Fed decides to decrease liquidity support or QE. Investors will temporarily decrease their investments in Asian emerging markets, as they might be worried about the effects of a reduction in QE, such as the QE Taper Tantrum incident in 2013.
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He expected the key resistance level would be between 33.40 and 33.50 to the US dollar, as exporters are waiting to offload more dollars.
He said the key support level would be around 33.00 to the dollar, which is the price range importers are waiting for before they make purchases. If there are large transactions, the baht might be volatile on Friday.
Toyota cuts show chip shortage ravages even best supply planners
Toyotas efforts to stockpile enough chips and other key components to ride out supply disruptions only protected the company so long before it too succumbed to the shortages eviscerating automakers.
The manufacturer will suspend production at all of its 14 Japanese assembly plants for various lengths of time through next month. The impact of these cuts will be harshest in September, with Toyota slashing its production plan by 40%, though risks will carry forward beyond next month.
It’s the latest sign even the best supply-chain planning is proving no match for a pandemic that virtually ground the auto industry to a halt a year ago and has plagued efforts to restore production. Toyota and BMW — two manufacturers least scathed by the semiconductor shortage in the first half — have now warned of significant blows to their operations in the coming months.
“This isn’t a Toyota-only problem,” said Tetsuo Seshimo, a fund manager at Saison Asset Management Co. “But the fact that this is happening at Toyota means that recent worries about the supply chain in Asia being disrupted by the spread of the coronavirus are materializing. There are a lot of companies manufacturing goods in Asia that could be impacted.”
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Toyota said 27 assembly lines in Japan will be impacted, affecting production of models including the RAV4, Corolla, Prius, Camry and Lexus RX. The news — first reported by the Nikkei — took the market by surprise, with investors sending Toyota shares down 4.4%, their biggest daily drop since December 2018.
“Especially in Southeast Asia, the spread of Covid and lockdowns are impacting our local suppliers,” Kazunari Kumakura, the chief officer of Toyota’s purchasing group, said Thursday. Going forward, the company will look at ways to further diversify its supply chains to not focus on one region and is attempting to find replacement parts from suppliers in other regions.
Production cuts had been factored into previous forecasts, so Toyota is maintaining its plan to produce 9.3 million vehicles for the fiscal year ending in March. The company maintained its annual operating profit projection earlier this month at 2.5 trillion yen ($22.7 billion) for the fiscal year through March, below analysts’ average projection for 2.95 trillion yen.
Early on in the chip shortage that began late last year, Toyota was lauded for its supply-chain savvy. The company has an intricate system in place to monitor its vast network of suppliers and has an early-warning system for shortages.
That may be no match for a pandemic that’s confounding scientists, governments and public-health officials, sparking fresh lockdowns around the world and wreaking more havoc on a vast array of industries.
BMW recently warned of uncertain months ahead as the global chip shortage worsens. After saying early this year it had ordered enough semiconductors and expected its suppliers to deliver, the luxury-car maker now expects production restrictions in the second half.
Volkswagen also has flagged worsening supply woes, while Daimler dialed back its delivery expectations due to the shortage.
According to research by Susquehanna Financial Group, the amount of time it’s taking for chip-starved companies to get orders filled has stretched to more than 20 weeks, indicating the shortages that have held back automakers and computer manufacturers are getting worse.
“Companies were saying it was a problem for the first half, but it’s astonishing what kind of strong figures they reached,” said Frank Schwope, an autos analyst at NordLB in Hanover. “But now, the chip shortage is coming in dramatically, showing that there must be some serious problems.”
Published : August 20, 2021
By : Syndication Washington Post, Bloomberg · River Davis, Craig Trudell
Biden administration faces big choices as economic calamity hangs over Afghanistan
Afghanistans economy faces calamity in the aftermath of the Taliban capture of Kabul, with the United States freezing the countrys financial reserves, residents unable to withdraw their money from bank accounts and billions of dollars of international aid put on hold.
The dangerous economic climate poses a major dilemma for the Biden administration as it tries to maintain leverage over the Taliban without exacerbating the severe economic conditions that threaten to immiserate millions of Afghan citizens. Biden administration officials are monitoring the situation closely and have said they will resume the flow of humanitarian aid, but they have not signaled how they plan to proceed.
Senior officials in Afghanistan’s toppled government have warned in recent days that parts of the nation’s economy are on the brink of devastation, given the country’s high dependence on international funding. Acting central bank governor Ajmal Ahmady, who recently fled the country, said in an interview that the nation’s economy faces severe strains as foreign capital and aid are choked off.
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Similarly, Wahid Majrooh, the acting minister of public health in Afghanistan, told The Washington Post that he is “deeply, deeply concerned” about cuts in international aid and funding for the Afghan government’s national health-care system. Majrooh said in an interview that he is already facing shortages of critical medical supplies such as bandages, sutures, syringes, catheters and other “basic supplies for emergency rooms.” He said he is pleading with international officials to maintain public health funding for Afghanistan, despite the Taliban takeover, but has largely not yet received a clear response.
The threat to the broader economy also appears serious. Exports and imports are reported to have cratered as major borders close to traffic. A half-dozen people in communication with Afghan residents reported dramatic price increases and shortages in grocery stores. Fears are also mounting about the impact of a failure for the Afghan government to pay its workforce – the largest employer in the country – when paychecks are due this month.
“The situation will be dire,” Majrooh said.
Ahmady, the former central banker fled in recent days, warned of a surge of refugees if the economic devastation is prolonged. “There will be a restructuring of the economy, with the currency depreciating, inflation rising, and real incomes declining. It’s going to cause a significant economic impact,” he said.
The warnings come as the Biden administration faces critical decisions over how to maintain leverage over the Taliban without allowing the country to tip into an economic disaster that would likely hurt everyday Afghans.
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President Joe Biden vowed in his public address earlier this week that aid to the Afghan people would continue, despite the U.S. withdrawal from the country. That pledge may prove difficult to keep in practice, given the prospect of the Taliban standing between international donors and the intended recipients of the money. The U.S. is also not expected to want to lift financial restrictions on the Afghan government until the White House sees how the Taliban governs the country, posing a further logistical hurdle.
On Sunday, the U.S. Treasury Department froze Afghan central bank assets kept in the U.S. The move will prevent the Taliban from accessing the bulk of the $9 billion in central bank reserves held by the Afghan government, but could exacerbate the financial crisis feared by many experts.
The administration is also grappling with how to handle existing sanctions on the Taliban that may chill the flow of international aid and funds into the country. Roughly 80 percent of the Afghan government’s budget comes from international grants and aid, according to PGIM Fixed Income, a global income manager. Billions of dollars in existing congressional appropriations to Afghanistan – primarily in the form of military support – are expected to cease flowing.
The International Monetary Fund also announced this week that Afghanistan would not have access to hundreds of millions of dollars in emergency funds that were scheduled to be disbursed to the country next week. IMF spokesman Gerry Rice in a statement said the payments could not be made due to the “lack of clarity within the international community regarding recognition of a government in Afghanistan.”
While Biden administration officials and other international groups faced pressure to cut off the international funds after the Taliban took power, the economic consequences of doing so on Afghanistan’s population could be difficult to unravel, experts said.
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“The last thing the Afghan people need right now is an economic crisis on top of a political and security crisis. The challenge for Washington is squaring that increasingly urgent need for cash and access to international reserves with the desire to not empower the Taliban,” said Elizabeth Threlkeld, senior fellow and deputy director of the South Asia Program at The Stimson Center, a foreign policy think tank. “That’s the fundamental tension.”
White House National Security adviser Jake Sullivan reiterated to reporters on Tuesday that the U.S. has means of delivering aid to those in need in a way that bypasses other governments.
“I don’t want to get into hypotheticals, but I would point out that there are a range of different diplomatic relationships the United States has with countries around the world, including some in very difficult or nonexistent relationships with governments where we still provide forms of aid to people,” Sullivan said. “And I will leave it at that, because we’re not at a point yet where we can speak directly to how things will play out in Afghanistan.”
White House and State Department officials say the U.S. will continue to provide aid to Afghanistan as it has in other countries where it has strained relations, such as Venezuela or Yemen. “Whatever course we take will not prevent humanitarian aid,” said a senior administration official.
But in those countries, the U.S. provides funding to aid organizations working there rather than payments directly to the government. In the case of Afghanistan, Congress appropriates billions of dollars in direct government aid.
Now that a designated terrorist group is in charge of the government, U.S. officials are prohibited from transferring funds to the Afghan government in the absence of a new U.S. license. Given the Biden administration’s profound disagreements with the Taliban it has to determine what aid it is willing to continue. However, the administration has been explicit that it does not yet recognize the Taliban as the official government of Afghanistan, which may mean the sanctions do not yet affect funding for the Afghan government.
It has stressed the importance of unifying its approach with other world powers and international institutions. That is likely to prove at least as difficult as getting world powers on the same page for simply recognizing the Taliban diplomatically.
China and Russia have both issued warm statements about the Taliban in recent days but have stopped short of formally recognizing its rule. Canadian Prime Minister Justin Trudeau said his government had “no plans” to recognize Taliban rule.
The European Union’s top diplomat, Josep Borrell, said the trade bloc would open a channel of communication with the Taliban but stop short of recognition. “The Taliban have won the war, so we will have to talk with them,” he said.
On Wednesday, Deputy Secretary of State Wendy Sherman said “each country, of course, makes its own decisions,” but said Secretary of State Antony Blinken had begun talks with his Chinese and Russian counterparts “try to all head in the same direction.”
The State Department has said the manner in which the Taliban governs the country will be the central factor in determining recognition. But even if the Taliban rules as inclusively as it says it will, untangling aid-limiting terrorism sanctions on the militant group will require an international effort as many are enshrined in resolutions approved by the United Nations Security Council resolutions, said experts.
The U.S. may continue to provide aid to Afghanistan without going through the Taliban through organizations that continue a presence in the country despite the fighting. The United Nations High Commissioner for Refugees remains operational in about two-thirds of the districts in the country with a staff of about 200, said Chris Boian, a spokesman with the organization. He says his organization will stay as long as it safely can, but the need is great.
“Violence and insecurity have prompted the displacement of more than half a million Afghan civilians this year,” Boian said. “Many of them are women and girls.”
The impact of the withdrawal on Afghanistan’s economy may be mitigated by a few factors. The country has a relative lack of dependence on the international financial system, as most Afghanis do not have a bank account and largely operate outside the traditional economy.
Jehanzaib Zafar and Hamza Kamal, analysts at AKD Securities Ltd, told Bloomberg that other regional powers such as China, Iran, and Pakistan could help the Afghan economy and maintain peace.
“The integrated economic interests of major powers in the region will help bring these players closer and work together and potentially bring peace and economic prosperity,” they said.
But signs of danger are mounting. Afghan’s currency, the Afghani, fell dramatically this week, with its value dropping by about 5 percent to 86 per dollar, according to Bloomberg. Germany has suspended approximately $300 million in aid budgeted for Afghanistan.
Majrooh, the health minister, said Afghanistan’s two major health care systems – one funded by international donors, the other by the Afghan central government – are now both under threat. He said they are already in need of oxygen, oil, fuel, and food for patients.
“Economically, this is likely to be a disaster unless they can figure out a way to keep the development aid going and the international support going,” said Matthias Luecke, senior researcher at the Kiel Institute for the World Economy and a former official at the International Monetary Fund. “It will be close to complete breakdown of the state and the economy. It is scary.”
On Sunday, security personnel at banks around the country fired at the “literally hundreds and hundreds of people even at the minor branches of minor banks” seeking to withdraw cash, said Zuhra Bahman, Afghanistan country director at Search for Common Ground, an international NGO. Afghans have been unable to purchase phone cards to enable them to make calls. International organizations and local NGOs have shut down as they decide whether to work in a country controlled by the Taliban, Bahman said, and layoffs have been reported in the transportation and service industries, among other sectors.
“The economy is collapsing. We need help,” said Bahman, who is currently based out of Dubai but in contact with numerous people inside Afghanistan. “We need the international community to meaningfully engage with the Taliban to ensure the already fragile economy does not further deteriorate.”
The Taliban’s likely loss of access to international disbursements to the military and Afghan government budget will amount to a loss of $750 million per month, said Alex Zerden, who led the U.S. Treasury Department’s office in Kabul from 2018 to 2019. That will immediately hamper the Taliban’s ability to pay government and military salaries, a destabilizing outcome in a country with a weak private sector.
“A lot of people are reliant on government salaries. One salary can feed a large family in some places so there’s a multiplier effect,” Zerden said.
Halema Wali, 30, co-founder of Afghans For A Better Tomorrow, said her relatives in Afghanistan in recent days have told her about dramatic increases in the price of rice, flour, oil, and other basic goods. She said more affluent Afghans have stockpiled cash and food, but ATMs were quickly emptied and others fear their ability to access financial help.
“Much of the economy was propped up by U.S. and international aid. That is a major concern of my family in Kabul, who are worried the economy might crash completely due to the pull out and the uncertainty of it at all,” Wali said. “Folks are incredibly worried.”
Published : August 20, 2021
By : The Washington Post · Jeff Stein, John Hudson
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