The Stock Exchange of Thailand (SET) Index closed at 1,308.67 today (August 19), down 21.44 points or 1.61 per cent, while total transactions tallied at Bt57.283 billion with an index high of 1,332.79 and a low of 1,301.97.
During the morning session, a stock analyst at Krungsri Securities said he expected the index to fluctuate between 1,320 and 1,340 points due to a lack of positive investment sentiment.
“Besides, uncertainty in relation to US-China tensions after Washington announced further restrictions on the Chinese phone brand Huawei, and a delay in the rolling out of the $1-trillion economic stimulus in the US will pressure the index,” he said.
The top 10 stocks with the highest trade value today were STGT, CPALL, PTT, MINT, KBANK, AOT, BDMS, ADVANC, SCB and KCE.
As of 4.30pm, the price of crude oil fell by US$0.28 or 0.65 per cent to $42.61 per barrel, while gold fell by $10.30 or 0.51 per cent, to $2,002.80 per ounce.
Other Asian indices were mixed:
Japan’s Nikkei Index closed at 23,110.61, up 59.53 points or 0.26 per cent.
China’s Shanghai SE Composite Index closed at 3,408.13, down 42.96 points or 1.24 per cent, while Shenzhen SE Component Index closed at 13,480.85, down 287.31 points or 2.09 per cent.
Hong Kong’s Hang Seng Index closed at 25,178.91, down 188.47 points or 0.74 per cent.
South Korea’s KOSPI Index closed at 2,360.54, up 12.30 points or 0.52 per cent.
Taiwan’s TAIEX Index closed at 12,778.64, down 93.50 points or 0.73 per cent.
The bank index rose sharply yesterday (August 18) on hopes that the Bank of Thailand (BOT) will allow banks to pay dividends if October stress test shows their capital is above the minimum requirement of 12 per cent.
The Stock Exchange of Thailand (SET) Index closed at 1,330.11 yesterday, up 9.20 points, or 0.70 per cent, while the bank index rose by 4.09 points, or 1.49 per cent, to 279.43.
Tisco Financial Group’s share price rose by Bt1.75, or 2.62 per cent, to Bt68.50 per share, with transactions totalling Bt766.19 million.
Bangkok Bank’s price increased by Bt2, or 1.90 per cent, to Bt107.00 per share, with transactions amounting to Bt541.19 million.
Kasikorn Bank rose by Bt1.50, or 1.71 per cent, to Bt89.25 per share, with transactions totalling Bt1.71 billion.
Siam Commercial Bank increased by Bt1, or 1.38 per cent, to Bt73.25 per share, with transactions amounting to Bt771.51 million.
Krungthai Bank (KTB) rose by Bt0.10, or 1.02 per cent, to Bt9.90 per share. Transactions totalled Bt208.64 million.
TMB Bank was up by Bt0.01, or 1.03 per cent, to Bt0.98 per share, with transactions amounting to Bt190.75 million.
Kiatnakin Bank (KKP) rose by Bt0.75, or 1.89 per cent, to Bt40.50 per share. Transactions totalled Bt122.16 million.
According to a KTB Securities (KTBST) analysis, banks will pay dividends this year at the lowest payout ratio as their capital was currently 17-22 per cent.
“Comparing banks’ dividend yield based on the lowest dividend payout ratio, small banks have a dividend yield that is more than large banks,” the analysis said. “KKP and Tisco have a dividend yield at 6 per cent and 5 per cent, respectively, while KTB is the only large bank that has the highest dividend yield at 5 per cent.”
KTBST weighted investment in bank shares as same as the market, advising investors to buy BBL at a target price of Bt120 per share as this bank has the lowest risks from setting up allowances for doubtful debts and the highest coverage ratio at 171 per cent to deal with risks in the future.
According to a Capital Nomura Securities’ analysis, the average commercial bank’s capital in June was 19.2 per cent, higher than BOT’s minimum requirement of 12 per cent despite the Covid-19 fallout.
“Considering each bank’s capital at the end of the first quarter this year, KKP and SCB have the lowest at 17.2 per cent, while Tisco has the highest at 20.7 per cent,” the analysis said.
“Banks’ capital is currently strong, especially large banks that are able to handle losses from Bt72 billion to Bt130 billion, so they will be able to pay dividend,” it added.
However, the securities company still weighted investment in bank shares as same as the market, advising investors to buy BBL and Tisco at a target price of Bt120 and Bt80 per share, respectively.
Youpik expands network by partnering up with auto dealer
Aug 18. 2020
By The Nation
Youpik, an e-commerce platform, is expanding its network by partnering with V Group Cars to help Thai consumers with social-media savvy to cash in by promoting and sharing information about the cars they like.
This is the first time for Youpik to collaborate with a partner in the automotive industry, but is in line with new trends as more brands and products shift their focus to online channels.
Pitchanun Wittayanont, a co-founder of Youpik, said: “Youpik is committed to building a fun and unique platform in the Thai market. We believe in the power of sharing on social media. Since our launch, Youpik has been expanding its partnership with a variety of businesses, so we can offer a variety of products to our customers.”
Buyers on Youpik application get a chance to receive cashback on every item purchased, plus commission when friends purchase items using links shared by “Youpikkers”.
PTT forges ahead with 2020 spending plan under new Energy minister
CorporateAug 18. 2020PTT president and CEO Auttapol Rerkpiboon
By The Nation
PTT will continue to its planned spending on projects this year, in line with new Energy Minister Supattanapong Punmeechaow’s policy that the national oil and gas conglomerate speed up investment to boost the economy and create jobs.
PTT president and CEO Auttapol Rerkpiboon said the state enterprise has already spent half of this year’s investment budget of Bt53.9 billion. The company also plans to recruit more workers for construction projects and on programmes to help society.
This year PTT is focused more on the liquefied natural gas (LNG) business. It plans to import up to 11 shipments of LNG this year via the spot market, of which seven shipments totalling 500,000 tonnes have already been imported.
Whether PTT would import all 11 shipments depended on domestic demand and the LNG price trend, said its president.
The company is also focused on selling LNG in overseas markets. It has already secured long-term LNG sale purchase contracts for 720,000 tonnes this year, of which 260,000 tonnes have been delivered to customers.
PTT ’s downstream businesses are creating synergy among themselves to foster competitiveness and boost investment efficiency in the petrochemical and refinery areas.
The company has no need to issue additional bonds to raise funds as it has around Bt100 billion cash in hand, said Auttapol.
By The Washington Post · David J. Lynch · BUSINESS, US-GLOBAL-MARKETS VBI Vaccines has lost money in each of the four years it has been listed on the Nasdaq stock exchange and last month told investors not to expect that to change anytime soon. Yet since its mid-March low amid the pandemic-related shutdown, the company’s share price has rocketed by more than 400%.
The jump comes even as VBI’s candidate for a vaccine for the coronavirus remains in the earliest stage of development, trailing well behind alternatives from bigger and better-known rivals that already are being tested on humans.
At first glance, VBI – which was almost dropped from the Nasdaq last year after its share price languished below $1 – looks like a perfect example of how the stock market has become detached from the reality of a bruised and battered U.S. economy. Stock prices briefly touched a fresh all-time high on Tuesday, despite a double-digit unemployment rate and the collapse in recent months of perhaps 100,000 small businesses.
The Standard & Poor’s 500-stock index – the best-known broad market gauge – has risen more than 50% since March and is on the verge of completing the fastest rebound from a bear market in history. President Trump has repeatedly celebrated the market’s performance, saying it represented an endorsement of his agenda and warning that a Democratic victory in November would cause stocks to “go down like a rock.”
Prominent lawmakers, including Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y., cite the apparent disconnect between financial markets and the real economy as evidence of a malfunctioning capitalist system.
A closer look at both VBI and the broader stock market, however, suggests that Wall Street is neither a proxy for the real economy nor a financial casino entirely divorced from the lives of everyday Americans.
“The idea that the stock market is the economy and the economy is the stock market – the correlation between the two is tenuous at best,” said Barry Ritholtz, whose N.Y.-based firm manages $1.5 billion in assets.
There is more to the tiny biotech company than red ink and long shot projects. And though soaring markets may seem at odds with the ailing economy, their inner workings show that investors are distinguishing between industries that have been crushed by the pandemic and those that are poised to prosper.
As Americans in recent months traded traveling for digital connections, for example, the value of United Airlines fell by roughly one-half while shares of Nvidia, a maker of computer chips for gaming devices and data centers, almost doubled.
“There’s always a difference between the market and the economy,” said Howard Silverblatt, senior index analyst for S&P Dow Jones Indices in New York. “We’re up because we’re looking past 2020 and looking at 2021.”
In VBI’s case, both the company and independent analysts say recent achievements support its share price rise. The Cambridge, Mass.-based company earlier this month received $56 million in funding from the Canadian government, which is backing its research into a vaccine for covid-19 and two other coronaviruses known as SARS and MERS. The cash infusion came a few months after VBI raised $57 million in an April stock offering.
While a coronavirus product remains far off, the company is moving closer to approval from American and European regulators to sell its hepatitis B vaccine, which already is on the market in Israel. VBI’s vaccine to treat glioblastoma, the virulent form of brain cancer that killed Sens. John McCain and Ted Kennedy, demonstrated in clinical studies the ability to shrink tumors by more than 50%.
“Since March 2020 there have been a number of achievements which have substantially changed the fundamentals of the company,” Jeff Baxter, VBI’s chief executive, said via email.
VBI’s stock price now hovers near $4, up from less than $1 in March.
VBI’s claim to fame is a proprietary vaccine platform known as an “enveloped virus-like particle” designed to mimic a virus to trigger the body’s immune response. The innovative design has attracted institutional shareholders including Perceptive Advisors, a prominent health-care hedge fund.
VBI also boasts an experienced management team, including Baxter, a veteran pharmaceutical executive who previously worked at GlaxoSmithKline. The company’s chief scientific officer, David Anderson, is a former professor at Harvard Medical School.
“People may have looked at them for the first time because of the covid news flow and, once they looked under the hood thought ‘hey, this is interesting,’ ” said Leland Gershell, senior analyst covering biopharmaceuticals at Oppenheimer & Co. in New York. “It’s now a stock on people’s radar.”
Whatever VBI’s fortunes, Wall Street is the wrong place to look for a real-time report card on the $19 trillion U.S. economy.
The stock market only captures the fortunes of publicly traded companies, those that are owned by individual and institutional shareholders. Most of the businesses that Americans patronize on a daily basis – local restaurants, dry cleaners, hardware stores – are not part of the major market indexes: the Dow Jones industrial average, the S&P 500 and the tech-heavy Nasdaq.
All of the companies in the S&P 500 combined, for example, employ less than one-fifth of the nation’s 140 million workers. Small businesses, which have been devastated by the pandemic, account for almost one-half of private sector employment, according to the Small Business Administration.
The S&P 500’s ascent – it is within a few points of closing at a record high – also doesn’t mean that the whole stock market is rising. Since the index gives greater weight to companies with the largest market value, just 10 companies account for 27% of its value, according to Silverblatt.
In practice, the index is being driven higher by a relative handful of prominent technology companies, including Apple, Alphabet, Microsoft, Amazon and Facebook.
“The index isn’t the real world,” said Ritholtz.
Despite talk of a market and economy that are at odds, investors are not indiscriminately lifting all stocks. Industries that have been badly damaged by the pandemic – such as airlines and hotels – are doing poorly while those that have retooled for socially distanced operations are thriving.
Through Aug. 17, the information technology and consumer discretionary sectors were both up more than 20% this year, outperforming the broader market. Providers of videoconferencing software, cloud computing platforms, communications services as well as online retailers are prospering from the shift of tens of millions of Americans to remote work.
Energy companies, down more than one-third, and financial institutions were lagging.
Even within sectors, investors are flocking to companies that have adapted and shunning those that haven’t. Target’s stock is up almost 10% this year, reflecting its ability to stay open throughout the pandemic, while shares of Kohl’s, which closed all of its 1,159 stores for several weeks beginning March 20, have lost roughly half their value.
The market also is benefiting from massive monetary stimulus by the Federal Reserve, which has added $2.8 trillion to its balance sheet during the pandemic. The money supply has increased by 22% over the past year, the fastest rate in history and twice the pace of the inflationary 1970s, according to Richard Bernstein, an investment manager in New York.
“I don’t think people understand this money supply growth is so far off the charts, we don’t have anything to compare it to,” he said.
That’s precisely what worries some analysts. The International Monetary Fund warned in June that the gap between asset prices and fundamentals was “near historic highs,” leaving the market exposed to a calamitous sell-off that could lengthen the recession.
Stock prices relative to company sales also are now higher than just before the tech bubble popped in 2000, according to Peter Boockvar, chief investment adviser for the Bleakley Advisory Group.
“This is a highly expensive market . . . egged on by the Fed. It will last until it doesn’t,” he said.
To many Americans, Wall Street’s rapid recovery – even as 28 million Americans remain jobless – is a sign of something profoundly amiss in the economic system. The gains from rising stock prices go disproportionately to the well-off: 84% of American households with an annual income of $100,000 or greater own stocks vs. just 22% of those making $40,000 or less, according to a recent Gallup survey.
Sanders, the avowed socialist and two-time Democratic presidential candidate, earlier this month criticized Fed actions that backstopped financial markets, saying they aided billionaires at the expense of the working class.
“We are currently witnessing what is likely the greatest transfer of wealth from the middle class and the poor to the very rich in the modern history of this country,” he said on the Senate floor.
Likewise, Senate Minority Leader Chuck Schumer, D-N.Y., attacked the president’s proposal for a cut in the capital gains tax, saying it would only benefit “wealthy investors.” Only one-quarter of all stocks are held in taxable accounts, according to Steve Rosenthal of the nonpartisan Tax Policy Center.
The president, who often cites rising stock prices as validation of his performance – and dismisses them them when they fall – has latched onto Wall Street’s recent gains.
“The stock market’s rebound signals a ‘V’-shaped recovery, stronger than our competitors anywhere in the world,” Trump said at the White House on Wednesday. “We had to turn off the economy, and now we’re turning it back on, and that’s beyond a ‘V’ shape. This is going to be very strong; it’s called a “strong ‘V.’ “
But real-time data on spending and employment instead show that the economic recovery has plateaued in recent weeks as Congress and the administration failed to reach a deal on new emergency funding.
The expiration of the extra $600 in weekly unemployment benefits will provide a new test for the economy and the stock market, which also faces the danger of a renewed surge of coronavirus infections this fall as well as the presidential election.
At VBI, meanwhile, executives are looking ahead to what they hope will be major accomplishments. Though they were late to the coronavirus vaccine race, the recipe they are developing is being designed to cope with future mutations of the virus, a potential competitive advantage.
Baxter, the CEO, also anticipates filing before year end the necessary paperwork with regulators in the United States, Europe and Canada for authorization to sell VBI’s hepatitis B vaccine. There is a “very, very high probability of approval” in 2021 with sales the following year, he told an investment conference in June.
The Stock Exchange of Thailand (SET) Index fell by 1.39 points, or 0.10 per cent, to 1,328.72 in the morning session today (August 19).
A stock analyst at Krungsri Securities expected the index to fluctuate between 1,320 and 1,340 points due to a lack of positive investment sentiment.
“Besides, uncertainty following US-China tensions after the US announced further restrictions on China’s Huawei, and a delay in rolling out a new US economic stimulus package would pressure the index,” he said.
“We advise investors to follow a joint Opec+ meeting today,” he added.
He recommended that investors buy:
> Stocks that benefit from the rising crude oil price, such as PTTEP, PTTGC, Top and IVL.
> Stocks that benefit from lockdown easing and progress in the development of a Covid-19 vaccine, such as CRC, CPN, HMPro, Global, Com7, DoHome, AOT, Mint, Centel and ERW.
The SET Index closed at 1,330.11 yesterday, up 9.20 points, or 0.70 per cent. Total transactions amounted to Bt50.85 billion, with an index high of 1,330.40 and a low of 1,321.07.
The price of gold dropped by Bt100 per baht weight in morning trade today (August 19), the Gold Traders Association reported.
As of 9.32am, the buying price of a gold bar was Bt29,300 per baht weight and selling price Bt29,400, while gold ornaments cost Bt28,773.68 and Bt29,900, respectively.
At close yesterday, the buying price of a gold bar was Bt29,400 per baht weight and selling price Bt29,500, while gold ornaments cost Bt28,864.64 and Bt30,000, respectively.
The Comex (Commodity Exchange) gold price to be delivered in December rose by US$14.4, or 0.72 per cent, to $2,013.1 (Bt62,798.07) per ounce at yesterday’s close.
The gold price rose more than $2,000 per ounce again from a decline in the dollar and US bond yields. Besides, uncertainty following US-China tensions boosted demand for the precious metal as a safe-haven asset.
By Syndication Washington Post, Bloomberg · No Author · BUSINESS
China, the world’s biggest oil importer, has ramped up purchases of American crude in the lead-up to a highly anticipated review of the trade deal between the two economic powerhouses.
As much as 14 million barrels — or seven superclass tankers full — of U.S. oil will be loaded next month for delivery to China, according to estimates by Vortexa Ltd. based on provisional tanker bookings. If all those shipments make the trip that will be more than double the volumes set for August.
The surge in bookings comes before a review of the phase-one trade deal, under which China pledged to boost purchases of U.S. energy products. The talks, which were originally planned for last weekend, have been delayed indefinitely, however, amid deteriorating relations between the two countries.
Chinese imports of U.S. goods in the first six months of the year only reached about 23% of the total target under the trade agreement for 2020, Bloomberg calculations based on data from General Administration of Customs show. The nation’s refineries have been cranking up run rates as the economy emerges from a virus-induced slump, which may be another reason for the boost in buying.
“The rise in U.S. crude purchases is likely politically driven,” said Serena Huang, a senior analyst at Vortexa, a market analytics firm. “China is still sitting on large stockpiles of oil, and current U.S. crude prices are not much more favorable than their Middle East competitors.”
Oil-refining heavyweights PetroChina Co. and Sinopec chartered more than 40% of the China-bound supertankers set for September loading as of Aug. 17, Vortexa’s data show. Grades such as WTI Midland and Mars were among the types of American oil purchased by China, but they weren’t always cheaper than alternative feedstock from other regions, according to traders.
A Beijing-based Sinopec official at the company’s press office and an official at China National Petroleum Corp., parent company of PetroChina, both declined to comment on the matter.
China bought an average about 568,500 tons, or 4.2 million barrels, of U.S. oil a month in May and June, General Administration of China Customs data show. The country imported no American oil for the previous five months as relations between the two countries deteriorated amid the coronavirus.
China’s energy demand has rebounded in-line with an uptick in its economy, said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit. “These new orders for U.S. crude will help to improve China’s overall progress toward the U.S.-China phase one trade deal targets,” he said.
By The Washington Post · Hamza Shaban, David J. Lynch · BUSINESS, US-GLOBAL-MARKETS
Defying the coronavirus pandemic’s mounting human and economic toll, stocks closed Tuesday at a record high, bringing an end to the shortest bear market in U.S. history.
After notching three consecutive weeks of gains, the Standard & Poor’s 500 index closed at 3,389, gaining 0.2% on the day. The finish capped a remarkable comeback from the March plunge that slashed 34% off the previous record, set Feb. 19, as the pandemic tightened its grip on the country.
Investors Tuesday brushed aside worries about the nation’s continuing struggle to contain the pandemic, focusing instead on signs of strength in the housing and retail sectors. Housing starts in July rose 22.6% to a seasonally adjusted annual rate of nearly 1.5 million, the Commerce Department said. Permits also rose sharply for both single- and multifamily dwellings.
“One of the economy’s most important leading indicators is telling us that not only is the pandemic recession over, the economic outlook is actually growing brighter by the day,” Chris Rupkey, chief financial economist for MUFG Union Bank in New York, wrote in a note to clients.
Walmart, one of the nation’s largest retailers, reported same-store sales rose 9.3% in the quarter that ended July 31. The company said its online business rose by 97%.
The pandemic, meanwhile, continues to stalk the $19 trillion U.S. economy. More than 5.4 million Americans have been infected by the coronavirus, and more than 171,000 have lost their lives, according to Johns Hopkins University.
As inprevious stock market rallies, the financial rewards of the latest surge have been highly uneven. Savvy investors have been showered with profits while millions of people without money to invest or even pay rent in the months ahead, have been left out. Only about half of Americans own stocks, mainly through retirement accounts, according to the Federal Reserve.
“At the end of the day, the record is just a number,” said Wayne Wicker, chief investment officer at Vantagepoint Investment Advisers. But the rise in the stock market suggests that investors see a recovery on the horizon. “Although today’s economy remains in a miserable state in an absolute sense,” he said, “markets care about better or worse, not good or bad,” and the leading economic indicators continue to improve.
The S&P 500’s milestone came one day after the tech-heavy Nasdaq posted its own record, drawing kudos on Twitter from President Donald Trump. Before trading began Tuesday, Trump touted signs of economic recovery and took credit for the market upswing.
“Jobs are flowing, NASDAQ is already at a record high, the rest to follow. Sit back & watch!” Trump tweeted.
For Main Street, moves in the market often presage moves in the economy, said Kristina Hooper, Invesco’s Chief global market strategist. “So a strong rebound for stocks could indicate that the economy will also experience a strong rebound,” she said.
The Dow Jones industrial average, which remains about 5% below its February peak, gave up 67 points or 0.2%. And the tech-heavy Nasdaq increased by 81 points, or 0.7%.
Stock prices cratered in March, following the initial coronavirus cases and subsequent stay-at-home mandates designed to slow infections. Since then, Wall Street has mounted a dramatic comeback. Several companies, such as Tesla, Wayfair and Masco, have set their own share-price records. Perhaps most prominently, investors have flocked to the tech giants, which wield massive cash reserves and whose products are seen as increasingly valuable in the shift to working-from-home and remote learning.
In 2018, Apple generated a stream of headlines for becoming the first company with a market value of $1 trillion. Two years later, the maker of the iPhone is on the cusp of doubling that figure. Microsoft and Amazon are not far behind, with valuations near $1.6 trillion.
“Notably, the rally has largely been driven by the continued surge in mega-cap tech stocks, which have carried the S&P 500 to new record highs through the pandemic as investors wager on their ability to deliver strong growth unhindered by the broader economic shutdowns,” said Nicole Tanenbaum of Chequers Financial Management.
But the stock market rally also coincides with dire economic data, double-digit unemployment rates, and the relentless virus.
“Certainly the last time we hit this number the world looked a lot different than it does today,” said Wicker. “Despite the fact that we are faced with new challenges it seems to indicate that investors are pretty positive about where we are going in the future,” he said.
The turnaround concludes the shortest bear market in history. A bear market is generally understood to refer to a period when stocks fall at least 20% from the previous peak. And a bull market is defined as 20% rise from the previous low.
Now that the S&P 500 set a new peak, it means the bear market lasted from Feb. 19 to March 23, when stocks bottomed and inaugurated a fresh bull run.
“Even though financial markets reflect a lot of volatility this year, the long term story is they are resilient and have an upward bias over time,” said Wicker.
The new record arrived as the Democratic Party kicked off its national convention, as the presumptive nominee Joe Biden holds a double-digit lead over President trump, according to a Washington Post-ABC News poll. Congressional Democrats have pushed for a more aggressive economic response to the coronavirus crisis and have characterized Republican plans as inadequate for a public health emergency. Earlier this month, President Trump attempted to bypass Congress by signing executive actions to make dramatic changes to tax and spending policy, in an effort to expand unemployment aid for jobless Americans.
Investors have been buoyed by the dramatic actions of the Federal Reserve and Congress to keep the economy from sliding further. “As it did during the global financial crisis, the Fed provided the rocket fuel for stocks’ gains, despite high unemployment and high covid-19 infections and deaths,” said Hooper, explaining how the stock market has “decoupled” from the broader economy.
Shareholders are also anticipating another round of emergency government relief. But as both parties prepare to deliver their political sales pitches to the American public, Congress and the White have yet to agree on the next stage of coronavirus aid.
The number of unemployed youth in Thailand will double this year, while 220 million young workers in Asia will be vulnerable to labour market disruption caused by Covid-19, the Asian Development Bank said.
The Covid-19 pandemic has triggered a massive disruption of labour markets, having a disproportionate impact on the employment of young people, said ADB report titled “Tackling the Covid-19 youth employment crisis in Asia and the Pacific”.
With lockdowns and travel restrictions in place, demand has slumped and many businesses have been forced to close or cut back on operations, having a serious impact on workers. Nearly 220 million people aged 15 to 24 in the region are particularly vulnerable given that they hold insecure, informal, part-time jobs in sectors that have especially been hit hard.
Given their relative lack of experience, young people face higher rates of unemployment than people above the age of 25 regardless of the business cycle. Young people are also more likely than adults to work in less secure, lower-wage jobs usually with limited legal rights, social protection and representation.
The Covid-19 crisis brings the vulnerabilities of youth labour markets to the fore but with the further complication of disrupted education and training pathways. Young people will be hit harder than adults in the immediate crisis and also bear higher longer-term economic and social costs. Pre-existing vulnerabilities of youth in the labour market will be exacerbated, with negative consequences for intergenerational poverty and inequality.
The crisis negatively impacts the prospects for youth through three channels: job disruptions from reduced working hours and layoffs; disruption in education and training as they try to complete studies; and difficulties transitioning from school to work and moving between jobs.
The crisis will affect young people differently depending on their situation in the labour market. The scale of the impact will depend on the length of the crisis, the choices governments make for socioeconomic recovery and the capacity of institutions to implement effective measures.
Youth in the Asia-Pacific region faced a challenging labour market situation before the crisis. The regional youth unemployment rate was 13.8 per cent in 2019 compared with 3 per cent for adults and the global youth unemployment rate was 13.6 per cent. More than 160 million youth (24 per cent of the population) were not in employment, education or training in 2019, and the region’s rates have been rising primarily as a result of the exclusion of young women who face an excessive burden of unpaid household and care work.
Four in five young workers in the region were engaged in informal employment – a higher share than among adults – and one in four young workers was living in conditions of extreme or moderate poverty.
At the onset of the crisis, nearly half of young workers in the region were employed in the four sectors destined to be hardest hit by the recession. These sectors – wholesale and retail trade and repair, manufacturing, rental and business services, and accommodation and food services – employed nearly half of all young people (more than 100 million) working in Asia-Pacific at the onset of the crisis. Young women are overrepresented in three of the four highly impacted sectors, particularly accommodation and food services.
The vulnerability of youth in labour markets was already visible in the first half of this year as the Covid-19 crisis unfolded. Youth unemployment rates jumped in the first quarter of 2020 from the last quarter of 2019 in all economies for which data is available.
Compared with the first quarter of 2019, youth unemployment rate increased in six of nine economies that have quarterly data available: Australia, Indonesia, Japan, Malaysia, and Vietnam, as well as in Hong Kong which showed the largest increase of 3 percentage points.
All economies that experienced increases showed sharper jumps in youth rates than in adult rates.
The reduction in working hours is unprecedented. Working hours across the region dropped 7.1 per cent in the first quarter of 2020 from the fourth quarter 2019. The loss of working hours rose to 13.5 per cent in the second quarter of 2020. While the regional figure is not disaggregated by age, evidence from two countries – South Korea and Thailand – showed young workers experienced a significantly larger loss of hours than adults.
Job loss among youth will continue throughout 2020 and could result in youth unemployment rates doubling. Between 10 and 15 million youth jobs (full-time equivalent) may be lost across 13 Asia-Pacific countries 2020. These estimates are based on the expected fall in output and consequent decrease in labour demand for the year relative to a non-Covid-19 scenario. The estimates include large countries, such as India and Indonesia, as well as small ones such as Fiji and Nepal.
The projected rise in youth unemployment rates varies considerably across the 13 countries, but increases are expected in all countries. In Cambodia, Fiji, Nepal, Pakistan, the Philippines and Thailand, youth unemployment rates are expected to at least double the 2019 estimates even if Covid-19 is contained.
Policy measures are urgently required to tackle the youth employment crisis in Asia-Pacific and recover lost ground on inclusive growth and sustainable development. Experience from past crises suggests that young people who try to enter the working world during a slowdown face long-term impacts on employment pathways, wages and productivity.
To minimise future “scarring” of the current generation, governments are called upon to urgently adopt and implement large-scale and targeted measures to stimulate the economy and youth employment, balancing the inclusion of youth in wider labour market and economic recovery measures with youth-targeted interventions to maximise efficiency in the allocation of resources.
Support measures, many of which should be directed at enterprises in the hardest-hit sectors where youth job losses are concentrated, to be prioritised include:
• Providing youth-targeted wage subsidies and public employment programmes;
• Expanding job information and employment services targeted to young jobseekers;
• Supporting apprenticeship programmes and focusing on demand-driven skills development;
• Increasing funds for upskilling and reskilling, especially in growth sectors;
• Investing in digital inclusion for equitable access to education, training and entrepreneurship; and
• Supporting young entrepreneurs through access to capital combined with non-financial services.
Three cross-cutting considerations should underpin an effective policy response: reaching the most vulnerable youth including the poorest and marginalised young women, meaningfully engaging young people in policy development and social dialogue, and facilitating disaggregation of crisis impact data by age and enhanced youth labour market information.
PTT president and CEO Auttapol Rerkpiboon
David J. Lynch
