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Bank of Thailand keeps interest rate at 0.5%, downgrades 2021 GDP outlook

EconDec 23. 2020Titanun Mallikamas, secretary of the Monetary Policy Committee (MPC) 

By The Nation

The Bank of Thailand (BOT) kept its benchmark interest rate unchanged for the fifth straight time on Wednesday, but downgraded its outlook for the economy next year after a fresh Covid-19 outbreak.

The unanimous vote to maintain the policy rate at 0.5 per cent was taken to preserve its limited policy space to support economic recovery that remained “highly uncertain”, said  Titanun Mallikamas, secretary of the Monetary Policy Committee (MPC) after Wednesday’s meeting.

Most economists had expected the policy rate to remain unchanged following three rate cuts earlier this year.

The bank also projected the Thai economy would contract 6.6 per cent in 2020, upgrading its previous forecast of 7-per-cent contraction due to improvements in private consumption and exports.

However, the BOT cut its 2021 growth outlook from 3.6 per cent to 3.2 per cent. The move follows an outbreak of more than 1,000 Covid-19 cases at the weekend. The bank forecasts 4.8 per cent growth in 2022.

It said the economic recovery remained highly uncertain and would depend in the short term on effective containment of the latest virus outbreak. 

Recovery in the longer term would rest on revival of the foreign tourist trade, Covid-19 vaccination, and the labour market, where unemployment and underemployment remained high, it added. 

The financial system remained sound while vulnerabilities among households and SMEs remained, said the bank. It also voiced concern that uneven recoveries across sectors would affect sustainability of economic growth.

Headline inflation was projected to return to the target in the middle of 2021.

The bank said it would consider additional measures to rein in the baht, which has been rising rapidly against the dollar to the dismay of Thai exporters. 

Monetary policy must remain accommodative, said the BOT. 

In deliberating monetary policy going forward, the bank said it would monitor government recovery measures and also risks such as the fresh virus outbreak.

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Gold price slides after rising the previous day (nationthailand.com)

Gold price slides after rising the previous day

EconDec 23. 2020

By The Nation

The price of gold dropped by Bt150 per baht weight in morning trade on Wednesday after rising by Bt100 per baht weight at close on Tuesday, the Gold Traders Association reported.

As of 9.26am, the buying price of a gold bar was Bt26,550 per baht weight and selling price Bt26,650, while gold ornaments cost Bt26,075.20 and Bt27,150, respectively.

At close on Tuesday, the buying price of a gold bar was Bt26,700 per baht weight and selling price Bt26,800, while gold ornaments cost Bt26,226.80 and Bt27,300, respectively.

The spot gold price moved to US$1,863 (Bt56,295) per ounce in the morning, while the Comex (Commodity Exchange) gold price to be delivered in February next year dropped by $12.50 to $1,870.30 per ounce on Tuesday due to a dollar appreciation and the historic rise in the US gross domestic product, resulting in mass sell-offs of safe-haven assets.

The Hong Kong gold price meanwhile dropped by HK$90 to $17,210 (Bt67,082) per tael, the Chinese Gold and Silver Exchange Society reported.

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SET extends gains, but Covid-19 fears cast shadow (nationthailand.com)

SET extends gains, but Covid-19 fears cast shadow

EconDec 23. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index fell by 7.55 points, or 0.53 per cent, to 1,431.94 in the morning session on Wednesday.

An analyst at Krungsri Securities expected the day’s index to fluctuate between 1,415 and 1,435 points amid an influx of foreign funds.

“However, uncertainty over the coronavirus mutation in Britain and fears of a new Covid-19 wave in Thailand would pressure the index,” he predicted, adding that some Thai provinces have already imposed lockdown measures to curb the spread of the virus.

He recommended investors buy:

> TQM, BLA, STGT, AJ, PTL, Synex and Com7, which actually benefit from a fresh Covid-19 outbreak.

> PTTEP, PTTGC, Top and IVL, which benefit from the rising oil price, while their fourth-quarter performance is expected to improve.

The SET Index closed at 1,424.39 on Tuesday, up 22.61 points, or 1.61 per cent. Total transactions amounted to Bt87.82 billion, with an index high of 1,428.11 points and a low of 1,388.23.

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Stocks extend slide amid lingering virus concern (nationthailand.com)

Stocks extend slide amid lingering virus concern

EconDec 23. 2020

By Syndication Washington Post, Bloomberg · Kamaron Leach, Cecile Gutscher

U.S. stocks fell for a third day as optimism over a covid-19 relief bill was tempered by the emergence of a new variant of the virus and a slew of lockdowns and travel curbs to contain it. The dollar advanced and Treasuries gained.

The benchmark S&P 500 fluctuated between gains and losses before closing lower, with consumer services and energy the biggest sector decliners. The Nasdaq Composite and Russell 2000 set record highs in what is a holiday shortened week. U.S. lawmakers cleared a $2.3 trillion year-end spending bill and stimulus package. President-elect Joe Biden warned the “darkest days” of the pandemic were still to come and called on Congress to be ready early next year to produce another stimulus package.

“Sometimes you get exaggerated moves in stocks due to lack of liquidity,” said Jonathan Boyar, managing director at BoyarValue Group.

Amgen Inc. was among the biggest losers in the Dow Jones industrial average, falling after a study showed an experimental drug failed to cut asthma patients’ dependence on steroids. Apple Inc. paced the gain in the Nasdaq after a report said the company is planning to make a battery-powered self-driving car as soon as 2024. Tesla Inc. fell for a second day.

In Europe, stocks rebounded from their steepest slump in almost two months Monday, with all industry groups in the green. British Airways owner IAG SA surged more than 5% as travel shares bounced back. Crude oil edged lower for a second day.

The global stock rally is looking increasingly fragile after equities touched a record high last week, as lockdowns and rising virus cases threaten to overshadow U.S. pandemic relief and the initial rollout of vaccines. The bill passed by Congress on Monday represents the second-biggest economic rescue package in American history.

“The agreed fiscal relief package will undoubtedly help mitigate some of the negatives but unfortunately, it won’t be able to fully offset the effects of people staying at home as many businesses face tighter restrictions or are even forced to close,” according to James Knightley, chief international economist at ING Groep.

In the U.K., where the virus variant has taken hold, a full lockdown came into force in London and southeast England. Europe and regions from Canada to Hong Kong have suspended travel links to the island nation, piling pressure onto the government as it tries to salvage a free-trade agreement with the European Union.

The bloc rebuffed Prime Minister Boris Johnson’s latest concessions on fishing rights, keeping the pound lower.

These are the main moves in markets:

Stocks

The S&P 500 Index decreased 0.2% to 3,687.27 as of 4:02 p.m. EST, the lowest in more than a week.

The Dow Jones industrial average sank 0.7% to 30,015.51, the lowest in more than a week on the biggest dip in more than three weeks.

The Nasdaq Composite Index increased 0.5% to 12,807.92, the highest on record.

The Stoxx Europe 600 Index surged 1.2% to 391.25, the biggest jump in five weeks.

Currencies

The Bloomberg Dollar Spot Index jumped 0.6% to 1,132.18, the highest in more than a week on the largest climb in almost eight weeks.

The euro sank 0.7% to $1.2162, the weakest in a week on the biggest dip in more than four months.

The British pound fell 0.7% to $1.3368, the weakest in more than a week on the largest drop in more than a week.

The Japanese yen depreciated 0.3% to 103.66 per dollar, the weakest in a week on the biggest dip in more than two weeks.

Bonds

The yield on 10-year Treasuries declined two basis points to 0.92%, the largest drop in more than a week.

Germany’s 10-year yield declined two basis points to -0.60%, the lowest in a week on the biggest fall in more than a week.

Britain’s 10-year yield declined two basis points to 0.183%, the lowest in more than a week.

Commodities

West Texas Intermediate crude dipped 2.1% to $46.94 a barrel, the lowest in more than a week.

Gold depreciated 0.9% to $1,860.77 an ounce, the weakest in a week on the largest dip in almost two weeks.

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Thailand to run fiscal deficit until 2025 (nationthailand.com)

Thailand to run fiscal deficit until 2025

EconDec 23. 2020Government spokesman Anucha Burapachaisri 

By The Nation

Thailand plans to run a fiscal deficit until 2025, to combat projected low tax revenue from low economic growth, while targeting inflation of 1 to 3 per cent next year.

The Cabinet on Tuesday gave the nod to the inflation target set by the Finance Ministry and Bank of Thailand’s Monetary Policy Committee (MPC), said government spokesman Anucha Burapachaisri.

The target was set in line with economic conditions including inflation dynamics, Thailand’s ageing society, fast-changing technology, and uncertainty caused by the Covid-19 pandemic.

The MPC has retained its priority to support economic recovery together with maintaining stability of prices and a sound financial system, he said.

The Cabinet also approved a medium-term government spending plan for 2022 to 2025, proposed by the Finance Ministry, said Anucha.

The Finance Ministry projects the Thai economy will expand in a range of 2.7 to 4.2 per cent over that four-year period. Thailand has experienced slow economic growth of 3 to 4 per cent in recent years, while the Covid-19 crisis is forecast to bring a severe economic contraction this year.

The Finance Ministry’s medium-term spending plan exceeds projected revenue as government spending remains an important factor in driving the economy, given low tax revenue.

For fiscal year 2022, the government plans to spend Bt3.1 trillion against projected revenue of Bt2.4 trillion, resulting in budget deficit of Bt700 billion. 

For 2023, spending will be Bt3.2 trillion against Bt2.49 trillion revenue, while for 2024 it is Bt3.31 trillion against 2.62 trillion revenue, and in 2025, Bt3.42 trillion against revenue of 2.75 trillion. Thailand has run a fiscal deficit since the 1997 Asian financial crisis. 

Projected key sources of tax revenue between 2022 and 2025 include VAT, e-service tax collected from international tech giants, licensing of frequencies for telecom operators, and production sharing contracts from oil and gas exploration firms.

The ministry also projects a rise in public debt as the government will need to borrow more to finance the deficit.

Public debt this year has hit Bt7.85 trillion, accounting for 49.3 per cent of gross domestic product (GDP).

Public debt to GDP is projected to rise to 56 per cent next year, 57.6 per cent in 2022, 58.6 per cent in 2023, 59 per cent in 2024 and 58.7 per cent in 2025.

Historically, the Finance Ministry has set a limit of 60 per cent on public debt-to-GDP, in order to ensure fiscal sustainability.

“For the short and medium term, the fiscal plan aims to increase both revenue and spending in order to brace for future risks. While for long-term planning, the budget deficit will be narrowed to achieve fiscal balance eventually,” said Anucha.

Slower economic growth and the Covid-19 fallout has contributed to rising public debt in recent years.

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SET rebounds from Covid shock (nationthailand.com)

SET rebounds from Covid shock

EconDec 22. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,424.39 on Tuesday, up 22.61 points or 1.61 per cent. Total transactions amounted to Bt87.82 billion with an index high of 1,428.11 and a low of 1,388.23.

The SET closed in positive territory after investors bought back shares following the sharp fall of more than 5 per cent during Monday trading.

In the morning session on Tuesday, an analyst at Krungsri Securities expected the day’s index to fall to 1,390 points as fresh Covid-19 outbreaks in Thailand and Britain spur negative sentiment for the economy and investor confidence.

“The index will also be under pressure from the falling oil price,” he said.

The 10 stocks with the highest trade value today were PTT, KBANK, BANPU, ADVANC, CPALL, IVL, PTTEP, BBL, CPF and IRPC.

As of 4.30pm, the price of oil dropped by US$0.96 or 2.00 per cent to $47.01 per barrel, while gold dropped by $5.00 or 0.27 per cent, to $1,877.80 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 26,436.39, down 278.03 points or 1.04 per cent.

China’s Shang Hai SE Composite Index closed at 3,356.78, down 63.79 points or 1.86 per cent, while Shenzhen SE Component Index closed at 13,882.30, down 252.55 points or 1.79 per cent.

Hong Kong’s Hang Seng Index closed at 26,119.25, down 187.43 points or 0.71 per cent.

South Korea’s KOSPI Index closed at 2,733.68, down 44.97 points or 1.62 per cent.

Taiwan’s TAIEX Index closed at 14,177.46, down 207.50 points or 1.44 per cent.

Singapore’s Straits Times Index closed at 2,823.79, down 22.73 points or 0.80 per cent.

Vietnam’s Ho Chi Minh Stock Index closed at 1,083.45, up 2.37 points or 0.22 per cent.