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SET rises very slightly in response to Thailand’s signing of largest trade deal

EconNov 16. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,351.06 on Monday, up 4.59 points or 0.34 per cent. The volume of total transactions was Bt78.50 billion with an index high of 1,365.87 and a low of 1,351.04.

In the morning session, an analyst at Krungsri Securities said he expected the day’s index to rise to between 1,355 and 1,360 points in response to news of Thailand signing the Regional Comprehensive Economic Partnership (RCEP) pact and subsequent rise in regional stock indices.

“Investors, however, should beware of market volatility from uncertainty over escalating Covid-19 cases and domestic political unrest,” he said, adding that pro-democracy protesters are planning to rally again this week.

The SET rose more than 16 points in the morning session after the National Economic and Social Development Council (NESDC) revealed that Thailand’s gross domestic product (GDP) had contracted 6.4 per cent in the third quarter and 6.7 per cent in the first nine months. The NESDC expected Thailand’s GDP to contract 6.7 per cent this year from the initial expectation of minus 7.3 to minus 7.8 per cent.

The top 10 stocks with the highest trade value today were STGT, SCGP, MINT, KBANK, VGI, GULF, PTT, WHA, GPSC and ADVANC.

As of 4.30pm, the price of oil had risen by US$0.58 or 1.45 per cent to $40.71 per barrel, while gold rose by $5.70 or 0.30 per cent, to $1,891.90 per ounce.

Other Asian indices were on the rise:

Japan’s Nikkei Index closed at 25,906.93, up 521.06 points or 2.05 per cent.

China’s Shanghai SE Composite Index closed at 3,346.97, up 36.86 points or 1.11 per cent, while Shenzhen SE Component Index closed at 13,850.83, up 96.28 points or 0.70 per cent.

Hong Kong’s Hang Seng Index closed at 26,381.67, up 224.81 points or 0.86 per cent.

South Korea’s KOSPI Index closed at 2,543.03, up 49.16 points or 1.97 per cent.

Taiwan’s TAIEX Index closed at 13,551.83, up 278.50 points or 2.10 per cent.

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Thai banks remain resilient despite poor performance in Q3 2020 due to drop in profits

EconNov 16. 2020

By The Nation

Suwannee Jatsadasak, Bank of Thailand’s senior director, said the country’s banking system has remained resilient thanks to high levels of capital funds, loan-loss provisions and liquidity to support economic recovery from the fallout of Covid-19 crisis. 

Debt-relief measures, coupled with revisions to rules on loan classification and provisions facilitating bank-loan expansion have alleviated the deterioration of bank-loan quality, she said on Monday.

However, the banking system’s profitability has declined as banks continue to set aside high loan-loss provisions to cushion the adverse impact of Covid-19 on loan quality, she said. 

Capital funds for the Thai banking system stood at Bt2.96 trillion, equivalent to capital adequacy (BIS) ratio of 19.8 per cent. Loan-loss provisions remained high at Bt782.5 billion with non-performing loan (NPL) coverage ratio of 149.7 per cent. Liquidity coverage ratio (LCR) registered at 184.9 per cent.

In the third quarter of this year, Thai banks’ overall loan growth stood at 4.6 per cent year-on-year, dropping slightly by 5 per cent from the previous quarter. 

According to data available, corporate loans (64.6 per cent of total loans) expanded at 4.5 per cent year-on-year, but contracted quarter-on-quarter as some switched their funding source from bank loans to this issuance of bonds and equity. 

Loans for small businesses showed a lower contraction, due mainly to the central bank’s soft-loans scheme and gradual recovery of the economy. 

Consumer loans (35.4 per cent of total loans) grew at 4.8 per cent year-on-year, and increased quarter-on- quarter following the relaxation of lockdown measures. Mortgage lending, in particular, expanded consistent with an increase in demand for low-rise residential projects compared to the previous quarter. 

Debt-relief measures, together with revisions to rules on loan classification and provisioning, have continued to alleviate banks’ loan-quality deterioration in the third quarter of 2020. The gross amount for outstanding NPLs (stage 3) stood at Bt513.9 billion, equivalent to 3.14 per cent of total loans, edging up slightly from 3.09 per cent in the previous quarter.

Meanwhile, the ratio of loans with a significant increase in credit risk (SICR or stage 2) to total loans stood at 7.03 per cent, down from 7.49 per cent in the previous quarter.

The banking system recorded net profit of Bt28 billion in the third quarter and Bt130.4 billion in the first nine months of 2020, a decline from last year owing to continued high-levels of provisioning expenses to cushion against the potential of further loan-quality deterioration. 

As a result, the ratio of return on asset (ROA) dropped to 0.52 per cent from 0.60 per cent in the previous quarter. The ratio of net interest income to average interest-earning assets (Net Interest Margin: NIM) declined from 2.60 per cent to 2.55 per cent, largely due to a drop in interest income on loans.

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Thai investors offered new mutual funds to beat stock volatility

EconNov 16. 2020

By The Nation

Asset management companies are launching various types of mutual funds in the remainder of this year to meet investors’ needs during market volatility.

SCB Asset Management will this year launch up to six funds worth approximately Bt18 billion – two global equity funds and four complex return funds, said its head of Marketing Strategy and Investment Products Suparat Areewong.

“The global equity fund that focuses on foreign shares will help diversify risks and generate returns in the long term, while the complex return fund will help generate returns in line with the gold price and reduce risks of capital loss,” she said.

Krungthai Asset Management is planning to launch up to six funds worth approximately Bt15 billion this year, including four global fixed income funds and one Retirement Mutual Fund (RMF), said Chatchaphol Srivaleepan, executive vice president of Business Development.

“The global fixed income fund will help generate additional returns and is suitable for customers who can tolerate low and moderate risks, while the RMF focuses on China A-shares and is suitable for long-term investors,” he said, adding that RMF investments are tax deductible.

Kasikorn Asset Management has plans to launch three RMFs worth about Bt15 billion this year.

“The company launched the K-CHANGE-RMF on November 2-6, which focuses on global shares related to green trends, while the K-CHINA-RMF focusing on Chinese shares will be launched soon,” said Navin Intharasombat, first senior vice president for foreign investment management, adding that the K-USA-RMF for US shares is currently awaiting approval.

Tisco Asset Management is launching up to two RMFs worth about Bt2 billion and focused on foreign stock markets that are able to generate better returns than Thai stocks.

“Previously, the company launched four Super Savings Funds that invest in about Bt4 billion of Thai and Chinese shares, and one fund that focuses on stocks related to next-generation internet, such as cloud computing, big data and blockchain,” said Sarat Chatsuwan, director of marketing and investment adviser.

Meanwhile BBL Asset Management will introduce two funds worth about Bt25 billion after launching the Bualuang China A-Shares Equity RMF worth Bt5 billion at the beginning of November.

UOB Asset Management will soon establish two funds, the United China A-Shares Innovation Fund (UCI) and United Sustainable Equity Solution Fund (USUS).

The UCI fund will target China A-shares related to innovation, while the USUS fund will focus on Environmental, Social, and Governance (ESG) stocks.

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Online businesses to be pulled into tax system next year

EconNov 16. 2020

By The Nation

Online merchants, YouTubers and even social-media influencers may have to start paying income tax after the finance minister announced his ministry targets at least Bt2 trillion in tax earnings from this group.

The Revenue Department plans to collect taxes from at least 500,000 online traders.

The Finance Ministry is also getting ready to propose amendments to the revenue code that cover online sales from overseas in the Senate next week once it collects comments from the House committee.

Ekniti Nitithanprapas, director-general of the Revenue Department, said on Monday that the law will require foreign businesses that use online platforms to provide commercial services in Thailand to register for the payment of value-added tax when their annual income exceeds Bt1.8 million. He said this will put local businesses at a fair footing and will also boost state earnings by at least Bt5 billion.

The Revenue Department will also expand the taxpayers’ base and cover more people, especially those who avoid filing tax returns. Thailand’s taxpayers’ base stands at 9.55 million people, but only 3 million actually pay taxes.

Many people have taken advantage of the Covid-19 crisis by earning extra income from selling products online, developing a YouTube channel or becoming social-media influences, and the ministry is planning to pull at least 500,000 of these people into the tax system next year.

Finance Minister Arkom Termpitthayaphaisit said recently that the Revenue Department should achieve its target of Bt2 trillion for the 2021 fiscal year despite the economic slowdown, as it has developed a new digital system which makes tax collection more efficient.

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SET gets a lift from RCEP pact and Q3 economic data

EconNov 16. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index rose by 16.51 points, or 1.23 per cent, to 1,362.98 in the morning session on Monday.

An analyst at Krungsri Securities expected the day’s index to rise to between 1,355 and 1,360 points in response to Thailand signing the Regional Comprehensive Economic Partnership (RCEP) agreement and the rise in regional stock indices.

The SET recently gained positive sentiment from the Office of the National Economic and Social Development Council (NESDC) revealing that Thailand’s third-quarter (Q3) gross domestic product (GDP) contracted 6.4 per cent, while the country’s first nine months GDP contracted 6.7 per cent.

The NESDC expected the country’s GDP to contract 6.7 per cent this year and grow 3.5 per cent to 4.5 per cent next year from government disbursement. The baht appreciated to 30.16 against the dollar.

“However, investors should beware of market volatility from uncertainty over the escalating Covid-19 outbreak and domestic political unrest,” he said, adding that pro-democracy protesters will hold an anti-government rally again this week.

He recommended that investors buy:

▪︎ KTC, AMANAH and THANI as Government Savings Bank will conclude partners to work on car registration loans this week.

▪︎ AMATA, WHA, SAT, AH, STGT, STA and RCL that benefit from the RCEP agreement.

The SET Index closed at 1,346.47 on Friday, up 10.16 points or 0.76 per cent. Total transactions amounted to Bt97.02 billion with an index high of 1,352.51 and a low of 1,327.73.

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Weakening dollar pushes up gold price

EconNov 16. 2020

By The Nation

The price of gold rose by Bt150 per baht weight in morning trade on Monday, the Gold Traders Association reported.

As of 9.26am, the buying price of a gold bar was Bt27,000 per baht weight and selling price Bt27,100, while gold ornaments were priced at Bt26,514.84 and Bt27,600, respectively.

At close on Saturday, the buying price of a gold bar was Bt26,850 per baht weight and selling price Bt26,950, while gold ornaments were Bt26,363.24 and Bt27,450, respectively.

Spot gold price moved to US$1,898 (Bt57,211) per ounce in the morning after rising by US$12.9 to $1,886.2 per ounce at close on Friday due to the weakening dollar. However, the metal price in the previous week dropped sharply by 3.24 per cent.

Hong Kong gold price rose by HK$70 to $17,470 (Bt67,918) per tael this morning, the Chinese Gold and Silver Exchange Society reported.