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https://www.nationthailand.com/business/40002339

OPEC+ discusses output hike in preparation for next meeting

OPEC+ is discussing whether to further boost production at next weeks meeting as the oil market looks increasingly tight.

Moscow is considering making a proposal that the group should ease a global supply deficit by increasing output, according to Russian officials familiar with the matter. Other OPEC+ nations are also discussing a potential supply hike in August, although specific numbers haven’t been mentioned, said a delegate.

Crude just hit $75 a barrel in London for the first time in two years as a strong recovery in demand from the coronavirus pandemic encounters supply constraints. The Organization of Petroleum Exporting Countries and its allies are already in the process of reviving about 2 million barrels a day of idle production from May to July, but influential voices in the market are asking for more as prices rise.

Saudi Arabia, the de-facto OPEC+ leader alongside Russia, so far hasn’t given any clear signal on the position it will take at next week’s talks. The kingdom has typically been cautious about rolling back the cuts, with Energy Minister Prince Abdulaziz bin Salman saying last week he wants to see clear evidence of a strong demand recovery before restoring more halted production.

The International Energy Agency has urged OPEC+ to start tapping its spare production capacity to bolster supply as demand rebounds. Goldman Sachs estimates the market is running a deficit of 3 million barrels a day, citing a lack of meaningful output growth. OPEC+ is still withholding as much as 5.8 million barrels a day from the market.

Nuclear talks between the U.S. and Iran have dragged on longer than expected, quashing expectations that sanctions on the Islamic Republic’s crude exports could be removed soon and adding further uncertainty to the OPEC+ deliberations. International oil companies and U.S. shale drillers are also keeping a tighter rein on their output than in the last price recovery, as their investors demand lower spending and better returns.

Moscow expects a global supply shortfall to persist in the medium term, two officials said, asking not to be named because the discussions aren’t public. The country’s final position going into the next OPEC+ gathering is still being shaped, another official said.

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Russia’s Deputy Prime Minister Alexander Novak is “in constant contact” with Saudi Arabia, Kremlin spokesman Dmitry Peskov said at his daily conference call. So far, there is no need for the Russian and Saudi leaders to hold direct talks about OPEC+ policy, he said.

The biggest oil companies in Russia said this month that the OPEC+ coalition should keep ramping up output to satisfy rising global consumption. Novak met with executives from the companies on Tuesday, although the discussion mostly centered on domestic fuel markets, said people familiar with the matter.

Published : June 23, 2021

By : Syndication Washington Post, Bloomberg · Evgenia Pismennaya, Olga Tanas, Salma El Wardany

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https://www.nationthailand.com/business/40002338

Fed pivot seen as more detour than deadend for reflation trades

The reflation narrative thats been a key driver of global risk rallies took a detour after the Federal Reserves hawkish pivot. Investors are split over whether the trades are now heading back to the highway or down a blind alley.

Markets are regaining their footing again as stocks bounce back. The Fed’s hints at a gradual tapering of stimulus, including a pair of interest rate hikes in 2023, had roiled risk assets from equities to commodities and Bitcoin, while setting off a surge in the dollar and longer-dated bonds — the 30-year Treasury yield fell below 2% for the first time since February.

The return to relative calm suggests it’s time to reload reflation trades focused on the assets most likely to benefit from a robust global economic recovery, according to strategists including Natixis Investment Managers and JPMorgan Chase. The latest wobbles have actually strengthened their conviction.

The selloff was “bewildering” and a downright overreaction given the long runway until the first potential rate hike in 2023 and the unreliability of dot plots as a predictor, said Jack Janasiewicz, portfolio manager and strategist at Natixis, which has more than $1 trillion under management.

“This caused a nice quick flush out of some weak hands riding the reflation trade and likely reset positioning to a better place,” he said in an email. “As for the reflation trade, it remains intact. We still find many of the inflation-related worries as transitory which makes us give a more nuanced definition to our outlook: reflation, but not inflation.”

Natixis is sticking with cyclical positions and expects those trades to continue to work, with energy remaining a favorite, Janasiewicz added.

JPMorgan also sees buying opportunities after reflation trades suffered a “technically driven pullback,” strategists including Marko Kolanovic and Nikolaos Panigirtzoglou wrote in a note Monday.

“We expect the trade to resume and see this move as an opportunity to add exposure to cyclical equities and commodities,” they said. “Inflation is likely to continue to realize above both the Fed’s and markets’ expectations, driving bond yields higher and value outperformance.”

Emerging markets are also poised for further outperformance over developed peers, with JPMorgan raising its year-end target for the MSCI Emerging Markets Index to 1,550 from 1,450, implying about a 15% upside from current levels.

Still, the whipsawing market reactions to the Fed are spurring plenty of debate among investors over where to park their cash if reflation trades falter.

Goldman Sachs strategists led by Christian Mueller-Glissmann see a greater focus on short-term rates sensitivity than in the past. Markets are focusing more on labor and inflation data, given the lower potential bar for a Fed liftoff as rapid improvements there may spur investors to price in earlier tightening, according to a note Monday.

“Coupled with slowing growth momentum, this might continue to weigh on risk appetite in the near term, although the repricing across reflationary assets has already been large,” they said.

The best yardstick for measuring out a path from here could be found by looking at the market’s performance in 2004, according to Morgan Stanley strategist Andrew Sheets. It offers the closest comparison to the current mix of a booming post-pandemic recovery, fiscal easing, high savings, low rates, higher inflation and tighter labor markets. Sheets considered a variety of eras within the past century with similar dynamics, but 2004 stood out.

At that time, an extended malaise following the 2001 U.S. recession only troughed in 2003, followed by a surge in equity and credit markets as confidence returned. That means 2004 saw similar valuations in global equities, credit spreads and even volatility as those apparent today, Sheets noted in a report Sunday.

“In short, 2004 represents a more mid-cycle market after a strong, early-cycle rally,” he said. “It saw similar valuations, and what happened next is similar to some key Morgan Stanley forecasts: a pause in equities within an ongoing bull market, lower default rates but slightly wider spreads, modest dollar strength and more mixed equity leadership.”

While there are some key differences — 2004 was a U.S. election year, there was no quantitative easing and China and emerging-market dynamics were vastly different — one key lesson to take away is how quickly the Fed moved from preaching patience at the start of the year to hiking rates by June, pushing target rates up 425 basis points over the next two years.

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“History always seems more orderly in hindsight,” he said. “Things can change.”

Published : June 23, 2021

By : Syndication Washington Post, Bloomberg · Eric Lam

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https://www.nationthailand.com/business/40002336

Alzheimers drug pricing uproar grows while U.S. weighs coverage

The $56,000 annual price for Biogen Inc.s recently approved Alzheimers therapy is drawing increasing criticism ahead of a decision by the U.S. government on reimbursement policies for the medication.

The Employers’ Prescription for Affordable Drugs, a coalition of health-care purchasers, said in a letter to congressional leaders on Monday that taxpayers and employers will have to pay billions of dollars for the drug, called Aduhelm, without knowing whether it works.

Aduhelm’s approval and price are a “cautionary tale of a broken system that is in profound need for reform,” the group wrote.

The Food and Drug Administration granted Aduhelm an accelerated approval this month over the objections of an advisory committee that said there was a lack of clear evidence that the drug could slow patients’ cognitive decline. Regulators said that Biogen must continue to study the therapy.

Despite the dispute over its benefits, Aduhelm could be taken by millions of Americans, creating a formidable new burden for taxpayers, employers and households who will ultimately pay for it. In addition to the high list price of the drug, patients who take it are expected to need regular scans to monitor treatment outcomes and side effects.

Biogen has said it expects 80% of the patients who ultimately take its drug to be on Medicare, the public insurance that covers Americans 65 and older. The federal agency that runs the program, the Centers for Medicare & Medicaid Services, hasn’t yet said how it will handle coverage.

If a million patients take Aduhelm, the annual cost would top $57 billion, according to estimates from the Kaiser Family Foundation. That’s more than the total for all drugs covered under Medicare’s Part B program, which is for medications like Aduhelm that are infusions administered in a doctor’s office.

Biogen is “engaging directly with public and private payers, and health systems to ensure coverage policies support access for appropriate patients,” spokeswoman Allison Parks said in an email, citing agreements with Cigna Corp. and the Veterans Health Administration.

The company plans to work with Medicare on “innovative price and access agreements that would help support continued sustainability of Medicare budgets,” she wrote.

It would be unusual for Medicare to limit access to a treatment that has gained a broad acceptance from the FDA. Officials may not have much room to maneuver, analysts from RBC Capital Markets wrote in a note to clients on Tuesday.

“The ability for CMS to meaningfully restrict Aduhelm appears limited to us in the near-term,” RBC’s Brian Abrahams wrote. “We think that CMS’s hands may largely be tied, barring an intervention from Congress.”

A meeting of outside experts who advise Medicare on coverage decisions could be scheduled for as soon as July, the RBC analysts wrote.

CMS didn’t immediately respond to a request for comment.

Alzheimer’s patient groups who implored the FDA to allow the drug on the market and praised the approval have also denounced the price. “This price is simply unacceptable,” the Alzheimer’s Association said June 12.

Some lawmakers have lashed out how the FDA handled the approval. Sen. Joe Manchin, D-W.Va., urged the Biden administration to replace the acting FDA chief, and Rep. Jim Cooper, D-Tenn., called the treatment a “scam.”

Cooper said that his wife recently died from Alzheimer’s and effective therapies are needed. “But this drug doesn’t seem to work,” he said in a statement. “Charging $56,000 for a drug that doesn’t work is a scam.”

The Employers’ Prescription for Affordable Drugs, which includes six large trade organizations for health-care purchasers and human-resources groups, urged Congress to take up comprehensive drug-pricing reform.

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The group said in its letter that the government should negotiate prices for drugs like Aduhelm where no market competition exists.

Democrats have proposed letting Medicare negotiate drug prices, but the policy faces GOP opposition and resistance from Democratic centrists who hold crucial votes.

Published : June 23, 2021

By : Syndication Washington Post, Bloomberg · John Tozzi

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https://www.nationthailand.com/business/40002335

Markets wrap: Stocks climb after Powells inflation reassurance

Stocks climbed after Federal Reserve Chair Jerome Powell reiterated his views that inflation pressures will be transitory even after a notable increase in recent months. The dollar fell.

The S&P 500 extended gains into a second day as the Fed chief said he’s got “a level of confidence” that prices will eventually come down, while noting that it would be “very, very unlikely” to see the kind of 1970s-style inflation. In a testimony to the House Select Subcommittee Tuesday, Powell also said that a 5% inflation environment wouldn’t be acceptable, and urged patience at evaluating data on prices.

“So inflation is larger than they expected,” said Art Hogan, chief strategist at National Securities. “That part is true. But the part about that’s going to force their hand faster than we think is the part that he’s pushing back on. I think markets have calmed down about that.”

Earlier Tuesday, New York Fed President John Williams noted that a discussion about raising interest rates is still “way off in the future.” Meantime, his Cleveland counterpart Loretta Mester said very low rates for a long period of time and unconventional policy tools such as asset purchases can lead to too much risk-taking and financial-stability issues.

Elsewhere, Bitcoin rebounded after earlier tumbling below $30,000 for the first time since January. Oil fell with reports that Russia and other OPEC+ nations are considering raising production in the wake of a tightly-supplied global crude market.

Here are some events to watch this week:

– U.S. new home sales, current account balance on Wednesday

– EIA crude oil inventory report due Wednesday

– Bank of England interest rate decision Thursday

– The Fed releases Thursday the results of stress tests on the largest U.S. banks

These are some of the main moves in financial markets:

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– – –

– The S&P 500 rose 0.5% as of 4 p.m. New York time

– The Nasdaq 100 rose 0.9%

– The Dow Jones Industrial Average rose 0.2%

– The MSCI World index rose 0.5%

– – –

– The Bloomberg Dollar Spot Index fell 0.1%

– The euro rose 0.2% to $1.1940

– The British pound rose 0.1% to $1.3948

– The Japanese yen fell 0.4% to 110.66 per dollar

– – –

– The yield on 10-year Treasuries declined three basis points to 1.46%

– Germany’s 10-year yield was little changed at -0.16%

– Britain’s 10-year yield advanced one basis point to 0.78%

– – –

– West Texas Intermediate crude fell 0.3% to $72.87 a barrel

– Gold futures fell 0.3% to $1,777.10 an ounce

Published : June 23, 2021

By : Syndication Washington Post, Bloomberg · Rita Nazareth, Vildana Hajric

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https://www.nationthailand.com/business/40002332

Bitcoin slides, erasing nearly all 2021 gains, as China crackdown continues

Cryptocurrency investors got hammered Tuesday, with losses wiping out more than $100 billion in market value overnight and slashing most of bitcoins gains for the year.

The most popular and valuable token fell more than 9 percent before recovering somewhat in the afternoon, briefly sending the digital currency below $30,000, a significant psychological benchmark not seen since January. Though long-term holders are typically better suited to weather the volatility of the cryptocurrency, the prolonged slump has erased most of the astronomical gains built up this year. And those who purchased near bitcoin’s all-time high of $64,000 have seen their investments cut by more than half.

By late afternoon Eastern time, bitcoin was trading around $32,000, turning positive for the day.

The slide and rebound followed reports that China has ramped up its crackdown of bitcoin miners in the country, part of a continuation of Beijing’s antagonistic approach to cryptocurrency. To reduce energy consumption in support of their climate goals, Chinese authorities have sent miners scattering.

The networks on which digital currencies run require robust computing power to execute transactions and other purposes, such as generating a fresh supply of cryptocurrency. But those maneuvers require large amounts of energy, a long-standing concern of environmentalists and other critics.

Elon Musk, the chief executive of Tesla, said earlier this month that his all-electric vehicle company would return to accepting bitcoin as payment once it confirms that enough miners are using renewable energy to power their networks.

While the pronouncement highlighted the great electricity demands of crypto operators, it also illustrated how Musk and other big personalities can influence the market.

Dogecoin, the popular meme token that has been a window into the exuberance of the crypto market, sank more than 6 percent, to about 19 cents. That’s well off the high of 72 cents set last month, leading up to Musk’s appearance on “Saturday Night Live.”

As with other digital currency sell-offs, bitcoin’s plummet has dragged much of the market with it. Most of the 20 largest tokens by market cap fell on Tuesday, several by double digits, according to CoinMarketCap, the cryptocurrency tracker. Even as tokens recovered some lost ground in afternoon trading, the overall market has shed more than $1 trillion since May, when investor optimism fueled a record-shattering run.

On Monday, China’s major state-owned banks reiterated their commitment to not facilitate the trading of cryptocurrency, reinforcing a previous ban that Chinese authorities put in place to shield their economy from added risks.

Officials there have tightened rules against processing cryptocurrency and last month banned payment companies from providing services tied to crypto transactions, issuing another warning to investors and sending jitters through the market.

Meanwhile, in Iran, as part of an effort to reduce the frequency of power outages during a hot summer, the government banned the mining of cryptocurrencies last month, blaming operators for the heightened electricity demand. On Tuesday, state media said Iranian police seized 7,000 computer miners in an abandoned factory west of the capital city of Tehran, Reuters reported.

In the United States, Biden administration officials are reviewing potential oversight measures related to the speculative trading of the crypto market and cryptocurrency’s potential uses to facilitate crime. The White House and the Treasury Department are also backing a new plan to target cryptocurrency as part of a broader effort to curb tax avoidance.

Other national governments, however, are embracing crypto. Nayib Bukele, the president of El Salvador, backed legislation making bitcoin legal tender, allowing Salvadorans to use the token to buy goods or pay taxes. But analysts remain skeptical of bitcoin’s use as a stable currency because of its extreme price volatility.

Crypto’s staggering climb this year has coincided with record gains in the stock market and the emergence of “meme stocks,” pulling in waves of new investors attracted in part by the excitement generated on online forums.

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Wall Street has wrestled with its own volatility in recent days. After Friday capped the worst trading week since October, stocks rebounded Monday and set all-time highs on Tuesday.

The tech-heavy Nasdaq advanced 112.79 points, or 0.8%, to close at 14,253.27, its highest level. The S&P 500 climbed 21.65 points or 0.5%, to finish at 4,246.44, just shy of its all-time high. The Dow Jones industrial average added 68.61 points, or 0.2%, to end at 33,945.58.

For months, market observers had been anticipating how the Federal Reserve would react to an improving economic outlook and whether central bankers would signal an interest rate hike to curb inflation. While fears of climbing prices have weighed on investors, some analysts say that the interest-rate concerns may have been overstated.

Published : June 23, 2021

By : The Washington Post · Hamza Shaban

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https://www.nationthailand.com/business/40002330

Thai plastics industry tipped to grow 3.1% to THB1.04tn this year

Thailand’s plastics industry will grow 3.1 per cent to 1.043 trillion baht this year, according to a forecast issued by the Thai Bioplastics Industry Association (TBIA) on Tuesday.

TBIA president Viboon Pungprasert said the rise is being driven by growing demand for bioplastics, which will spur an estimated 16.6 per cent increase in exports of Polylactic acid (PLA) plastic pellets to generate 2.7 billion baht this year.

Thailand is the third-largest exporter in the world and has the largest bioplastics capacity in the Asean region. The government is therefore pushing Thailand to become a regional centre of the bioplastics industry, said Paiboon. But to meet that aim, bioplastics must be promoted in Thailand, where high production costs mean they still only account for 1 per cent of the 2 million tonnes produced per year, he added.

Paiboon said the state must create incentives via tax and other measures to promote biodegradable plastic packaging.

Thailand’s bioplastic industry is growing at a rate of 10 per cent per year, which is considered high. Despite the high growth, Thailand has not followed its bioplastics rivals India and China in introducing incentives. These include China’s rule that all single-use plastic must be biodegradable.

​​Paiboon pointed out that many countries around the world, including Thailand, are aware of the problem of plastic waste and therefore have guidelines to promote proper disposal and recycling. They also produce compostable bioplastics from raw agricultural materials such as starch from cassava, sugar from sugar cane, vegetable fat, etc.

“If you look at the outside, [bioplastics] are the same as ordinary plastic. But the effects on the environment, including degradation, are completely different,” he said.

However, the price of bioplastics in Thailand is 2-3 times higher than conventional plastics. Manufacturers cannot bear such high costs, so they mix their ingredients to produce Oxo or non-biodegradable plastics, while still advertising them as biodegradable, said Paiboon.

“Oxo-degradable plastics eventually break down to microplastics, which contaminate soil, water and air, and become an environmental problem, but consumers are misled into thinking they are eco-friendly bioplastics.”

Although the Natural Resources and Environment Ministry has banned Oxo-degradable, the ban is not legally enforceable, he added. As a result, some manufacturers continue to mix Oxo or other substances with conventional plastics, making them cheaper than real bioplastics while also misleading consumers into believing they are biodegradable. In addition, manufacturers are advertising Oxo plastics as “Biodegradable”, “Degradable”, “EDP” (Environmental Degradable Plastics) and other names to avoid government measures, he said.

Paiboon urged the government to use the law to enforce the ban on selling Oxo products and plastics containing other substances. As long as Oxo is sold in the market, he said, it’s difficult in Thailand to use real bioplastics.

Published : June 23, 2021

By : The Nation

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https://www.nationthailand.com/business/40002324

SET falls below 1,600 as other Asian indices climb

The Stock Exchange of Thailand (SET) Index closed at 1,599.23 on Tuesday, down 1.90 points or 0.12 per cent. Transactions totalled THB81.59 billion with an index high of 1,613.66 and a low of 1,598.56.

In the morning session, Krungsri Securities expected the day’s index to rebound to between 1,610 and 1,615 points after the US Federal Reserve pointed to strong US economic data.

It added that the index also gained positive sentiment from the rising oil price.

“However, the index would be pressured by the outflow of foreign funds,” Krungsri Securities said.

The 10 stocks with the highest trade value today were GUNKUL, KBANK, PTT, AOT, RCL, HANA, RBF, CBG, SIRI and BANPU.

Other Asian indices were up, except in Hong Kong:

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Japan’s Nikkei Index closed at 28,884.13, up 873.20 points or 3.12 per cent.

China’s Shanghai SE Composite Index closed at 3,557.41, up 28.23 points or 0.80 per cent, while the Shenzhen SE Component Index closed at 14,696.29, up 54.99 points or 0.38 per cent.

Hong Kong’s Hang Seng Index closed at 28,309.76, down 179.24 points or 0.63 per cent.

South Korea’s KOSPI closed at 3,263.88, up 23.09 points or 0.71 per cent.

Taiwan’s TAIEX closed at 17,075.55, up 12.57 points or 0.074 per cent.

Published : June 22, 2021

By : The Nation

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https://www.nationthailand.com/business/40002311

SET buoyed by Fed remarks on US economy, rise in oil price

The Stock Exchange of Thailand (SET) Index rose by 8.37 points, or 0.52 per cent, to 1,609.50 on Tuesday morning.

The SET Index closed at 1,601.13 on Monday, down 11.85 points or 0.73 per cent. Transactions totalled THB83.15 billion with an index high of 1,602.66 and a low of 1,590.55.

Krungsri Securities expected the day’s index to rebound to between 1,610 and 1,615 points after the Federal Reserve made positive remarks on the US economy and its monetary policy.

It added that the index also gained positive sentiment from the rising oil price.

“However, the index would be pressured by the outflow of foreign funds,” Krungsri Securities predicted.

It recommended that investors buy:

▪︎ PTT, PTTEP, IVL and BANPU, which benefit from the rising oil price.

▪︎ BCH, CHG, BDMS, MINT, CENTEL, ERW, AOT, CPALL, HMPRO, CPN, CRC, AAV, AMATA, WHA, BEM and BTS, which benefit from the country’s reopening.

Published : June 22, 2021

By : The Nation

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https://www.nationthailand.com/business/40002309

Marginal gains for gold as dollar weakens, US bond yield slides

The price of gold in Thailand rose by THB50 per baht weight in morning trade on Tuesday, in response to the weakening dollar and the decline in US bond yield.

The Gold Traders Association report at 9.31am showed the buying price of a gold bar at THB26,650 per baht weight and selling price at THB26,750, while gold ornaments were priced at THB26,166.16 and THB27,250, respectively.

At close on Monday, the buying price of a gold bar was THB26,600 per baht weight and selling price THB26,700, while gold ornaments were priced at THB26,120.68 and THB27,200, respectively.

Spot gold price on Tuesday was US$1,785 (THB56,468) per ounce after Comex gold on Monday rose by $13.9 to $1,782.9 per ounce.

Hong Kong gold price, meanwhile, rose by HK$10 to $16,520 (THB67,305) per tael, the Chinese Gold and Silver Exchange Society reported.

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Published : June 22, 2021

By : The Nation

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https://www.nationthailand.com/business/40002297

Bitcoin Falls to Two-Week Low as China Cracks Down on Crypto

Bitcoin fell to a two-week low amid an intensifying cryptocurrency crackdown in China.

The largest virtual currency fell 8% to $33,070 as of 11:12 a.m. in London. Ether declined 12% to $1,993.

China has ordered payment platform Alipay and domestic banks to not to provide services linked to trading of virtual currencies. The institutions were also ordered to cut off payment channels for crypto exchanges and over-the-counter platforms, the People’s Bank of China said in a statement.

It’s more evidence of China’s tougher stance on crypto that’s stretching from financial regulation to the energy demands of Bitcoin mining.

“The PBOC crackdown is going further than initially expected,” said Jonathan Cheesman, head of over-the-counter and institutional sales at crypto derivatives exchange FTX. “Mining was phase one and speculation is phase two.”

Separately, a Chinese city with abundant hydropower has stepped up action to rein in mining. A Ya’an government official told at least one Bitcoin miner that the city has promised to root out all Bitcoin and Ether mining operations with a year, said a person with knowledge of the situation.

In the backdrop, the appetite for risk assets has diminished after last week’s hawkish policy pivot by the Federal Reserve. Even though equity markets tipped into the green on Monday, analysts pointed to lingering jitters about frothy corners of the market.

“If, as I expect, the global buy-everything unwind continues this week, Bitcoin will feel those chill winds,” said Jeffrey Halley, senior market analyst at Oanda Asia Pacific.

Some commentators have said China’s hashrate — the computational power used to mine coins and process blockchain transactions — is waning amid harsher regulatory oversight.

The crypto faithful are also grappling with a tumble in tokens used in so-called decentralized-finance — or DeFi — applications. DeFi apps let people lend, borrow, trade and take out insurance directly from each other using blockchain technology, without use of intermediaries such as banks.

For instance, the DeFi Titanium token went from being valued at around $60 to $0 — a rare occurrence even for famously volatile crypto markets. Famed mogul Mark Cuban had invested, telling Bloomberg News earlier that though it represented a small percentage of his crypto portfolio, the wipe-out “was enough that I wasn’t happy about it.”

Published : June 22, 2021

By : Syndication Washington Post, Bloomberg · Joanna Ossinger