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Big funds remain committed to investing in OR despite controversy

EconJan 29. 2021

By The Nation

Thailand’s cornerstone funds say their plans to invest in PTT Oil and Retail Business (OR)’s initial public offering (IPO) remain unchanged despite high-level criticism of the float. The IPO aims to raise up to Bt54 billion.

Earlier, the Third Council Speaks group led by former Finance Minister Thirachai Phuvanatnaranubala urged the government to investigate the OR share sale over suspicions the company had broken state enterprise arbitration laws. The suspicions concern a dispute over whether some of OR assets should be transferred to the government.

BBL Asset Management (BBLAM)’s CEO said fund managers under its supervision had already made a cornerstone investment agreement for OR shares.

“This shows that BBLAM’s method for allocating OR shares to mutual, private, and provident funds was fair,” said Peerapong Jirasevijinda, adding that the Securities and Exchange Commission (SEC) could also check his company’s asset allocation.

He said fund managers had confidence in OR’s long-term growth, in line with the company’s fundamentals.

“We expect the target price of OR shares in three years to be Bt25-Bt27, compared to the IPO price of Bt16-Bt18,” he said, adding that the Thai stock market is expected to face a correction in the short term.

Siam Commercial Bank Asset Management (SCBAM) also said it would also invest in OR shares under the cornerstone investment agreement.

Nunmanus Piamthipmanus, its chief investment officer, said SCBAM will allocate shares in line with each fund’s investment policy, adding that its fund managers were still positive over OR shares.

“OR has growth potential since profits from its oil business will increase once the government eases lockdown measures, while profits from its retail business will rise from space leasing and overseas investment,” she said.

OR’s IPO price of Bt16-Bt18 was appropriate, she said, adding that its target price would increase by 10-15 per cent in the next two years.

OR expects over 1 million retail investors to subscribe for shares before the February 2 deadline.

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Thailand’s growth revised downward due to lack of tourist dollars

EconJan 28. 2021

By The Nation

While stimulus measures have been launched to prop up the economy and the export market is expected to rebound this year, the massive drop in foreign tourists has had the biggest impact on the economy, acting director-general of the Fiscal Policy Office (FPO) Kulaya Tantitemit said.

The FPO has revised down its forecast of Thailand’s growth to 2.8 per cent from its previous projection of 4.5 per cent. This is in line with a new prediction that tourist arrivals will fall from 8 million to 5 million with total tourist revenue down from Bt330 billion to Bt260 billion.

Thailand’s tourism sector has been hit hard by the Covid-19 fallout.

The agency has revised upward the forecast of export growth this year to 6.2 per cent from 6 per cent in line with expected economic expansion of Thailand’s trading partners.

Meanwhile, the Association of Domestic Travel (ADT) estimates the fresh Covid-19 outbreak has hit at least 2 million of the 4.4 million workers in the tourism sector.

ADT secretary-general Adith Chairattananon urged the government to launch bold new measures to mitigate the impact, including a scheme to co-pay workers’ wages for two to four months and a fund to help the sector.

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Thai stock market drops almost 2%

EconJan 28. 2021

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,468.51 on Thursday, down 29.62 points or 1.98 per cent. Total transactions amounted to Bt92.61 billion with an index high of 1,492 and a low of 1,467.74.

In the morning session, an analyst at Krungsri Securities expected the day’s index to fall to 1,480-1,490 points after the US Federal Reserve decided against launching more measures to tackle the economic impact of Covid-19.

Foreign investors’ net sales of Bt8.7 billion over the past four days would also pressure the index, he added.

“However, the SET will rebound from mass buy-ups of stocks whose fourth-quarter turnover is expected to improve,” he predicted.

The 10 stocks with the highest trade value today were EA, SCC, PTT, KBANK, GPSC, SAWAD, CPALL, STGT, IVL and CBG.

As of 4.30pm, the price of oil dropped by US$0.38 or 0.72 per cent to $52.47 per barrel, while gold dropped by $7.40 or 0.40 per cent to $1,837.50 per ounce.

Other Asian indices were on the fall:

Japan’s Nikkei Index closed at 28,197.42, down 437.79 points or 1.53 per cent.

China’s Shang Hai SE Composite Index closed at 3,505.18, down 68.17 points or 1.91 per cent, while Shenzhen SE Component Index closed at 14,913.20, down 500.64 points or 3.25 per cent.

Hong Kong’s Hang Seng Index closed at 28,550.77, down 746.76 points or 2.55 per cent.

South Korea’s KOSPI Index closed at 3,069.05, down 53.51 points or 1.71 per cent.

Taiwan’s TAIEX Index closed at 15,415.88, down 285.57 points or 1.82 per cent.

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SET Index falls, Fed stimulus decision a factor

EconJan 28. 2021

By The Nation

The Stock Exchange of Thailand (SET) Index fell by 13.63 points, or 0.91 per cent, to 1,484.50 in the morning session on Thursday.

The SET is expected to fall to between 1,480 and 1,490 points as the US Federal Reserve decided not to launch additional measures to tackle the impact of Covid-19 on the economy, said a Krungsri Securities analyst.

He also said foreign investors’ net sales of Bt8.7 billion for four consecutive days would pressure the index.

“However, the SET will rebound from mass buy-ups of stocks whose fourth-quarter turnover is expected to improve,” he predicted.

He recommended investors buy:

▪︎ PTTGC, TOP, IVL, EPG, VNT, SCGP, CBG, ROJNA, TVO, STGT, TWPC, CPF, RCL, PSL, SYNEX, COM7, XO, WICE, JMT, MTC, SAWAD and KCE, whose fourth-quarter turnover is expected to improve.

▪︎ CBG, ICHI, OSP, SAPPE, RBF and DOD, which benefit from news related to hemp after Thailand’s Food and Drug Administration said it would allow government agencies, private companies, farmers and the public to apply to grow the cannabis plant species.

The SET Index closed at 1,498.13 on Wednesday, down 14.70 points, or 0.97 per cent. Total transactions amounted to Bt78.79 billion, with an index high of 1,515.32 points and a low of 1,498.25.

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Gold price slumps further amid strong dollar

EconJan 28. 2021

By The Nation

The price of gold dropped by Bt50 per baht weight in morning trade on Thursday, the Gold Traders Association reported. The gold price was down for the second successive day, after dropping by Bt150 per baht weight on Wednesday.

As of 9.22am, the buying price of a gold bar was Bt26,050 per baht weight and selling price Bt26,150, while gold ornaments cost Bt25,574.92 and Bt26,650, respectively.

At close on Wednesday, the buying price of a gold bar was Bt26,100 per baht weight and selling price Bt26,200, while gold ornaments cost Bt25,635.56 and Bt26,700, respectively.

The spot gold price moved to US$1,838 (Bt55,187) per ounce in the morning, while the Comex (Commodity Exchange) gold price to be delivered in February dropped by $6 to $1,844.90 per ounce on Wednesday due to a strengthening dollar. Also, investors delayed gold purchases to follow a key US Federal Reserve meeting.

The Hong Kong gold price meanwhile dropped by HK$60 to $17,010 (Bt65,885) per tael, the Chinese Gold and Silver Exchange Society reported.

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BlackBerry revival rewards Watsa’s patience with huge gain

EconJan 28. 2021Attendees look at the Blackberry Keyone smartphone its launch event ahead of the Mobile World Congress in Barcelona, Spain, on Feb. 25, 2017. MUST CREDIT: Bloomberg photo by Chris Ratcliffe.

By Syndication Washington Post, Bloomberg · Michael Bellusci

Day traders have pushed BlackBerry’s share price to levels not seen in more than nine years. They’ve also given a jolt to a Canadian investment company that got crushed in last spring’s market crash.

BlackBerry soared 22.6% to $23.19 as of 9:38 a.m. in New York on Wednesday, bringing its gain for the year to nearly 250%. That is repaying the patience of Prem Watsa and his Fairfax Financial Holdings, which owns 8.3% of the software firm’s shares.

Once the toast of the mobile tech world, BlackBerry failed to keep pace with competitors including Apple and the stock lost most of its value in 2010 and 2011. Around that time, Watsa, a value investor who has tried to model Fairfax after Berkshire Hathaway Inc., began building a large stake, which also includes convertible debentures with a conversion price of $6 each that could be turned into 55 million shares.

The run-up in BlackBerry shares this year would drive a pretax gain of about $1.16 billion for Fairfax in the first quarter, Phil Hardie, a Toronto-based analyst at Bank of Nova Scotia, told clients in a note before markets opened on Tuesday. Hardie upgraded his recommendation on Fairfax’s shares to a buy-equivalent.

Fairfax closed at C$488.94 on Tuesday. With a 12.7% gain as of Tuesday’s close, it’s the best-performing financial stock in the S&P/TSX Composite Index this year after being one of the worst in 2020 with a 29% drop.

Scotiabank’s most bullish scenario for Fairfax “implies almost 50% upside and assumes that the stock sheds its valuation discount and trades at book value, with Fairfax locking in recent gains in BlackBerry through hedging or monetizing its position,” Hardie wrote. Fairfax didn’t respond to a request for comment.

Watsa has been waiting for such a payoff for years. Fairfax even organized a bid to take BlackBerry private in 2013 — the same year the latter changed its name from Research In Motion Ltd. — then abandoned it in favor of a bond deal and management shakeup that brought in John Chen as chief executive officer.

Despite an unrealized loss of $50 million on the investment as of 2019, Fairfax’s letter to shareholders last March made clear Watsa still believed in the CEO, who has focused BlackBerry on enterprise software. “We continue to support John Chen as he works diligently to make BlackBerry a growth company again,” Watsa wrote.

The sudden rise has been partly fueled by Reddit forums and social media channels where retail speculators seek out unloved or heavily-shorted stocks like GameStop Corp., hoping to drive them up quickly.

RBC Capital Markets downgraded its recommendation on BlackBerry to a sell-equivalent Tuesday, citing the torrid rally and unchanged fundamental outlook. Analyst Paul Treiber kept his price target at $7.50. Scotiabank also elected to cut BlackBerry’s stock rating to a sell-equivalent early Wednesday, as analyst Paul Steep calling the share run “overdone.” Still, shares are gaining about 11% in premarket trading Wednesday.

Watsa, 70, founded Fairfax in 1985, following Warren Buffett’s strategy of using insurance float as a way to build an investment portfolio. With a market value of more than C$14 billion it’s a fraction of Berkshire’s size, though it’s more than twice as large as buyout firm Onex Corp.