While stimulus measures have been launched to prop up the economy and the export market is expected to rebound this year, the massive drop in foreign tourists has had the biggest impact on the economy, acting director-general of the Fiscal Policy Office (FPO) Kulaya Tantitemit said.
The FPO has revised down its forecast of Thailand’s growth to 2.8 per cent from its previous projection of 4.5 per cent. This is in line with a new prediction that tourist arrivals will fall from 8 million to 5 million with total tourist revenue down from Bt330 billion to Bt260 billion.
Thailand’s tourism sector has been hit hard by the Covid-19 fallout.
The agency has revised upward the forecast of export growth this year to 6.2 per cent from 6 per cent in line with expected economic expansion of Thailand’s trading partners.
Meanwhile, the Association of Domestic Travel (ADT) estimates the fresh Covid-19 outbreak has hit at least 2 million of the 4.4 million workers in the tourism sector.
ADT secretary-general Adith Chairattananon urged the government to launch bold new measures to mitigate the impact, including a scheme to co-pay workers’ wages for two to four months and a fund to help the sector.
The Stock Exchange of Thailand (SET) Index closed at 1,468.51 on Thursday, down 29.62 points or 1.98 per cent. Total transactions amounted to Bt92.61 billion with an index high of 1,492 and a low of 1,467.74.
In the morning session, an analyst at Krungsri Securities expected the day’s index to fall to 1,480-1,490 points after the US Federal Reserve decided against launching more measures to tackle the economic impact of Covid-19.
Foreign investors’ net sales of Bt8.7 billion over the past four days would also pressure the index, he added.
“However, the SET will rebound from mass buy-ups of stocks whose fourth-quarter turnover is expected to improve,” he predicted.
The 10 stocks with the highest trade value today were EA, SCC, PTT, KBANK, GPSC, SAWAD, CPALL, STGT, IVL and CBG.
As of 4.30pm, the price of oil dropped by US$0.38 or 0.72 per cent to $52.47 per barrel, while gold dropped by $7.40 or 0.40 per cent to $1,837.50 per ounce.
Other Asian indices were on the fall:
Japan’s Nikkei Index closed at 28,197.42, down 437.79 points or 1.53 per cent.
China’s Shang Hai SE Composite Index closed at 3,505.18, down 68.17 points or 1.91 per cent, while Shenzhen SE Component Index closed at 14,913.20, down 500.64 points or 3.25 per cent.
Hong Kong’s Hang Seng Index closed at 28,550.77, down 746.76 points or 2.55 per cent.
South Korea’s KOSPI Index closed at 3,069.05, down 53.51 points or 1.71 per cent.
Taiwan’s TAIEX Index closed at 15,415.88, down 285.57 points or 1.82 per cent.
CorporateJan 28. 2021SCG president Roongrote Rangsiyopash
By The Nation
Siam Cement Group (SCG)’s unaudited operating results for 2020 show a 7-per-cent boost in profits year-on-year worth Bt34.14 billion thanks to better performance in all its businesses, SCG president Roongrote Rangsiyopash said on Thursday.
However, revenue from sales dropped 9 per cent y-o-y to Bt399.94 billion largely due to the drop in chemical prices and sales volume.
The company attributed its success to the dedication of SCG staff who complied with strict Covid-19 measures combined with operational agility and use of digital technology to explore new opportunities.
The 2020 operating results by business units are as follows:
• Chemicals: Sales revenue dropped 17 per cent y-o-y to Bt146.87 billion due to a drop in product prices and lower sales volume. Profit for the period rose 14 per cent y-o-y to Bt17.67 billion as a result of higher product spread.
• Cement and building materials: This unit recorded a sales revenue of Bt171.72 billion, dropping 7 per cent y-o-y due to the pandemic and challenging economic environment. However, profit for the period came in at Bt6.42 billion, an increase of 18 per cent y-o-y due to efficiency improvements and lower production cost.
• Packaging: Sales revenue of Bt92.79 billion, up by 4 per cent y-o-y. Profit for the period also rose 23 per cent y-o-y to Bt6.46 billion.
SCG said the operation of its chemical business has been running smoothly both locally and overseas with robust business continuity and sales portfolio management.
The business has increased the sale of plastics for the production of consumer products that are in high demand such as food packaging, beverage packaging, and e-commerce packaging.
In markets that are hit hard by Covid-19, the business has shifted sales to markets less affected by lockdowns. The chemicals business has also applied digital technology, like a digital commerce platform that links purchase orders directly with supply management.
SCG has expanded its downstream businesses and is exploring new businesses to create product differentiation and enhance business flexibility.
For circular economy solutions, SCG has started the production of post-consumer recycled resins utilising used plastics.
The cement and building materials unit has boosted its operational efficiency by adjusting operations and business models so they are ae in line with increased consumer appetite for hygiene products and e-commerce.
The packaging business has adapted itself to cope with economic fluctuations by further reinforcing its integrated business model to build sustainable growth in Asean.
The company has recently acquired shares in Bien Hoa Packaging to fortify its position and strength in upstream packaging business in Vietnam. On top of that, the company also acquired Go-Pak UK Limited (Go-Pak), a leading foodservice solution provider in the UK, Europe, and North America, with its production facilities in southern Vietnam. These acquisitions will augment market potential in the food-packaging business.
Nation Multimedia Group (NMG) launched Nation Coffee on Thursday, as a step into the food and beverage industry.
Nation Coffee will sell food and beverages, especially tea, coffee and baked goods, and will also supply goods to other businesses in the sector, as per the company’s objectives. Its registered capital is Bt10 million, divided into 100,000 ordinary shares at the par value of Bt100 per share. Of the total capital, Bt2.5 million has been paid up.
The new subsidiary’s shareholding structure is as follows:
• NBC Next Vision (NNV), a subsidiary of Nation Broadcasting Corporation, holds a 60 per cent stake with 60,000 shares.
• NMG holds a 39.99 per cent stake with 39,997 shares.
• Warangkana Kalayanapradit, Aura-orn Akarasanee and Supawat Sa-nguan-ngam hold one share each or a stake of 0.001 per cent.
Exim bank resilient despite rising bad debt, president says
CorporateJan 28. 2021Pisit Serewiwattana, president of Export-Import Bank of Thailand
By The Nation
The Export-Import Bank of Thailand (Exim) is in a strong financial position despite non-performing loans (NPLs) rising to 3.81 per cent (or Bt5.2 billion) at the end of last year, its president Pisit Serewiwattana said on Wednesday.
Pisit is due to retire at the end of this month after serving as president of the state-owned bank since 2016. In 2015, Exim’s NPLs stood at 3.2 per cent of its outstanding loans.
Provisions to bolster financial strength in the face of Covid-19 cost the bank Bt1.34 billion last year, he revealed. Exim’s credit loss as of the end of December 2020 amounted to Bt11.97 billion. However, the bank had lowered risk with high coverage ratios of 232.44 per cent – compared to commercial banks’ standard ratio of just above 100 per cent – helping Exim record Bt2.3 billion in profit before credit loss.
Exim has responded to the new wave of virus infections by maintaining aid for liquidity-hit businesses and suspending principal interest repayments for customers in red, orange and yellow zones. It has also extended its investment and production efficiency enhancement scheme to ease burdens on businesses.
Pisit said Exim is paying special attention to supporting small and medium enterprises (SMEs), who are often ignored by commercial banks.
While supporting Thai exporters and investors, the bank has been careful to obey World Trade Organisation rules that prevent state agencies from subsidising companies to give them unfair advantages over foreign competitors, he added.
Exim forecasts economic recovery this year will see Thai exports grow 2.5-4 per cent, after 6 per cent contraction last year.
Pisit projects Exim’s role will grow further in line with Thailand’s recovery blueprint. The bank has embarked on organisational transformation under the 10-year Master Plan (2017-2027) to adapt to external circumstances even amid the Covid-19 pandemic, he said.
Exim had maintained satisfactory operating results and was on track to becoming a regional Export Credit Agency (ECA) by 2022 and a global ECA by 2027.
Those prospects were reflected by Exim’s credit facilities for Thai trade and investment, which stand at 1.6 per cent of gross national income (GNI), compared to 0.5-0.7 per cent of other ECAs in Asean. The bank’s operating results in 2020 showed a five-year high across all areas, he added.
Exim and other state-owned banks, commercial banks and financial institutions have joined forces with the government to provide debt holidays, loans and debt restructuring since Covid-19 first emerged early last year. The impact of providing those measures is reflected in their operating results last year.
Krungsri speeds up support for SMEs hit by new virus surge
CorporateJan 28. 2021Duangkamol Limpuangthip, head of Krungsri’s SME Banking Group
By The Nation
Krungsri (Bank of Ayudhya Plc) said it is accelerating rollout of relief measures for small and medium-sized enterprises, including retail businesses, affected by the new wave of Covid-19. Among them is the launch of an ad-hoc team of relationship managers to maintain regular contact with customers and offer appropriate measures.
These include debt restructuring, soft loans offered by the Bank of Thailand, and soft loans for tourism offered by the Government Savings Bank (GSB).
“To date, Krungsri has approved Bt21.5 billion in soft loans for over 7,000 SME customers,” said Duangkamol Limpuangthip, head of Krungsri’s SME Banking Group.
The bank said it has also suspended debt repayments on Bt110 billion of loans for more than 28,000 SME customers, and offered relief on outstanding loans of Bt42 billion.
SME customers can contact relationship managers or apply for relief programmes at Krungsri.com or by calling 1572.
The Stock Exchange of Thailand (SET) Index fell by 13.63 points, or 0.91 per cent, to 1,484.50 in the morning session on Thursday.
The SET is expected to fall to between 1,480 and 1,490 points as the US Federal Reserve decided not to launch additional measures to tackle the impact of Covid-19 on the economy, said a Krungsri Securities analyst.
He also said foreign investors’ net sales of Bt8.7 billion for four consecutive days would pressure the index.
“However, the SET will rebound from mass buy-ups of stocks whose fourth-quarter turnover is expected to improve,” he predicted.
▪︎ CBG, ICHI, OSP, SAPPE, RBF and DOD, which benefit from news related to hemp after Thailand’s Food and Drug Administration said it would allow government agencies, private companies, farmers and the public to apply to grow the cannabis plant species.
The SET Index closed at 1,498.13 on Wednesday, down 14.70 points, or 0.97 per cent. Total transactions amounted to Bt78.79 billion, with an index high of 1,515.32 points and a low of 1,498.25.
The price of gold dropped by Bt50 per baht weight in morning trade on Thursday, the Gold Traders Association reported. The gold price was down for the second successive day, after dropping by Bt150 per baht weight on Wednesday.
As of 9.22am, the buying price of a gold bar was Bt26,050 per baht weight and selling price Bt26,150, while gold ornaments cost Bt25,574.92 and Bt26,650, respectively.
At close on Wednesday, the buying price of a gold bar was Bt26,100 per baht weight and selling price Bt26,200, while gold ornaments cost Bt25,635.56 and Bt26,700, respectively.
The spot gold price moved to US$1,838 (Bt55,187) per ounce in the morning, while the Comex (Commodity Exchange) gold price to be delivered in February dropped by $6 to $1,844.90 per ounce on Wednesday due to a strengthening dollar. Also, investors delayed gold purchases to follow a key US Federal Reserve meeting.
The Hong Kong gold price meanwhile dropped by HK$60 to $17,010 (Bt65,885) per tael, the Chinese Gold and Silver Exchange Society reported.
BlackBerry revival rewards Watsa’s patience with huge gain
EconJan 28. 2021Attendees look at the Blackberry Keyone smartphone its launch event ahead of the Mobile World Congress in Barcelona, Spain, on Feb. 25, 2017. MUST CREDIT: Bloomberg photo by Chris Ratcliffe.
By Syndication Washington Post, Bloomberg · Michael Bellusci
Day traders have pushed BlackBerry’s share price to levels not seen in more than nine years. They’ve also given a jolt to a Canadian investment company that got crushed in last spring’s market crash.
BlackBerry soared 22.6% to $23.19 as of 9:38 a.m. in New York on Wednesday, bringing its gain for the year to nearly 250%. That is repaying the patience of Prem Watsa and his Fairfax Financial Holdings, which owns 8.3% of the software firm’s shares.
Once the toast of the mobile tech world, BlackBerry failed to keep pace with competitors including Apple and the stock lost most of its value in 2010 and 2011. Around that time, Watsa, a value investor who has tried to model Fairfax after Berkshire Hathaway Inc., began building a large stake, which also includes convertible debentures with a conversion price of $6 each that could be turned into 55 million shares.
The run-up in BlackBerry shares this year would drive a pretax gain of about $1.16 billion for Fairfax in the first quarter, Phil Hardie, a Toronto-based analyst at Bank of Nova Scotia, told clients in a note before markets opened on Tuesday. Hardie upgraded his recommendation on Fairfax’s shares to a buy-equivalent.
Fairfax closed at C$488.94 on Tuesday. With a 12.7% gain as of Tuesday’s close, it’s the best-performing financial stock in the S&P/TSX Composite Index this year after being one of the worst in 2020 with a 29% drop.
Scotiabank’s most bullish scenario for Fairfax “implies almost 50% upside and assumes that the stock sheds its valuation discount and trades at book value, with Fairfax locking in recent gains in BlackBerry through hedging or monetizing its position,” Hardie wrote. Fairfax didn’t respond to a request for comment.
Watsa has been waiting for such a payoff for years. Fairfax even organized a bid to take BlackBerry private in 2013 — the same year the latter changed its name from Research In Motion Ltd. — then abandoned it in favor of a bond deal and management shakeup that brought in John Chen as chief executive officer.
Despite an unrealized loss of $50 million on the investment as of 2019, Fairfax’s letter to shareholders last March made clear Watsa still believed in the CEO, who has focused BlackBerry on enterprise software. “We continue to support John Chen as he works diligently to make BlackBerry a growth company again,” Watsa wrote.
The sudden rise has been partly fueled by Reddit forums and social media channels where retail speculators seek out unloved or heavily-shorted stocks like GameStop Corp., hoping to drive them up quickly.
RBC Capital Markets downgraded its recommendation on BlackBerry to a sell-equivalent Tuesday, citing the torrid rally and unchanged fundamental outlook. Analyst Paul Treiber kept his price target at $7.50. Scotiabank also elected to cut BlackBerry’s stock rating to a sell-equivalent early Wednesday, as analyst Paul Steep calling the share run “overdone.” Still, shares are gaining about 11% in premarket trading Wednesday.
Watsa, 70, founded Fairfax in 1985, following Warren Buffett’s strategy of using insurance float as a way to build an investment portfolio. With a market value of more than C$14 billion it’s a fraction of Berkshire’s size, though it’s more than twice as large as buyout firm Onex Corp.
By The Washington Post · David J. Lynch, Hamza Shaban, Hannah Denham, Tory Newmyer
Shares of video game retailer GameStop and movie theater giant AMC Entertainment soared to astronomical levels Wednesday as an apparent swarm of ordinary investors, spurred by a Reddit message board, took on big Wall Street funds that had bet the stock prices would fall.
GameStop shares more than doubled, to $347.51, and have soared more than 400% this week. AMC, beleaguered by the coronavirus pandemic and stay-home measures, quadrupled to $19 a share.
The GameStop and AMC price surges were so dramatic that trading for both companies was temporarily halted by the stock exchanges to temper volatility. But once trading resumed, prices took off again. TD Ameritrade, a leading trading platform, took the unusual step of imposing restrictions on both stocks, citing “an abundance of caution amid unprecedented market conditions.”
The extraordinary trading, which many analysts linked to a pandemic-related surge in day trading by average investors, seemed disconnected from the companies’ financial prospects. GameStop, which sells video game software in brick-and-mortar retail outlets, has lost money in five of the past six quarters. Revenue in the three-month period that ended in October was down 31% from the same period one year earlier.
As officials at the White House and the Federal Reserve offered statements of reassurance, there were signs that market watchdogs at the Securities and Exchange Commission will scrutinize the unusual trading.
Federal securities law prohibits market participants from misrepresenting a company’s prospects to artificially affect its share price. With Reddit users cloaked in anonymity, there is no way of knowing whether messages touting GameStop come from average joes or scam artists executing a “pump-and-dump” stock scheme.
In a statement after the markets closed, Allison Herren Lee, the SEC’s acting chair, and two subordinates, said the commission was “actively monitoring the ongoing market volatility in the options and equities markets” and was working with other regulators “to assess the situation and review the activities” of those involved.
“Folks at the SEC are going to want to take a very close look at this,” said Harvey Pitt, who chaired the commission from 2001 to 2003. “When you have extreme volatility of this nature, the system is not necessarily working correctly . . . You’re starting to see things that would look to a regulator as if they were manipulation.”
The soaring stock prices for companies that many professional investors scorn illuminated the striking influence of social media, or what Peter Atwater, an economics lecturer at the College of William & Mary, calls a “flash mob with money.”
In their open challenge to the deep-pocketed hedge funds that bet on individual stock prices falling, the online mob brandishes an us-against-them rhetoric that echoes the populism of former president Donald Trump’s supporters.
Posters savaged CNBC, the financial news channel, for allegedly siding with Wall Street firms over the ordinary investor. One post touting GameStop was tagged “bankrupting institutional investors for Dummies.”
On Twitter, Anthony Scaramucci, a hedge fund manager who was briefly a Trump adviser, wrote: “We are witnessing the French Revolution of finance.”
Still, to many analysts, the frenzied buying that has driven the shares of companies such as GameStop into a vertical climb was uncomfortably reminiscent of the dot-com era financial bubble, which ended with technology stocks losing more than half their value. Some described the Dow Jones industrial average’s 63% gain from its March lows as evidence that the Federal Reserve’s near-zero interest rates were fueling a similar craze.
“Activity like this has been going on since the beginning of markets, but there is no question that the Fed’s easy money policy has been the liquor that has made many market participants drunk,” Peter Boockvar, chief investment officer for Bleakley Advisory Group.
Wednesday’s trading frenzy played out amid a decline in the broader market. The Dow fell nearly 634 points, or 2.1%, as investors sorted through a mixed bag of corporate earnings. The broader S&P 500 dropped nearly 99 points, or 2.6%, while the tech-heavy Nasdaq shed about 355 points, or 2.6%.
Treasury Secretary Janet Yellen and the rest of the Biden administration’s economic team are monitoring the matter, White House press secretary Jen Psaki told reporters at a midday briefing, adding that “the stock market is not the only measure of the health of our economy.”
Federal Reserve Chair Jerome Powell, speaking at a scheduled news conference, said he would not comment “on a particular company or day’s market activity.”
The stunning rise in AMC and GameStop shares has become one of Wall Street’s most-watched dramas, pitting an apparent army of retail investors against wealthy institutions. Some of the Reddit participants, who had organized in the message board r/wallstreetbets, said they were punishing Wall Street and “democratizing” trading.
In a Twitter thread Wednesday, Reddit co-founder Alexis Ohanian said the mood on the message boards was one of retribution against big institutions. “This is an echo of what we’ve seen social media enable the public to challenge institutions for the last decade,” he said. “And also – please – don’t invest money you can’t afford to lose, ESPECIALLY, in risky investments.”
For weeks, users posting on r/wallstreetbets have rallied support for GameStop, which has been targeted by hedge fund short sellers as it struggles to adapt its brick-and-mortar business for the age of e-commerce.
The message board known as “wsb” describes itself as “like 4chan found a Bloomberg terminal,” in a reference to the anything-goes discussion site and the sophisticated software package used by financial professionals.
In daily posts, wsb’s 3.3 million members trade irreverent jibes, make liberal use of the f-word and cheer one another’s winning investments.
The Reddit posters began betting last year that GameStop’s stock price would rise, challenging Wall Street short sellers wagering the opposite. As the shares rose, the Wall Street traders have been forced to take massive losses.
Among those rooting on the Reddit crowd this week was Elon Musk, the chief executive of Tesla, who tweeted “Gamestonk!!” with a link to the message board. (Musk has waged his own battles against short sellers, saying in 2018 that “what they do should be illegal.”)
“GameStop has become a pyramid scheme,” said Michael Pachter, an analyst with Wedbush Securities. Investors buying the stock at $200 are convinced someone else will buy it from them at $250, he said but that won’t last forever.
“Pyramid schemes work as long as new investors believe there will be new investors behind them; when it’s clear nobody else is going to come in, they are less likely to participate.”
Over the past week, the Reddit board has started putting its support behind AMC, which recently announced that it had raised nearly $1 billion to avoid bankruptcy. Its stock price also has jumped.
Other stocks that had fallen out of favor with institutional investors, such as BlackBerry and Bed, Bath and Beyond, also are enjoying a second act.
On the Reddit forum, participants who said they were ordinary investors celebrated their collective efforts to take down big hedge funds. This week, Melvin Capital, a large hedge fund, was forced to seek a financial rescue from two other funds.
Citadel and Point72 Asset Management injected a combined $2.75 billion into the wounded short seller in return for a stake in future revenue. Melvin lost big after betting that GameStop’s stock would fall.
John Stark, former director of the SEC’s office of Internet enforcement, said the commission almost certainly has taken the first steps to investigate the trading activity.
“I can’t imagine there isn’t an open investigation and probably a formal order to find out who’s on these message boards,” he said.
Some Reddit users seem to have the same idea. “Dear SEC. I may be guilty for a lot but if you give me a deal ill gladly rat out a bunch of other people,” user w8w8dont posted on Wednesday.
But James Angel, a finance professor at Georgetown University, said proving wrongdoing could be difficult. “It’s going to be hard for the SEC to find blatant manipulation, but they owe it to look,” he said. “The normal locker-room chatter you see in these chat rooms is probably not enough to get convictions. But are there bigger players here? We’ll see.”
To establish manipulation that runs afoul of securities laws, Angel said regulators will need to prove that traders engaged in “an intentional act to push a price away from its fundamental value to seek a profit.” In market parlance, this is typically known as a pump-and-dump scheme: Participants buy a stock; artificially inflate its price, say, by circulating rumors about the company; then sell for a profit.
There is no evidence yet of such a strategy behind the surge in GameStop and other stocks, Angel notes. The SEC probably will examine “who’s really moving the market. Is it a bunch of Robinhooders trading 10 shares each, or are there larger players out there engaging in a bigger pump-and-dump?” he said.
Customers of several retail brokerage firms – including TD Ameritrade, Robinhood Crypto, E-Trade, Charles Schwab, Fidelity Investments, Vanguard and Interactive Brokers – experienced service disruptions Wednesday morning, which many attributed to higher volume. The website Downdetector reported log-in and website problems for some of the firms, as well as Reddit, starting after 9 a.m. Eastern, with most issues resolved within an hour.
R/wallstreetbets also experienced service issues as volunteer moderators briefly set the group to private Wednesday morning to keep up with the morning’s frenzy of activity, a company spokeswoman said.
SCG president Roongrote Rangsiyopash
Pisit Serewiwattana, president of Export-Import Bank of Thailand
Duangkamol Limpuangthip, head of Krungsri’s SME Banking Group
Attendees look at the Blackberry Keyone smartphone its launch event ahead of the Mobile World Congress in Barcelona, Spain, on Feb. 25, 2017. MUST CREDIT: Bloomberg photo by Chris Ratcliffe.
