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State-run banks extend payment holiday as Bt5.5trn debt suspension expires

EconOct 21. 2020

By The Nation

State-run banks will extend financial aid to those unable to resume their payments when the central bank’s aid package for retail borrowers and small and medium-sized enterprises (SMEs) expires on Thursday (October 22), Finance Minister Arkhom Termpittayapaisith said on Tuesday.

The Bank for Agriculture and Agricultural Cooperatives (BAAC) has agreed to extend the debt holiday until March next year for debtors unable to make payments.

The Government Savings Bank and Government Housing Bank are also considering doing the same, he said.

The debt-repayment suspension covers 12 million accounts with combined debt of Bt5.5 trillion. Four million of those accounts are at state-run banks, accounting for Bt1.9 trillion or 30 per cent of total suspended debt.

Commercial banks are being urged by the central bank to provide support for customers who can’t make debt payments, estimated at about 10 per cent of all debtors.

The other 90 per cent are expected to resume debt payments following full (60 per cent) or partial (30 per cent) recovery of their businesses.

Of the remainder, 4 per cent have liquidity problems while 6 per cent have cut contact with banks and their combined debts of about Bt100 billion.

Meanwhile, new central bank governor Sethaput Suthiwartnarueput said he would leave commercial banks to solve the problem by themselves rather than issuing them with orders.

Deputy Prime Minister Supattanapong Punmeechaow said Thailand’s economy is slowly recovering from a sharp downturn in the second quarter, when it was hit hard by fallout from Covid-19. 

The International Monetary Fund now projects the Thai economy will contract 7.1 per cent this year, an improvement on its earlier forecast of a 7.7 per cent contraction. 

Meanwhile the World Bank is optimistic that Asia will recover faster than the rest of the world.

Thailand’s National Economic and Social Development Council (NESDC) recently forecast the economy will shrink 7.8 per cent. 

Asked whether ongoing political unrest will drag the economy down further, Arkhom said that it would depend on how the situation developed.

The government is under mounting pressure after tens of thousands of protesters held rallies across the country this week to demand that the Prayut-led administration step down.

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Thai Chamber of Commerce to meet as concern over political conflict grows

EconOct 21. 2020The Thai Chamber of Commerce chairman Kalin Sarasin 

By The Nation

The Thai Chamber of Commerce has called a meeting to evaluate the country’s political and economic situation and seek ways to resolve the brewing political conflict, said its chairman Kalin Sarasin.

He said a number of foreign businesses had expressed concerns about Thailand’s safety and whether the government would declare martial law. He assured them that the current political situation would not affect their businesses here.

Kalin also voiced support for recalling Parliament for an extraordinary session to seek ways out of the conflict.

The Cabinet on Tuesday approved the plan but did not set a date for the extraordinary session.

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Thai economy can survive shocks, but political unrest worrisome: new BOT governor

EconOct 21. 2020Bank of Thailand governor Sethaput Suthiwartnarueput meets the press for the first time on Tuesday after recently taking leadership at the central bank. 

By The Nation

New central bank governor Sethaput Suthiwartnarueput said he is concerned about the ongoing political unrest, but added that the economy is resilient enough to survive any shock.

The central bank has forecast that the economy will contract 7.8 per cent this year and will only start expanding in the second quarter of next year.

“It [the political unrest] will affect consumption, investment and confidence,” he said at his first press meeting on Tuesday. 

“And problems with actual execution of policies will make things tougher,” he said referring to the government’s usual difficulty with policy execution rather than planning. 

Anti-government protesters have intensified their rallies across the country demanding that the government step down, while the government has responded with crackdowns on protest leaders and censorship of the press. 

Businesses, meanwhile, are worried that the state of emergency imposed by the government will have an adverse impact on the economy. 

Thailand’s economy has already been crippled by the Covid-19 outbreak and taking far too long to recover. 

“The state of the economy now can be compared to a patient who is slowly coming out of intensive care,” he said.

The outbreak resulted in a sharp drop of tourists from about 40 million to 6.7 million, which translated to an income loss of 10 per cent of the gross domestic product. Thai exports in the second quarter shrank to the lowest level in 11 years, like a gravely ill person who needs intensive care, he continued. 

Recovery, he said, is uneven among different sectors and the economy will take at least two years before it returns to pre-Covid levels, especially since it is still uncertain when a vaccine will be available and how much the tourism sector will recover. 

In a bid to adapt to the changing environment, the Bank of Thailand (BOT) has recently shifted its policy from providing blanket financial aid to a more targeted, comprehensive and flexible scheme, he said. 

However, he said, there are no new measures planned. 

He also voiced confidence that the Thai economy is resilient to shocks brought on by the virus or other factors. 

“The public debt is manageable, the country is financially stable and the labour market is flexible,” he said. 

As for the strengthening of the baht, he said this was due to the high current account surplus, which comes in at US$30 billion (Bt938.3 billion) annually. 

He said Thailand is not able to recycle this money for investment overseas because few Thai listed companies are investing abroad. This is unlike South Korea and Taiwan, which have been successfully recycling their large current account surplus by investing overseas. 

Over the past five years, BOT has learned that external factors such as the US dollar and regional currencies account for 85 per cent of the impact on the baht exchange rate, while domestic factors represent only 15 per cent. Hence, the central bank is not able to have much of an influence on the currency’s exchange rate. 

Thai exporters have long complained that a stronger baht is eroding their competitiveness, and have recently suggested that the currency be brought down to Bt34 against the dollar from the current rate of Bt31. 

When asked how the central bank will help boost economic growth, he admitted that the fiscal policy was the key driver with the monetary policy playing a supporting role. 

Thailand is among few countries in Asia to have brought its policy rate down to 0.5 per cent, which is so low that it leaves limited room to bring it down further. 

Sethaput said as central bank governor, he faces five key challenges, with the most important one being solving the debt crisis so households and businesses can survive and recover from the Covid-induced crisis.

The second is to maintain financial stability to support recovery, third is ensuring a stable macroeconomic level, so it is resilient to the impact of coronavirus and the fourth is to enhance public confidence. He said the fifth challenge is to ensure BOT works as a unified entity because it is fragmented and has so many small departments that its potential is restrained. 

He said he will take a performance-based approach, allowing everyone to work together and deliver a good outcome.

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Experts offer investment strategies to beat political turmoil

EconOct 21. 2020

By The Nation

Thai stock market gurus have suggested ways investors can escape the impact of prolonged political unrest.

Wijit Arayapisit, a research department strategist at Maybank Kim Eng Securities, said the Stock Exchange of Thailand (SET) is currently weaker than regional peers due to political turmoil that has driven out foreign investors and delayed investment by locals.

“If the situation prolongs, the stock market will sink further,” he said.

He advised investors to beef up their portfolios with assets unaffected by the unrest. He said these included electronics stocks which benefit from the rise in technology shares, food shares that benefit from the weakening baht, and retail shares boosted by government stimulus measures.

“We recommended buying KCE, TU, COM7, RS and SINGER,” he added.

An analyst at Asia Plus Securities said political unrest always caused the baht to weaken and the stock market to fall.

“Last week, the baht weakened by 0.65 per cent and SET Index fell over 2.64 per cent as more than Bt4.1 billion in foreign funds flowed out from the stock market,” he said.

“Meanwhile, the pro-democracy protests are likely to be prolonged and expand throughout the country, so investors should monitor the situation closely.”

With negative sentiments pressuring the Thai stock market, he advised investors to hold 35 per cent in cash and invest 65 per cent in stocks that pay high dividends – such as DCC, JMART and MCS – and multinationals such as TU and PTTGC.

Nuttachart Mekmasin, assistant managing director at Trinity Securities, said the political unrest had hit the value of certain stocks.

He recommended that investors buy small- and medium-cap stocks in companies with growing profits, adding that foreign and institutional investors would not sell these stocks.

“However, we advise investing only 10 per cent in stocks,” he said, adding that stocks capable of escaping impact from political unrest included electronics, food and agriculture shares.

Supachai Wattanavitheskul, senior director at Yuanta Securities, said the price of electronics shares on Tuesday rose despite ongoing political unrest because these global stocks have good long-term prospects and benefit from the weakening baht.

“We advise investors to buy KCE because the price of other electronic shares is currently high,” he said.

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SET levels out after three-day slide

EconOct 20. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,210.67 on Tuesday, up 1.92 points or 0.16 per cent. Total transactions amounted to Bt59 billion with an index high of 1,219.16 and a low of 1,202.03.

In the morning session, an analyst at Krungsri Securities expected the day’s index to fall below 1,200 points, as hopes receded that US economic stimulus measures would be launched before the November 3 presidential election.

“Also, uncertainty over Thailand’s political unrest, as protesters hold rallies across the country, will pressure the market,” he said.

However, he said that planned extraordinary parliamentary session to address the unrest should help relieve political tensions.

The 10 stocks with the highest trade value today were STGT, KBANK, STA, PTT, SCC, AOT, CPALL, NER, IVL and PTTEP.

As of 4.30pm, the price of oil dropped by US$0.10 or 0.24 per cent to $40.73 per barrel, while gold dropped by $2.50 or 0.13 per cent, to $1,909.20 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 23,567.04, down 104.09 points or 0.44 per cent.

China’s Shang Hai SE Composite Index closed at 3,328.10, up 15.44 points or 0.47 per cent, while the Shenzhen SE Component Index closed at 13,603.88, up 182.69 points or 1.36 per cent.

Hong Kong’s Hang Seng Index closed at 24,569.54, up 27.28 points or 0.11 per cent.

South Korea’s KOSPI Index closed at 2,358.41, up 11.67 points or 0.50 per cent.

Taiwan’s TAIEX Index closed at 12,862.37, down 45.97 points or 0.36 per cent.

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Super Savings Funds surge past Bt1 billion

EconOct 20. 2020

By The Nation

Assets under management (AUM) of the Super Savings Funds (SSFs) scheme totalled Bt1.05 billion on October 14, Morningstar Research said on Tuesday.

Chayanee Juengmanon, a Morningstar senior analyst, said the funds’ assets in the third quarter hit Bt908 million, up more than three times from around Bt200 million in the previous quarter.

She said the group of SSFs with the highest growth was large-cap equities, which more than tripled to Bt312 million, from Bt100 million in the previous quarter.

“Meanwhile, global equities rose to Bt264 million, up 4.5 times from Bt48 million in the previous quarter,” she said.

“Currently, there are 81 SSFs, while the market share of the top five asset management companies is 82 per cent, led by Kasikorn Asset Management with 28 per cent of the market and AUM of Bt254 million.”

She said SSFs have a chance to grow from investment abroad, as investors are paying attention to China’s economic recovery and the rise in technology shares, while the Thai stock market is being pressured by Covid-19’s impact on the economy and political unrest.

“As SSFs were designed for long-term investment, investors should focus on asset allocation and study information on each SSF before investing because there are differences in investment policies and fees,” she added.

The SSFs are a government-led initiative to boost savings and investment by offering a 30 per cent tax deduction on contributions, capped at Bt200,000 a year.

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Suspension of train services pulls down BTS, MRT shares

EconOct 20. 2020

By The Nation

The share price of BTS Group Holdings and Bangkok Expressway and Metro (BEM) dropped sharply on Monday due to uncertainty over the suspension of train services in response to pro-democracy protests.

BTS shares dropped by 3.74 per cent to Bt9 per share, while BEM dropped by 4.12 per cent to Bt8.15 per share. BTS and BEM shares hit their lowest point on Monday at Bt8.85 and Bt7.95, respectively.

Train services were suspended around the protest site in downtown Bangkok from the afternoon of October 16, the day police used water cannons to disperse protesters.

The pro-democracy movement then announced that rallies will be held nationwide, especially near BTS and MRT stations.

An analyst at KTB Securities said if the protests continue unabated, then BTS and BEM’s daily profit will drop by 0.5 per cent and 0.6 per cent respectively every time they suspend services.

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Worries over rollout of US stimulus package, Thai political unrest seen as pressuring SET

EconOct 20. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index rose by 7.67 points, or 0.63 per cent, to 1,216.42 in the morning session on Tuesday.

An analyst at Krungsri Securities expected the index to fall below 1,200 points, as the market did not expect the US economic stimulus measures to be launched before the presidential election after House speaker Nancy Pelosi set up a 48-hour deadline to launch the stimulus bill.

“Also, uncertainty over Thailand’s political unrest, as protesters held rallies in many places nationwide, would pressure the market,” he said.

However, he expected that the special parliamentary meeting would help relieve political tension.

As an investment strategy, he recommended that investors buy:

▪︎ PTTGC, IVL and TOP that will benefit from the rising oil price.

▪︎ TU, STGT, CBG, SCC, IVL, COM7, ASIAN, DELTA and HANA, whose third-quarter performance is expected to grow.

The SET Index closed at 1,208.75 on Monday, down 24.93 points or 2.02 per cent. The volume of total transactions was Bt54 billion, with an index high of 1,223.15 and a low of 1,205.61.