The Eastern Economic Corridor (EEC) Office of Thailand has recently called on Thai embassies in 30 countries to approach foreign firms to invest in the EEC, the office’s secretary-general Kanit Sangsubhan said.
He said the EEC’s main targets are firms in technology, logistics, medical and health sectors, adding that in France, EEC has been eyeing aviation firms, while in the US it is wooing logistic companies.
He added that the office will propose to the Cabinet this month a plan to develop a 2,000 to 3,000-rai smart city in the region to accommodate the million or so people expected to migrate to the EEC in the next 20 years.
Uncertainty over weak profit forecasts, political issues, and the global economic freeze are hammering the Stock Exchange of Thailand (SET) Index, said an expert at Tisco Securities.
Senior Tisco Securities strategist Apichat Poobunjirdkul said the Thai stock market is currently facing a correction and is likely to rise at lower rate than global indices for a while.
He said the market is currently under pressure from three factors:
1. Weak market profit forecasts: According to Bloomberg Consensus, second-quarter profits of 133 securities accounting for 76 per cent of total market capitalisation are expected to total Bt90.1 billion, down 49 per cent year on year, but up 17 per cent quarter on quarter.
“However, listed companies’ second-quarter performances showed total net profit of Bt41.2 billion, down 14 per cent from the market expectation due to banks’ move to set up allowances for doubtful debts to deal with future economic risks,” Apichat said.
“Also, we expect other stock analysts to cut their profit forecasts for listed companies further because profit in the first half of this year accounts for 35 per cent of the full-year forecast.”
2. Political issues: US-China tensions are likely to escalate as Donald Trump ups accusations against Beijing to increase his credibility with voters ahead of the US presidential election on November 3, while the political outlook in Thailand remains gloomy.
“We expect the [Thai] Cabinet reshuffle to occur this month as this will help relieve pressure among government coalition parties and enable government and civil servants to work as normal,” Apichat said.
“We advise investors to monitor the government’s work after the Cabinet reshuffle, debate on the 2021 budget, and political protests after the state of emergency expires.”
3. The global economic freeze: The world economy will weaken because economic stimulus measures are set to expire soon.
“Meanwhile, moves to impose additional measures will be delayed or insufficient to cope with the Covid-19 fallout, forcing countries to impose lockdown measures again,” Apichat predicted.
He advised investors to buy when the index falls below 1,300, focusing on stocks that show good performance and better profit forecasts, and pay interim dividends,.
“Recommended stocks in August were AP, CPF, DCC, PRM, SMPC, and TVO,” he added.
“The index’s support level this month is between 1,300 and 1,305, while the resistance level is 1,350.”
ADB loan of Bt48bn will not strain public debt, says govt
EconAug 05. 2020Credit : Public Debt Management Office, data as of June 30.
By The Nation
The Cabinet on Tuesday (August 4) approved the Finance Ministry’s proposal to borrow US$1.5 billion (Bt48 billion) from the Asian Development Bank. The loan will be used to finance Covid-19 recovery projects, said Rachada Dhnadirek, deputy government spokeswoman.
The new loan would not raise public debt in a foreign currency too high, she assured.
The ADB loanwill raise foreign currency debt to 2.46 per cent of total public debt, well within the prudent limit set at 10 per cent, she said.
The new $1.5 billion loan will be based on an exchange rate of Bt32 per dollar, equivalent to Bt48 billion. The interest rate charge is floated and referenced the six month average LIBOR rate plus 0.5 per cent risk premium. The government must pay interest every six months, or on February 15 and August 15. The ADB will also collect an annual fee of 0.15 per cent.
Regarding principal repayment, the first $500 million must be paid within 10 years, with a three-year grace period. The remaining $1 billion loan is for five years with a three-year grace period.
The first repayment on the $500 million loan is due on August 15, 2023 and the final amount on February 15, 2030.
The first repayment on the 1 billion is due on August 15, 2023 and the last instalment on June 30, 2025.
According to the Public Debt Management Office, as of June 30, Thailand’s public debt stood at Bt7.4 trillion, or 44.76 per cent of GDP. Foreign currency debt was at 1.90 per cent of total public debt – a relatively low level.
The Asian Development Bank (ADB) is loaning Thailand Bt46.7 billion (US$1.5 billion) to combat the impact of Covid-19.
“ADB is committed to providing timely support to Thailand and helping reduce the pandemic’s social and economic impacts on the country,” said ADB president Masatsugu Asakawa. “Our budget support will help fund the government’s relief packages, which aim to better prepare the country’s healthcare system for possible future waves of Covid-19, protect the vulnerable, support small and medium-sized enterprises in industries most affected by the outbreak such as tourism and manufacturing, and provide overall economic stimulus.”
ADB said Thailand remains highly vulnerable to the pandemic due to its deep integration with regional and global economies. Potential surges in Covid-19 cases could overwhelm the Thai health system, warned the bank.
ADB forecast Thailand’s economy to contract by 6.5 per cent in 2020, down from its December 2019 projection of 3 per cent growth. It said that given the country’s strong regional trade, investment and labour links, an economic crisis in Thailand could spill over into neighbouring countries like Cambodia, Laos, Myanmar and Vietnam.
Said Santi Promphat, Thailand’s acting finance minister: “[W]e believe that ADB support to member economies, including Thailand, in response to the Covid-19 pandemic will alleviate social and economic impacts in Thailand and the region.”
The loan agreement is expected to be signed by ADB and Finance Ministry representatives by the end of August in Bangkok.
ADB’s “Covid-19 Active Response and Expenditure Support (CARES) Programme” aims to restore growth and set the stage for targeted ADB private sector operations to support recovery in priority areas such as infrastructure, trade, and supply chain finance. ADB said it will also set up a framework for policy dialogue with the government on crisis response and economic recovery.
The CARES Programme is funded through the Covid-19 pandemic response option (CPRO), established in April as part of ADB’s $20-billion expanded assistance for developing member countries.
Thai government stimulus packages total Bt2.25 trillion for fiscal years 2020 and 2021, the bank noted. That includes about Bt1.2 trillion in cash assistance to 16 million informal workers and 10 million farmer households; supporting the economic and social recovery; and strengthening the healthcare system. SMEs in tourism and other sectors are provided tax incentives, as well as soft loans and debt suspension from the Bank of Thailand. The government has also drawn up a post-Covid-19 economic recovery plan. ADB estimates the stimulus packages could increase economic output by Bt1.6 trillion, or 10.1 per cent of gross domestic product.
ADB is preparing a new country partnership strategy with Thailand, which will support the economic recovery with a pipeline of green and climate-resilient infrastructure projects. The strategy will also focus on rebuilding regional cooperation through the Greater Mekong Subregion working groups on tourism, trade, transport, and health.
The Stock Exchange of Thailand (SET) Index rose 9.58 points or 0.72 per cent to close at 1,330.81 today (August 4). The volume of total transactions was Bt55.135 billion with an index high of 1,338.08 and a low of 1,328.13.
In the morning session, a stock analyst at Krungsri Securities said he expected the index to rebound between 1,330 and 1,335 before falling, as economic data from US and Europe showed signs of markets rebounding after the easing of lockdown measures.
“The price of oil dropped after the US and Euro-zone manufacturing purchasing managers index rose to 54.2 and 51.8, respectively,” the analyst said.
“The market also gained positive sentiment after a US pharmaceutical company said it had started the final phase of tests on a Covid-19 antibody.”
However, he said, uncertainty over United States’ $1-trillion economic relieve measures and listed companies’ second-quarter performance will pressure the index.
The top 10 stocks with the highest trade value today were PTT, DELTA, AOT, MINT, CPALL, GULF, STGT, CPF, KBANK, and EA.
As of 4.30pm, the price of crude oil dropped by $0.52 or 1.27 per cent to $40.49 per barrel, while gold rose by $5.60 or 0.28 per cent, to $1,991.90 per ounce.
Other Asian indices were mixed:
Japan’s Nikkei Index closed at 22,573.66, up 378.28 points, or 1.70 per cent.
China’s Shanghai SE Composite Index closed at 3,371.69, up 3.72 points, or 0.11 per cent, while Shenzhen SE Component Index closed at 13,860.46, down 104.10 points, or 0.75 per cent.
Hong Kong’s Hang Seng Index closed at 24,946.63, up 488.50 points, or 2.00 per cent.
South Korea’s KOSPI Index closed at 2,279.97, up 28.93 points, or 1.29 per cent.
Taiwan’s TAIEX Index closed at 12,709.92, up 196.89 points, or 1.57 per cent.
Almost 80 per cent of chief executive officers of large organisations in Thailand hope the new Cabinet will be able to start working immediately and with a deep understanding of local and foreign economies, according to a Krungthep Turakit newspaper survey of 100 CEOs in various sectors.
The CEOs also expected the new Cabinet to be able to work closely with the private sector.
Most of them wanted to see a strong and professional economic team in the new Cabinet.
Around 45.5 per cent expected the Cabinet reshuffle to improve implementation of economic policies, while 38.4 per cent thought the situation would remain unchanged.
Almost three-quarters (71 per cent) of CEOs wanted the new Cabinet to immediately launched short- and long-term stimulus packages to maintain economic momentum.
Asked about a possible second wave of Covid-19 in Thailand, more than 77.8 per cent said the government should have a plan to deal with a surge via collaboration with the private sector, toughened measures at tourist attractions, shopping malls and restaurants, and speeding up vaccine development.
Almost 50 per cent of CEOs believed the business sector situation would worsen in the last five months of this year if there is no vaccine. More than 50 per cent believed the Thai economy will shrink by 10 per cent this year.
The CEOs were split on whether the state of emergency should remain in place. Forty-nine per cent said it should stay while another 49 per cent said it was not necessary.
Of the total, over 50 per cent said the state of emergency had a slight impact on their businesses, while 14 per cent said it had a major impact.
Of the total CEO respondents, 21.4 per cent were from finance sector, 17.3 per cent from the energy sector, 16.3 per cent from the production sector, 16.3 per cent from the ICT sector, 15.3 per cent from the tourism sector, and the rest from export, property, auto, consumer goods, retail, agriculture and media.
The Thai stock market would face volatility in the remaining five months of this year, asset management experts predicted. They expect the Stock Exchange of Thailand (SET) Index to move between 1,300 and 1,400 at the year-end,
Wiput Uaanant, Krungsri Asset Management’s chief equity investment officer said the Thai stock market in the remaining five months of this year would move in a narrow range compared to the first half of this year.
“The SET index at the year-end is expected to be at 1,400 as we expect the country’s economy and companies’ profits to recover gradually from the lockdown easing and monetary policy,” he said.
“Besides, the low interest rate will also help boost investment in stocks.”
He advised investors to monitor the Covid-19 impact on the economy closely.
“We recommend increasing investment in companies that benefit from the economic recovery, such as the commercial group,” he said.
He added that stocks the company weighted more than the market were food and beverage, and information and communications technology, while stocks that the company weighted less than the market were hotel, restaurant and logistics.
Theeranat Rujimethapass, Tisco Asset Management’s president, said the company expected the index at the year-end to move between 1,300 and 1,350.
“The index would rise slightly as foreign funds may flow into the market because of the low interest rate and high liquidity, while the Thai economy would recover gradually,” he said.
“Therefore, we advise investors to pick up stocks with good fundamentals and that pay high dividends.”
Somchai Amornthum, Krungthai Asset Management’s assistant to the chief executive officer of the Strategic Asset Allocation and Fund Marketing Department, expected the index at the year-end to be at 1,350 as listed companies’ profits are expected to drop by 22 per cent.
“The Thai stock market would face volatility in the remaining five months of this year even though the country’s economy may be better than in the first half of this year,” he said.
“However, the index would rise more than expected if it gains positive sentiment from news on the development of a Covid-19 vaccine.”
He advised investments in stocks that benefit from a low interest rate and show good performance.
The Government Savings Bank (GSB) is now offering a second round of emergency loans for those who have been affected by the Covid-19 crisis. The loan is capped at Bt50,000 per person. Applicants can register online at www.gsb.or.th from Tuesday (August 4) onwards.
To be eligible, candidates must hold a regular job and be able to provide a bank statement for the past three months or the latest salary slip. The loan is offered at a flat interest rate of 0.35 per cent per month for up to three years.
BCPG Pcl, a leader in the renewable energy business in Thailand and the Asia-Pacific region, has signed an agreement with Eternity Power Pcl for the acquisition of 99.99 per cent shares in RPV Energy Co Ltd, an operator of four solar power plants in Thailand, with a total production capacity of 20 megawatts.
The four solar power plants, which have already started commercial operations, consist of a 5MW solar power project in Lopburi province, a 5MW solar power project in Prachin Buri province, and two solar power projects with a total production capacity of 10MW in Kanchanaburi province.
The revenue recognition for all projects is expected to be within this quarter.
“The acquisition is in line with BCPG’s five-year plan, which aims to expand into various types of renewable energy businesses and develop the existing green energy projects to achieve the company’s business performance goal,” BCPG president Bundit Sapianchai said.
By The Washington Post · Ian Duncan, Lori Aratani · NATIONAL, BUSINESS, TRANSPORTATION, US-GLOBAL-MARKETS
WASHINGTON – The Federal Aviation Administration said Monday that it has given preliminary approval to design changes for Boeing’s 737 Max that should prevent a repeat of two crashes that killed more than 300 people in five months.
In a new report and a proposed directive to airlines, the agency said it would require the installation of a software patch that introduces several new safeguards and require that key sensors on the planes be checked before they are flown.
The public will have 45 days to comment on the proposed directive. The FAA must then analyze the feedback and respond to it, so it’s unlikely the Max will be ungrounded before October. But the steps taken by the agency Monday are the clearest sign yet that the jets will soon be ready return to the skies.
“Through a thorough, transparent, and inclusive process, the FAA has preliminarily determined that Boeing’s proposed changes to the 737 MAX design, flightcrew procedures and maintenance procedures effectively mitigate the airplane-related safety issues,” the agency said in a report on its work so far.
In a statement, Boeing said it was continuing to work with the FAA on getting the Max safely back in the air.
“While we still have a lot of work in front of us, this is an important milestone in the certification process,” the company said.
The first Max crash occurred Oct. 29, 2018, when a Lion Air flight crashed into the Java Sea shortly after takeoff, killing all 189 people onboard. Five months later, on March 10, 2019, a Ethiopian Airlines 737 Max bound for Nairobi crashed shortly after takeoff, killing all 157 people onboard.
Investigators say an automated feature on the Max known as the Maneuvering Characteristics Augmentation System, or MCAS, contributed to both crashes. The system repeatedly engaged based on faulty data from a single sensor that investigators say had probably been poorly repaired. The noses of both planes were pushed down repeatedly as the pilots struggled to regain control.
After the second crash, aviation safety authorities around the world declared the jet unsafe and ordered it grounded. The FAA said Monday that since then a team of 40 agency employees have been working full-time to ensure the Max is safe to fly again.
When the Max does return to the air, a jet that was seen as crucial to Boeing’s financial success and airlines’ operations will come back to an aviation industry ravaged by the coronavirus pandemic.
In the United States, demand for air travel collapsed almost completely by early April and airline leaders say they’re uncertain when it will return to pre-pandemic levels. That has led airlines to rethink plans for how they will use the Max in their fleets.
Boeing says it lost 373 orders for the Max in the first half of the year. And that doesn’t include plans to cancel an order for almost 100 of the jet by a Norwegian carrier that was an important early customer for the aircraft.
While the directive is a significant step in the eventual ungrounding of the Max, the FAA said that several other tasks remain. A group of international pilots must assess the training requirements for the jet and a document issued as part of that process will also be submitted for formal public comment.
Once the grounding order is lifted, airlines must ensure they are complying with all the new rules for operating the plane. In addition, the FAA has said it will sign off on all newly manufactured planes before they are allowed to fly, a job that was previously delegated to Boeing.
Southwest Airlines, which has 34 Max jets, the most of any U.S. carrier, said once the FAA recertifies the plane, it would take several months to return the jets to service. In addition to meeting requirements laid out by the FAA, including updates to MCAS, the airline will have to train thousands of pilots. Airline executives said they continue to work closely with the FAA and Boeing on efforts to return the aircraft to service.
Southwest said the plane has been removed from its schedule through mid-December.
The FAA agency emphasized the thoroughness of the review, noting that the work took more than 18 months and included more than 40 engineers, inspectors, pilots, and technical support staff. In all, the effort, “represents more than 60,000 FAA hours of review, certification testing, and evaluation of pertinent documents.”
The FAA said the review included approximately 50 hours of flight or simulator tests and analyzed more than 4,000 hours of flight and simulator testing undertaken by Boeing.
The evaluation also included input from flight crews from Boeing and from pilots working at U.S. and international airlines that fly the 737 Max. The crews selected were designed to represent a cross-section of pilots expected to operate the plane once it returns to service.
The redesign work has focused on the MCAS. The system was designed to counter changes in how the jet handled because of its larger engines, which are positioned differently on its wings than older 737s.
The proposed directive calls for four fixes to the Max.
It says the software patch would require MCAS to rely on two sensors that determine the angle at which the plane is flying, rather than just one. And if the sensors disagree by a certain amount, the system would be disabled for the rest of the flight. MCAS will also be gentler in how it pushes the plane’s nose down and allowed to engage only once, to avoid overwhelming pilots.
Wiring in the jets that was found not to comply with FAA rules during the safety review will also have to be changed.
The FAA estimates the changes will affect 73 planes registered in the United States and that complying with the directive will cost operators a total of $1 million. Other planes still in production will be updated before their first flights.
Michael Stumo, whose daughter Samya died on the Ethiopian flight, said he remained unconvinced that the Max was safe, calling it an old design that had been questionably updated.
“Obviously there is economic pressure to get the plane up in the air,” he said. “Safety isn’t first.”
While the design fixes focus on MCAS, investigations since the crashes have revealed how Boeing sought to downplay the significance of the feature in an effort to ensure regulators wouldn’t require existing 737 pilots undergo more intensive and expensive training to qualify to fly the plane. A reference to MCAS was stripped from a manual approved by the FAA and even an FAA warning after the first crash it was not identified by name.
Boeing and the FAA have repeatedly faced questions about the closeness of their relationship since the crashes. U.S. regulators were the last to decide to ground the jet in March 2019.
Last November, Boeing issued a statement predicting that the Max would be ready to fly again by early this year. In return regulators quickly took steps to show that they were in charge of the timeline and would hold the company accountable.
Within weeks, Boeing ousted its chief executive and said it would halt production of the Max.
Boeing’s effort to minimize the importance of MCAS and the FAA’s subsequent failure to properly scrutinize the system has led lawmakers to propose revamping the safety certification process for planes. Much of the work is handled by Boeing employees acting on behalf of the government, which critics say leaves them exposed to pressure to meet the corporation’s financial goals rather than serving the public.
Kanit Sangsubhan
Credit : Public Debt Management Office, data as of June 30.
BCPG president Bundit Sapianchai
File photo of Boeing 737 Max
