The Stock Exchange of Thailand (SET) Index closed at 1,274.83 on Thursday, up 11.12 points or 0.88 per cent. The volume of total transactions was Bt56 billion with an index high of 1,282.65 and a low of 1,269.50.
In the morning session, a Krungsri Securities analyst said he expected the index to rise to between 1,270 and 1,275 points before falling in response to news that President Donald Trump has made a U-turn and is moving again to promote economic stimulus measures as well as inject cash to help the aviation industry and small businesses. Another positive factor is Thailand’s Centre for Economic Situation Administration approving measures to stimulate consumer spending from October 23 to December 31.
However, the analyst warned investors to beware of mass sell-offs by foreign investors as this would pressure the index.
The top 10 stocks with the highest trade value today were DELTA, PTT, CRC, KBANK, MINT, AOT, IVL, STGT, TU and ADVANC.
As of 4.30pm, the price of oil rose by US$0.61 or 1.53 per cent to $40.56 per barrel, while gold rose by $5.70 or 0.30 per cent, to $1,896.50 per ounce.
Other Asian indices were mixed:
Japan’s Nikkei Index closed at 23,647.07, up 224.25 points or 0.96 per cent.
Hong Kong’s Hang Seng Index closed at 24,193.35, down 3.78 49.51 points or 0.20 per cent.
South Korea’s KOSPI Index closed at 2,391.96, up 5.02 points or 0.21 per cent.
Taiwan’s TAIEX Index closed at 12,887.19, up 140.82 points or 1.10 per cent.
China’s stock markets were closed for the Moon Festival.
Asean still attractive for European businesses, survey shows
EconOct 08. 2020Chris Humphrey, executive director of the council
By The Nation
The EU-Asean Business Council on Thursday released its sixth Business Sentiment Survey, which showed that most European businesses based in the region see Asean as offering the best economic opportunities and most expect to expand in the next five years.
However, they cite supply chain barriers, Asean Economic Integration and FTAs as crucial areas to address. Among the key highlights of this year’s survey are:
• 56 per cent of EU businesses plan to enter Asean markets, a slight drop from 61 per cent in 2019.
• 65 per cent of respondents favour Thailand as the second-best alternative for expansion and EU-Asean free-trade agreement, similar to previous years.
• 59 per cent of respondents in Thailand are satisfied with the government’s Covid-19 response.
• 53 per cent see Asean as the region with the best economic opportunity compared to 63 per cent last year.
• 47 per cent are considering reorganising supply chains post-Covid-19, with Asean, Europe and China seen as top destinations
• 73 per cent expect to expand current levels of trade and investment in Asean in the next five years, compared to 84 per cent last year.
• Only 2 per cent feel the Asean Economic Integration is progressing fast enough, versus 6 per cent last year.
• Only 4 per cent find Asean customs procedures speedy and efficient, versus 8 per cent in 2019.
• 62 per cent of respondents who use supply chains reported facing many obstacles to the efficient use of supply chains in Asean, compared to 78 per cent last year.
• 98 per cent said they want EU to accelerate FTA negotiations with the grouping, slightly higher than 96 per cent in 2019.
Donald Kanak, chairman of the EU-Asean Business Council, said: “This year’s survey confirms that Asean is still seen as the region of best economic opportunity, but as would be expected during the Covid-19 crisis, the outlook for increased trade and investment shows signs of softening.”
This year’s survey asked which regions in the post-Covid era would attract more investment on supply chains. While Asean received the most votes, Europe and China also received many.
“Almost half expect supply chains to be reorganised following Covid-19. That makes the unfinished business on the Asean economic integration and progress on trade facilitation crucial to the region’s sustainable recovery from the economic downturn,” Kanak continued.
Chris Humphrey, executive director of the council, said: “The message from the survey is clear: Asean Economic Integration appears to be at a standstill. Asean and its members need to pick up the pace to meet the AEC Blueprint 2025 goals.
“European businesses are now adjusting their strategy according to local environments, rather than waiting for substantial progress in regional economic integration. European businesses are also very concerned about the lack of progress on further FTAs with the Asean region, and in particular the long talked about region-to-region FTA which eight out of 10 see as potentially delivering more benefits that a series of bilateral FTAs.”
The survey was conducted from April to July during the height of the pandemic and lockdowns in the region. In total, 680 respondents were recorded from European businesses in the 10 Asean member states. Respondents were either in the services or manufacturing industries, ranging from hospitality and tourism to the manufacture of pharmaceuticals and medical equipment.
Thailand’s recovery after the Covid-19 outbreak is likely to be weighed down by the country’s high reliance on tourism and weak domestic demand, Fitch Ratings analysts said at the agency’s annual conference.
The two-day conference, which started on Wednesday, focused on the credit impact of the pandemic.
Fitch still expects Thailand’s sovereign ratings to be resilient in light of its strong public and external finance buffers. However, the country’s banking and corporate sector face significant financial and operating risks into 2021.
James McCormack, managing director and global head of sovereigns at Fitch Ratings, said there is a sequential economic recovery underway globally, led by China where the virus appears to have been contained and production levels have rebounded.
However, Fitch does not forecast a “V-shaped” recovery for Thailand, as the services sector, including tourism, will be slow to gain traction amid prolonged restrictions on movement and new social distancing norms.
Thailand is among the countries most exposed to tourism, and Fitch forecasts an economic contraction of 7.8 per cent this year, followed by an expansion of 3.9 per cent in 2021, both below the global average. Even so, Thailand’s (BBB+/Stable) sovereign rating is still supported by comparatively robust public and external finances.
Both the US and Europe are still tackling Covid-19 infections, though Fitch does not expect a return of economy-wide lockdowns. Fiscal support will continue as long as effects of the pandemic linger, and the surge in global government debt levels is the primary reason for the record number of “negative outlooks”, which currently stand at 40.
The United States’ “AAA” rating has been given negative outlook and near-term uncertainties may rise with the upcoming election. A number of European sovereigns are also on negative outlook, and rating outcomes will be guided in part by medium-term fiscal consolidation strategies. The same is true of Japan (A/Negative), which has the highest government debt burden of any Fitch-rated sovereign.
In his presentation on the banking sector, Parson Singha, senior director of financial institutions at Fitch Ratings Thailand, pointed out that the pandemic has raised the level of credit risk globally, leading to a significant deterioration in the operating environment for banks.
In the longer run, Thai banks may suffer the adverse impact of a period of low interest rates and poor economic growth, which make finding earnings drivers more difficult. Rapid changes in technology and consumer behaviour also pose risks, but could also present opportunities to nimble players.
Obboon Thirachit, director of corporate ratings at Fitch Ratings Thailand, said the agency expects the pandemic to cause aggregate EBITDA (earnings before interest, taxes, depreciation and amortisation) of Thai corporates drop by 24 per cent, with median leverage increasing 4.4 times this year, compared to 2.8 times last year.
Fitch expects a gradual earnings recovery and deleveraging in 2021, subject to the continued containment of the pandemic in Thailand.
Oil, gas and petrochemicals are among the hardest-hit sectors amid the plunge in oil price and weak product margins. International travel restrictions and higher unemployment will remain a constraint to the recovery of hotel, airline, residential property and non-food retail industries. The more resilient sectors are telecoms, utilities and food retail.
With several Thai corporates on negative outlook, further downgrades are possible if the expected economic recovery falters.
Siew Wai Wan, senior director of insurance ratings at Fitch Ratings, said operating challenges from the pandemic have exacerbated the impact from the low interest rate environment and recent catastrophes. Insurance companies are expected to increasingly focus on capital and risk management to withstand the volatile operating landscape as well as stricter regulatory regimes.
Gulf Energy Development (Gulf) is expected to reap dividends of around Bt700 million per year after securing a 10-per-cent stake in Intouch Holdings, experts said.
Recently, Gulf became the second-largest shareholder in Intouch after approved spending of up to Bt19 billion to boost its shareholding from 7.99 per cent to 10 per cent.
Also, Gulf’s board of directors approved the setting up of Gulf 1 to operate all forms of solar energy businesses, such as solar farms and solar rooftop panels, as well as providing maintenance services for the said renewable energy systems. The new company will have a registered capital of Bt100 million in which the holding company will have a 99.99 per cent stake.
Theethanat Jindarat, an analyst at Yuanta Securities, expected Gulf to receive dividend of approximately Bt700 million per year from investment in Intouch shares. Meanwhile, he expected Gulf to increase its shareholding in Intouch shares if Gulf has a strong financial position, and Intouch aims to expand its business in other infrastructure areas.
“At the end of July, Gulf’s electricity production capacity was 6,409MW, while electricity production capacity according to the company’s shareholding was 2,959MW in which 46 per cent of production capacity came from independent power producers, 42 per cent from small power producers, and 12 per cent from alternative energy,” he explained
“Meanwhile, 90 per cent of Gulf’s domestic electricity production capacity is being distributed to the Electricity Generating Authority of Thailand (Egat) and 10 per cent is being distributed to the private sector. Gulf will distribute 95 per cent of electricity to Egat from 2027.”
According to Gulf’s plan to open power plants for commercial use, he said electricity production capacity according to the company’s shareholding would increase by 42 per cent to 4,200MW in 2021 and increase by approximately 22 per cent yearly from 2020 to 2025.
“Gulf’s profit in 2021 is expected to increase sharply by 76 per cent from two phases of GSRC’s power plants with production capacity totalling 2,650MW, which will be operated in 2021 and 2022. The company’s profit is expected to increase continuously until 2027 from the opening of new power plants,” he said
He added that Gulf’s share price was currently around Bt31 per share, with price to earnings in 2021 at 46.3 times.
“However, the company’s price/earnings to growth ratio in 2021 is expected to be at 0.61 times due to the 76 per cent increase in profit forecast and acquisition of power plants, so this is a chance to invest in the company’s shares,” he said.
“Also, we assumed the company’s natural gas price at Bt260 per million British Thermal Unit. When natural gas price drops every Bt10 from the assumption, the target price of the company’s share will increase by Bt1.50 per share.”
The Department of International Trade Negotiations (DITN) aims to lead 20 selected dairy entrepreneurs out of a total of 81 to Guangzhou, China, for discussions in a plan to expand the kingdom’s overseas markets under free-trade agreements, DITN director-general Auramon Supthaweethum said.
The department had two years ago taken dairy businessmen on a similar trade trip to Shanghai and Singapore, with a successful penetration both markets.
“We are assessing the Covid-19 situation. If possible, we will go. If this is not possible, we must adjust to conduct business negotiations online instead,” Auramon said.
“But I believe that Thailand will be able to expand sales of its milk and dairy products to China as these have been developed in terms of quality and innovation, such as edible milk tablets that do not decay, milk tablets mixed with fruit, or pasteurised milk that can be stored for 40-45 days, making it possible to meet the needs of the market,” she said.
Under FTA deals, Thailand has reduced taxes to 0 per cent for almost all dairy products. The items that are expected to see a tax cut in 2021 and 2025 for Australia and New Zealand include milk powder products containing 1.5 per cent fat (not for raising babies), milk products, whey, butter, fat, cheese and cream products, milk-flavoured beverages and skimmed milk powder.
According to Auramon, Thai products have been recognised for their quality, an advantage in terms of export especially to Asean and Chinese markets.
In the first eight months of the year, Thailand exported cow’s milk and processed cow’s milk worth US$382 million (Bt11.92 billion) to world markets, an increase of 7.9 per cent.
Major dairy exports include UHT ready-to-drink milk, yoghurt and fresh milk, with the main markets being Asean (Cambodia, Philippines, Myanmar, Laos, Singapore), 82.7 per cent, China, 5.4 per cent, and Hong Kong, 3.4 per cent.
PTT Group’s three flagships, Thai Oil, PTT Global Chemical and IRPC, have drawn up a plan to synergise their activities with the aim of adding value to the group’s international trading business and enhancing the group’s competitiveness in the global market.
Project One will allow the three companies to jointly manage and procure crude oil, which will increase their bargaining power in the global market, said Disathat Panyarachun, PTT’s senior executive vice president for International Trading Business Unit.
Joining forces will also allow them to avoid redundant investment in the petrochemical and refinery businesses.
Meanwhile they plan to launch joint international trading activities next year.
Charoen Pokphand Foods (CPF) has introduced its “U Farm” brand of meats that are free from biochemicals for consumers conscious about food safety and animal welfare, chief executive officer Prasit Boondoungprasert said.
“Under the U Farm brand, Cheeva Pork is high quality meat that contains a high volume of good fat and Omega 3 for health conscious consumers. It is now available at selected retailers including Central, The Mall, Foodland, Villa and CP Fresh Mart,” Prasit said.
“Next, we will push for export of Cheeva Pork to Hong Kong and Japan, markets where we had previously successfully penetrated with U Farm’s Benja chicken meat and processed pork,” he said.
According to Prasit, pigs for Cheeva Pork will be raised without the use of biochemicals or growth hormones in group pens that allow the animals to move around freely while the facility is air conditioned by evaporators. The pigs will not receive any vaccine for at least a month before going to the slaughterhouse to ensure there is no chemical residue in the meat.
“Cheeva Pork is certified by NSF International, an American product testing, inspection and certification organisation. This brand of pork also received the food innovation award at the ThaiFex-Anuga Asia 2020 trade exhibition last month,” Prasit said.
“The cost of producing Cheeva Pork is roughly 10 per cent higher than ordinary pork, with a capacity of 400-500 pigs per day, which could be expanded when market demand increases,” he added.
CPF executive vice president of the firm’s pig business Somporn Jermpong said the company now has approximately 900,000 breeder pigs in its domestic and foreign farms, making it the world’s third largest breeder pig producer.
“The second place goes to a manufacturer in China, which has a little over 1 million breeder pigs, making it quite possible for us to overtake them soon and grab the title of the world’s 2nd largest breeder pig producer,” he said.
In Thailand, CPF produces around 5 million pigs per year and is the biggest producer in the market of around 18 million swine per year.
“Our production capacity is expanding at 1-2 per cent annually, with most of the pigs being bred for domestic consumption. Exports, in the form of processed pork, are only responsible for a small portion,” Somporn said.
“Due to the African Swine Fever outbreak, China is suffering from a pig-supply shortage and is looking to import pigs from Russia, where we also have farms. So this is a good chance to expand our presence in the Chinese market,” he added.
The Stock Exchange of Thailand (SET) Index rose by 10.13 points, or 0.80 per cent, to 1,273.84 in the morning session on Thursday.
An analyst at Krungsri Securities expected the index to rise to between 1,270 and 1,275 points before falling in response to the news that US President Donald Trump made a u-turn and is moving again to promote economic stimulus measures and inject cash to help the aviation industry and small businesses. Another positive factor is Thailand’s Centre for Economic Situation Administration (CESA) approving measures to stimulate expenses from October 23 to December 31.
However, the analyst warned investors to beware of mass sell-offs of shares by foreigners as this would still pressure the index.
He recommended investors buy the shares of:
> CRC, HMPro, JMart, Com7, KTC, Centel and Mint that will benefit from the CESA’s measures.
> Banpu and Age that are benefiting from a rising coal price in response to strong Chinese demand.
> TU, PlanB, STGT and Com7, whose third-quarter performance is expected to grow.
The SET Index closed at 1,263.71 on Wednesday, up 13.56 points, or 1.08 per cent, while transactions amounted to Bt52.31 billion, with an index high of 1,264.29 points and a low of 1,245.09.
The price of gold dropped by Bt50 per baht weight in morning trade on Thursday, the Gold Traders Association reported.
As of 9.21am, the buying price of a gold bar was Bt27,800 per baht weight and selling price Bt27,900, while gold ornaments cost Bt27,303.16 and Bt28,400, respectively.
At close on Wednesday, the buying price of a gold bar was Bt27,850 per baht weight and selling price Bt27,950, while gold ornaments cost Bt27,348.64 and Bt28,450, respectively.
The spot gold price moved to US$1,887 (Bt58,971) per ounce on Thursday morning after the price dropped by $18 to $1,890.80 per ounce at close on Wednesday due to uncertainty over the rollout of US economic stimulus measures after US President Donald Trump first called off negotiations until the end of the presidential election but then decided to promote the stimulus bill again.
The Hong Kong gold price dropped by HK$60, opening at $17,440 (Bt70,320) per tael in the morning, the Chinese Gold and Silver Exchange Society reported.
By Syndication Washington Post, Bloomberg · Vildana Hajric, Claire Ballentine · BUSINESS, US-GLOBAL-MARKETS Stocks climbed to a more-than-one-month high on renewed optimism that U.S. lawmakers could still reach an agreement on additional stimulus. Treasuries and the dollar fell.
The S&P 500 rose as much as 1.9% after a barrage of overnight tweets from President Donald Trump advocating a piecemeal approach. Trump sent stocks tumbling late Tuesday by ending talks with Democrats. House Speaker Nancy Pelosi, D-Calif., signaled openness to a standalone airline relief bill in a conversation with Treasury Secretary Steven Mnuchin on Wednesday.
“The seesaw we’ve seen since yesterday’s plunge is just case and point for the volatility we may encounter as we close in on the election,” said Chris Larkin, managing director of trading and investment product at E-Trade Financial. “That said, with President Trump’s call for aid to airlines, an obviously hard-hit area of the market, traders may be eyeing bullish opportunities.”
Some investors who’ve watched Democratic challenger Joe Biden’s lead in the polls swell in recent days are now speculating that a victory by him would bring an increase of federal spending to boost the economy. Biden leads among likely voters Florida, Iowa and Pennsylvania, Quinnipiac University polls found. Tech stocks also mostly rose, even after a House panel’s proposal late Tuesday for stricter antitrust rules to curb the power of Amazon, Apple, Facebook and Google. The four tech giants account for more than 15% of the S&P 500. Eli Lilly & Co. gained after advances on its covid-19 antibody drug.
“People are now talking again about this blue wave,” or election sweep by Democrats in Congress and the presidency, said Marc Odo, client portfolio manager at Swan Global Investments. “The one thing we do need is a very clear cut result coming out of this election.”
Minutes of the Federal Open Market Committee’s Sept. 15-16 meeting released Wednesday showed some U.S. central bankers sought further debate on the future of the Federal Reserve’s asset purchase program when they met last month, signaling they’d be open to altering or increasing bond buying.
With Trump now out of the hospital, investors continue to monitor the virus’s impact on economic recoveries around the world. Signs are mounting that the virus is returning to the New York area, with infection rates reaching three-month highs.
“There is going to be heightened volatility,” said Bryce Doty, senior portfolio manager at Sit Investment Associates. “You have an extraordinary amount of uncertainty between timing of vaccine, when will this current uptick in cases top out.”
Oil fell after U.S. government data showed crude stockpiles increased and gold advanced.
The European Commission, meanwhile, is close to a deal to procure more of the coronavirus treatment remdesivir from Gilead Sciences.
Chris Humphrey, executive director of the council 
DITN director-general Auramon Supthaweethum 
