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SET dips from worries over Covid-19 impact on global economy, mass sell-offs before US election

EconNov 02. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index dropped by 0.64 points, or 0.05 per cent, to 1,194.31 in the morning session on Monday.

An analyst at Krungsri Securities expected the day’s index to fall to between 1,185 and 1,205 due to European countries’ second lockdown in response to rising Covid-19 cases, resulting in negative sentiment for the global economy.

“Also, mass sell-offs in stocks to reduce risks from the US presidential election tomorrow would pressure the index,” he said, adding that the index would rebound from mass buy-ups in shares whose third-quarter performance is expected to improve.

He recommended that investors buy TU, STGT, STA, CBG, IVL, COM7, SYNEX, ASIAN, HANA, SVI and TVO, whose third-quarter performance is expected to improve.

The SET Index closed at 1,194.95 on Friday, down 6.69 points or 0.56 per cent. The volume of total transactions was Bt52.72 billion with an index high of 1,204.99 and a low of 1,187.49.

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Gold price stays flat in Thailand despite rise in global market

EconNov 02. 2020

By The Nation

The price of gold was unchanged in morning trade on Monday, the Gold Traders Association reported.

As of 9.20am, the buying price of a gold bar was Bt27,650 per baht weight and selling price Bt27,750, while gold ornaments were priced at Bt27,151.56 and Bt28,250, respectively.

At close on Saturday, the association announced the change in the precious metal’s price for one time, causing the price to rise by Bt100 per baht weight.

Spot gold price moved to US$1,882 (Bt58,619) per ounce in the morning after the price rose by $11.9 to $1,879.9 per ounce at close on Friday.

Gold price rose technically after falling in previous days. Meanwhile, it gained positive sentiment from mass buy-ups of the metal as a safe-haven asset in response to uncertainty over Covid-19’s impact on the economy.

Hong Kong gold price rose by HK$10 to $17,340 (Bt69,651) per tael this morning, the Chinese Gold and Silver Exchange Society reported.

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Cabinet asked to cut red tape to woo foreign investment in 3 areas

EconNov 02. 2020

By The Nation

The Department of Business Development will ask the Cabinet to remove restrictions on three business types so that foreign firms no longer have to apply for investment permits from the Commerce Ministry.

The three types fall under the Foreign Business Act’s “List Three” – areas where Thai nationals are not ready to compete with foreigners, said the department’s director-general Tossapon Tangsubut.

The first area is Type 1 telecom licence services provided via another telecom operators’ network.

The second are treasury centres for managing foreign currencies for businesses and affiliates in the same group.

The third is software development related to Big Data, cyber security, advanced technology, business process management and industrial production.

All three business types already have related agencies where foreign investors could apply for permits without the need to ask the Commerce Ministry, said Tossapon. This would cut redundancy in the process and improve the business investment environment, he added.

The department has already withdrawn several business types from List Three in a bid to woo more foreign investment.

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Company registrations in EEC drop over 14%

EconNov 02. 2020

By The Nation

The number of firms registering in the Eastern Economic Corridor (EEC) dropped 14.04 per cent to 4,879 in the first nine months of this year.

Their registered capital was Bt13.947 billion, down 29.70 per cent, said Department of Business Development director-general Tossapon Tangsubut.

The decline is due to Covid-19’s impact on the global economy, he added.

The property sector tops the rankings of new EEC registrations with 772 firms and total registered capital of Bt2.709 billion. Next comes the construction sector with 396 firms and Bt665 million in capital, and real estate agencies 189 firms and Bt508 million.

As of September 30, the EEC hosted a total 72,185 companies with combined capital of more than Bt1.944 trillion, up 1.91 per cent from the same period last year.

Of the total, 52,524 are located in Chon Buri with capital of Bt1.147 trillion, 13,810 are in Rayong with capital of about Bt609 billion, and 5,581 are in Chacheongsao with capital of Bt188.199 billion.

Meanwhile, the number of foreign businesses in the EEC rose one per cent over the past nine months to 526, with investment of Bt88.282 billion.

Foreign investment in the EEC via joint ventures with local partners is worth Bt790.205 billion. Japan tops the chart with Bt381.075 billion invested, followed by China at Bt90.298 billion, Singapore (Bt43.263 billion), the United States (Bt25.353 billion), and South Korea (Bt24.08) billion). Rayong boasts the largest share of foreign investment at 52.71 per cent.

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Small businesses to bear brunt of cut in US GSP privileges, but all eyes on US presidential election

EconNov 01. 2020Biden VS Trump: US presidential election 

By The Nation

The US decision to cut GSP privileges for Thailand would hit some small businesses hard but not impact overall Thai exports, while the US presidential election would significantly impact Thai exports and the economy, an economist said.

The latest round of the US cutting trade privileges under the Generalised System of Preferences would not hurt Thailand’s economy much, but it would have a large impact on small businesses depending on the US market, said Anusorn Tamajai, former dean of Rangsit University’s Faculty of Economics.

Although the US government announced on Friday the cut in tax privileges under the GSP programme for Thailand starting from December on 231 products, Thai exporters  actually applied for GSP for only 147 products worth about $600 million to $700 million a year, he said.

With a 4 to 5 per cent tax rate added on those products, the value of export is estimated to be $640-960 million a year. Small businesses who export auto parts, car gears, rubber-made products, chemicals and thin aluminium sheets will be hit hard. They have to find alternative markets, he said. The share prices of listed firms engaging in these products may face a decline when the market opens on Monday, he predicted.

Anusorn believed that President Donald Trump had made his decision in order to gain popularity among American farmers, especially swine farmers. The Trump administration had cited  Thailand’s lack of openness in the pork meat market for US products as reason for the GSP cut.

Thailand should brace for more GSP privilege cuts as Thailand currently received trade privileges on 638 products, he warned.

If Joe Biden wins the presidential election scheduled for November 3, his administration may use issues related to human rights, labour rights and democracy for bargaining on trade with Thailand, he said.

Biden has pledged to increase corporate tax from 21 per cent to 28 per cent and personal income tax for the top bracket  from 37 per cent to 39 per cent, as well as introduce a capital gains tax on those who earn income of $1 million and more. The tax hike will be used to provide welfare for lower-income groups. The tax will impact large businesses. Biden, however, is unlikely to continue the trade war, and extreme nationalism of President Trump, so Biden’s policies will benefit the global economy as a whole. Biden will support renewable energy and clean energy. His policy to increase the minimum wage to $15 per hour will encourage more US firms to relocate labour-intensive manufacturing to Asia, he forecast.

Biden is expected to revive the Trans-Pacific Partnership initiated by former president Barak Obama. Or he may join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, said Anusorn.

Biden’s “Buy America” would not result in trade restrictions like Trump’s “America First” or “America Great Again” does, he noted, referring to Trump’s  trade restrictions on China, Europe as well as Thailand.

If Trump wins the election, large corporates will benefit in the short run due to tax cuts. But Trump will intensify trade wars, which will hurt the global economy as a whole.

If the election is very close and results in a recounting of votes by a court order, the global market would be subjected to high volatility until early next year, he predicted.

If Biden wins, the US dollar is likely to weaken, and more money will flow to emerging markets and there will be a correction in the US stock markets. The rising cost for business stemming from Biden’s tax increase policy will be compensated by overall freer global trade. Rising income of labour will boost domestic demand. Investment in infrastructure projects will contribute to US growth. Biden is unlikely to engage in trade conflicts with Europe, as he did not show strong opposition to Europe’s attempt to collect digital taxes which will adversely impact US tech companies.

“The central bank should review its policy rate currently at 0.5 per cent and prepare for unconventional measures to deal with potential volatility in the global financial market,” said Anusorn, a former director at the Bank of Thailand.

If there is chaos in the US due to lack of clarity about the presidential election winner, it could worsen the global economy. And the Thai economy would suffer if the ongoing political crisis is not resolved peacefully. Therefore, preparing for an unconventional monetary policy is necessary, as the country’s fiscal position has been weakening, he added.

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PM pleased’ with report on reduction in poverty last year

EconOct 31. 2020Government deputy spokeswoman Traisuree Taisaranakul 

By The Nation

Prime Minister Prayut Chan-o-cha is satisfied with the government’s efforts to reduce poverty after a report by the National Economic and Social Development Council (NESDC) said the number of poor people in the country had declined last year, government deputy spokeswoman Traisuree Taisaranakul said on Saturday.

According to the NESDC report on poverty last year, the number of poor people dropped to 6.24 per cent (4.3 million) from 9.85 per cent (6.7 million) in 2018, she added. The report attributed it to the economic expansion and the government’s measures to help low-income people.

She said that the figure suggested that Thailand had met its goal in the 12th national economic and social development plan, which targets reducing the number of those below the poverty treshold to 6.5 per cent at the end of next year.

However, it remains to be seen if Thailand can maintain this pace until the end of next year as this year Thailand is suffering the severe impact of the Covid-19 pandemic outbreak, she added.