The Cabinet today approved an Asean-China agreement on transportation and logistics to boost trade and combat the cross-border spread of Covid-19.
Ministers also agreed to receive free assistance from the World Bank on phase 2 of a project to reduce ozone-destroying HCFC gases.
Government spokesperson Narumon Pinyosinwat said the Cabinet green-lighted the draft of the Asean-China Transport Joint Statement ahead of the Asean-China Transport Ministers Meeting on Covid-19 on July 16.
The joint statement demonstrated Asean and China’s commitment to fighting the outbreak and its severe impact on the global economy, travel and tourism, manufacturing, retail, transportation, supply chains and financial markets.
Meanwhile the Cabinet also approved a World Bank draft agreement for a US$5 million (Bt198.8 million) grant to fund stage two of the HCFC Phase-Out Project. HCFCs are used in the spray-foam and freezer manufacturing industry but destroy ozone and cause global warming
Stage one of the project was successfully completed on December 31, 2019 after cutting HCFC use by 576.69 tonnes from the target of 209 tonnes.
Minor International Plc (MINT) has cut the ask price in its offering of 563,293,276 new shares for existing shareholders from Bt18.9 to Bt17.5 per share, as part of plans to raise Bt25 billion in capital.
The cut rewards shareholders who have stayed loyal amid the volatile market environment, said the hospitality, restaurant and lifestyle multinational.
The share payment period runs from July 17 to 23 via Bangkok Bank. After payment, shareholders can subscribe for the shares at http://www.bualuang.co.th or at Bualuang Securities headquarters on Silom Road. In addition, Minor will allocate MINT-W7 warrants to shareholders at the ratio of 22 ordinary shares per one warrant at no offering price. The term of the warrants will be three years with an exercise price of Bt21.60.
Minor said it is confident that shareholders will fully support the rights offering.
MINT founder and chairman William E Heinecke has committed to subscribing for his full entitlement of shares, the company said.
As the Covid-19 pandemic subsides, MINT has reopened its hotels, restaurants, and lifestyle businesses both in Thailand and overseas. It sees positive signs of recovery, aided by government stimulus packages including the “We Travel Together” campaign to revitalise domestic tourism.
Nevertheless, MINT has launched a plan to raise Bt25 billion in capital as “a pro-active and comprehensive approach”. The plan also features an offering of perpetual bonds worth about Bt10 billion. The measures are aimed at strengthening MINT’s balance sheet during uncertainty over the Covid-19 pandemic, without the need for more capital increases over the next two years. MINT said its interest-bearing debt-to-equity ratio is expected to fall to its internal policy of 1.3x by the end of 2020, from 1.6x at the end of the first quarter this year.
“I believe the offering price of Bt17.50 per share is very attractive,” Pichet Sithi-Amnuai, president of Bualuang Securities, MINT’s financial adviser, said. “This price represents a 14.6 per cent discount from the volume-weighted average price of the company’s shares during the prior eight consecutive trading days.”
Big-lot transactions worth over Bt20 billion were executed in July in the Stock Exchange of Thailand (SET) in response to the news of an upcoming Cabinet reshuffle, experts said.
Big lot transactions from July 1 to 13 was Bt20.9 billion compared to Bt23.7 billion in the whole of June. Normally, there were 20 to 30 big-lot transactions per day, but there were 139 big-lot transactions worth Bt13.9 billion on July 9 alone.
On July 9, Airports of Thailand (AOT) had the biggest transaction valued at Bt1.76 billion at an average price of Bt57.47 per share, followed by Bangkok Dusit Medical Services (BDMS) of Bt806.43 million, at an average price of Bt22.63 per share and CP All (CPALL) of Bt705.89 million, at an average price of Bt67.02 per share.
However since the beginning of July, Sri Trang Gloves (Thailand) had the biggest transaction of Bt1.85 billion at the average price of Bt67.09 per share, followed by AOT of Bt1.76 billion at the average price of Bt57.47 per share and CP All (CPALL) of Bt1.07 billion at the average price of Bt67.25 per share.
Jaroonpan Wattanawong, head of research at Maybank Kim Eng Securities (Thailand), said that after news about the Cabinet reshuffle was reported, over 80 companies had big-lot transactions on the afternoon of July 9.
“This showed that third parties who are likely to get a position in the Cabinet had started selling their shares to separate assets because they may have to be involved with the concession agreement or other government jobs,” he said. “However, the third party’s move to separate assets would not affect the stock’s fundamentals because it is just a transfer of shares to other private funds or persons with administrative duties.”
A stock analyst at Country Group Securities advised investors to monitor the Cabinet reshuffle because if the market is not satisfied with a new economic management team, it may result in a market correction.
“Also, we advise investors to hold cash while those who speculate on profits in the short term should pick up shares that have strong fundamentals,” the analyst said. “We recommend buying stocks when the SET Index falls below 1,300.”
Meanwhile, a stock analyst at Asia Plus Securities said that the Cabinet reshuffle is an important factor that determines the economic direction because it is necessary to have a strong economic management team to push recovery measures, which is currently considered an urgent matter.
The price of gold rose by Bt50 per baht weight in morning trade on Wednesday (July 15), the Gold Traders Association reported.
As of 9.20am, the buying price of a gold bar was Bt26,850 per baht weight and selling price Bt26,950, while gold ornaments cost Bt26,363.24 and Bt27,450, respectively.
At close on Tuesday (July 14), the buying price of a gold bar was Bt26,800 per baht weight and selling price Bt26,900, while gold ornaments were priced at Bt26,317.76 and Bt27,400, respectively.
The COMEX (Commodity Exchange) gold price to be delivered in August dropped slightly by 70 cent, or 0.04 per cent, to US$1,813.40 (Bt57,184) per ounce at yesterday’s close.
Some investors were buying gold as safe-haven assets due to uncertainty following the rising Covid-19 cases worldwide and tensions between the US and China.
The Stock Exchange of Thailand (SET) Index rose by 9.95 points, or 0.74 per cent, to 1,351.02 in the morning session on Wednesday (July 15).
A stock analyst at Krungsri Securities expected the index to rebound between 1,350 and 1,355 before falling in response to positive news about a Covid-19 vaccine and rising crude oil price.
“Recently, Moderna revealed that the mRNA-1273 vaccine helped strengthen the Covid-19 patients’ immunity,” the analyst said.
“Meanwhile, the price of crude oil rose over US$40 per barrel again.”
However, the analyst advised investors to beware of mass sell-offs due to uncertainty following the second Covid-19 wave in Thailand after the number of new cases increased.
“Also, we advise investors to follow developments at the Opec+ meeting to consider an agreement on reducing the production of crude oil,” the analyst added.
He recommended that investors buy:
▪︎ Energy stocks that benefit from rising crude oil price, such as PTT, PTTEP, TOP, PTTGC, IRPC, SPRC and IVL.
▪︎ Food and electronics stocks that benefit from the weakening baht, such as TU, CPF, GFPT, TFG, ASIAN, KCE, DELTA, HANA and SVI.
▪︎ Stocks whose second-quarter performance will improve, such as TOP, PTTGC, SPRC, SCC, BGRIM, CKP, CPF, TU, TASCO, STA, STGT, SPALI, PRM, PTL, AJ, STARK and CBG.
The SET Index fell 1.30 points, or 0.1 per cent, to close at 1,341.07 points on Tuesday (July 14), with total transactions of Bt63.991 billion and an index high of 1,342.30 and a low of 1,326.65.
By Syndication Washington Post, Bloomberg · Sarah Ponczek, Claire Ballentine · BUSINESS U.S. stocks rose in volatile trading, led by gains in the energy, materials and industrial sectors. The dollar weakened to a five-week low and Treasurys were little changed.
The S&P 500 jumped 1% after swinging all day between gains and losses as investors weigh earnings season and the economic hit of rising virus cases. Megacap technology shares were headed for the first two-day slide since mid-May, with the Nasdaq 100 falling as much as 2%, before rallying late in the session. Banks were mixed after JPMorgan Chase & Co. reported strong trading results, while Wells Fargo & Co. tumbled after cutting its dividend and reporting its first quarterly loss since 2008.
“We may see this earnings season as one where companies speak honestly and send a slightly different message than, we’re never going to look back from the bottom,” said Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. “I think it’s appropriate that companies are honest even if it’s deemed as throwing cold water on the V-shaped narrative.”
U.S. stocks finished in the red Monday after the S&P 500 briefly touching the highest level since the coronavirus pandemic. Equities have largely treaded water over the past month as worries about new virus cases are offset by optimism over stimulus spending and the economic recovery.
Still as new outbreaks appear around the world, officials are putting stricter measures in place to control the spread. Japan said a new state of emergency is possible and Hong Kong implemented its toughest social distancing measures yet. Florida reported a record number of coronavirus deaths among residents, while Arizona had the most new cases in 11 days.
“It’s this tug-of-war between the forward-looking assumption around a vaccine and treatment versus what is happening today as it relates to cases, the mortality rate and, more broadly, the spread,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management.
The U.K.’s two-year bonds yielded less than Japanese debt for the first time. Copper ended a six-day winning streak amid renewed tensions between Beijing and Washington.
In Asia, equities were broadly lower with Chinese and Hong Kong shares faring the worst. The Trump administration rejected China’s expansive maritime claims in the South China Sea, reversing a previous policy of not taking sides in such disputes.
These are some of the main moves in markets:
Stocks
The S&P 500 Index advanced 1.3% to 3,197.52 as of 4:05 p.m. EDT, the highest in five weeks on the largest gain in more than a week.
The Dow Jones industrial average climbed 2.1% to 26,642.59, the highest in almost five weeks on the biggest increase in more than two weeks.
The Nasdaq Composite Index increased 0.9% to 10,488.58.
The MSCI All-Country World Index climbed 0.5% to 543.54, the highest in five weeks.
Currencies
The Bloomberg Dollar Spot Index dipped 0.2% to 1,207.67, the lowest in almost five weeks.
The euro gained 0.4% to $1.1391, the strongest in more than four months.
The Japanese yen was little changed at 107.28 per dollar.
Bonds
The yield on two-year Treasurys gained one basis point to 0.16%, the biggest climb in almost two weeks.
The yield on 10-year Treasurys climbed less than one basis point to 0.62%.
Germany’s 10-year yield fell three basis points to -0.45%, the biggest drop in more than a week.
Commodities
West Texas Intermediate crude increased 0.4% to $40.27 a barrel.
Gold strengthened 0.4% to $1,810.03 an ounce, the highest in almost nine years.
Copper sank 0.6% to $2.94 a pound, the first retreat in almost three weeks and the largest decrease in more than four weeks.
Jul 15. 2020Bank of Thailand governor Veerathai Santiprabhob and other central bank executives meet with financial analysts on Tuesday to share their views on the latest economic situation.
By The Nation
The central bank will not extend the debt moratorium programme which ends in October and will instead focus on debt restructuring to help small businesses cope with the Covid-19 fallout, Bank of Thailand (BOT) governor Veerathai Santiprabhob said on Tuesday (July 14).
This programme was created to help SMEs survive the Covid-19 crisis, but it may damage the credit culture in the long run and lead to financial instability, he said.
“Several financial support schemes will expire in October. We don’t think most SMEs will fall off the cliff, because banks have provided them with more support than the central bank has done, by suspending debt repayment by as much as a year,” Veerathai said.
The important task now is that banks closely follow their debtors and implement appropriate measures for targeted groups, he said.
As for the Bt500-billion soft loan for commercial banks, he said, Bt103 billion in loans has been approved so far.
“Though we are far behind the target, we can extend our support period,” he said.
He also said that BOT is considering banks’ proposal that the Thai Credit Guarantee Corporation provide loan guarantees for more than two years.
Looking ahead, he added, the most important thing is to restructure debts that are consistent with each company’s cash flow and BOT will finely tune regulations to make debt restructuring more effective.
Mathee Supapongse, deputy BOT governor, said the central bank is studying bonds’ yield curve control as central banks in some countries have imposed yield curve control measures. BOT is also studying to see what impact low interest rates will have on financial institutions, savers, banks and financial system, though he said it is unlikely that the key policy rate will drop to zero per cent from the current historic low of 0.5 per cent.
The central bank is also urging local gold traders to trade in dollars instead of the baht in order to reduce the impact on the Thai currency’s exchange rate, he added.
Don Nakhontab, senior director at the central bank, expressed concerns about the severe impact the outbreak has had on the economy, which has prompted the central bank to project an 8.1 per cent contraction in growth.
Also, only about 8 million tourists are expected to arrive this year, down from 40 million last year. Tourism is not expected to recover until the end of next year, assuming a vaccine is available by then. He said the economy has bottomed out in the second quarter, but if the debt default becomes more globally widespread and there is a second wave of infections, then the contraction in the following quarters will be even deeper.
Unemployment rose rapidly in May, as 300,000 people were laid off and applied with the social security fund for assistance, he said, adding that it will become very difficult for new graduates to find employment.
Jul 15. 2020Shop owners close their shops in the Passione mall, formerly known as Laem Thong, for two days of cleaning after an Egyptian soldier visited the mall and was later confirmed infected with Covid-19.
By The Nation
Hotels and other businesses in Rayong province have suffered a further blow from news that a Covid-infected Egyptian soldier paid a short visit to the eastern coastal province.
Pradchaya Samalapa, chairman of the Thai Chamber of Commerce’s committee on the Eastern region’s development, said the incident had taken a toll on local businesses.
“Hotels and resorts have been hard hit as travellers cancelled their bookings after the news broke,” he said on Tuesday (July 14).
The government’s Centre for Covid-19 Situation Administration (CCSA) admitted on Monday that it had made errors in managing the entry of some groups of foreigners. The infected soldier was among a 31-strong delegation of Egyptian military personnel who landed at Rayong’s U-Tapao Airport last Wednesday and stayed in a local hotel and visited a local shopping mall. They were not subject to state quarantine, unlike Thais who return to the country. The group left Thailand on Saturday (July 11), but a test result the next day confirmed the soldier had Covid-19.
The incident sparked fear in the province of a second wave of virus infections.
Pradchaya said tourists had cancelled bookings in the province for the long holiday at the end of July.
Other businesses preparing to reopen after months of lockdown are also suffering, with workers now refusing to return to the province over fears of a second wave of contagion, he added.
By Syndication Washington Post, Bloomberg · Cecile Gutscher, Sam Potter · BUSINESS, US-GLOBAL-MARKETS
The constant refrain on Wall Street is that markets have broken from pandemic reality, yet the evidence keeps suggesting otherwise.
The S&P 500 staged a late-session reversal on Monday on fresh virus fears that underscore the jitters behind the global rebound in risk. The latter keeps taking place alongside a historic bid for safety and elevated equity volatility.
Those signals of investor fear are appearing in the highest quality bonds, where the more than $13 trillion pile of sub-zero yields has threatened to surpass the March peak. In the safest exchange-traded funds, which hold more gold than ever before. Under the equity surface, where valuations point not to exuberance but to continued defensiveness in favor of growth stocks.
As companies prepare to report how they fared at the pandemic peak, this bifurcated market is one way to make sense of risk appetite that seems to defy economic logic.
“The V-shaped equity market is deceptive,” said Erik Knutzen, the chief investment officer of multi-asset strategies at Neuberger Berman. “Far from a vote of confidence, the rally has been led by a handful of defensive, U.S. large-cap growth stocks, and it has not been backed up by a similar rebound in more economically sensitive sectors and regions or in Treasury yields.”
Much has been made of the apparent disconnect between Main Street and Wall Street after stocks staged the fastest rally in history as the world’s largest economy sunk into recession. With the economic fallout of the coronavirus still unfolding, the fact that global equities trade at about 20 times their forward earnings is often a cause for worry.
Not so fast, say Morgan Stanley strategists. They argue that by looking at equity prices through cyclical ups and downs, and on a current price relative to the last 10 years of real earnings, valuations right now are pretty much average. That would suggest they’re no threat to gains over the next year.
“Valuations are still a long way from implying a normal recovery, and instead reflect a market that remains concerned about long-term growth,” Morgan Stanley cross-asset strategists led by Andrew Sheets wrote in a report last week.
Even before the pandemic struck, the market has looked famously lopsided, with gains driven by tech darlings including Alphabet Inc., Amazon.com Inc., Apple Inc., Facebook Inc. and Microsoft Corp.
Whereas the S&P 500 now trades at 22 times historic earnings per share, the benchmark’s equal-weight counterpart trades at just 18 times. The premium for the market-cap weighted index remains not far from the widest since 2008 — showing just how sacred megacap firms have become.
The partial reopening of economies has only deepened investors’ faith in the privileged few rather than tempt them to make risk-on bets on smaller, cyclical and lower-quality companies. Value stocks won’t stop trading at a historically large discount to larger peers.
Even investors fretting over the rally in junk debt can take solace, according to Morgan Stanley. The likelihood of defaults is already built into the debt prices of the most at-risk companies trading at half their face value, it said.
Meanwhile, caution abounds in the ETF market. Gold’s grind to the highest in nine years has been driven by an almost relentless flow of cash into bullion funds. ETFs have increased their holdings of the metal every month in 2020, and have already added more than in any prior year.
Almost as relentless is the drive for the safest bonds. Months after the worst of the equity selloff abated, the world’s pile of debt with negative yields has been slowly growing as investors divert cash into havens. It topped $14 trillion on Friday, threatening to surpass the level reached in March.
It all points to a market that’s paying close attention to the world around it, reaching for companies that can survive another downturn while the rate of global Covid-19 infections stays elevated. Social distancing and fears over their health are keeping consumers at home, even in economies that have reopened.
“All those represent wagers against a strong recovery, and instead on a world where growth remains weak and uncertainty remains high,” the Morgan Stanley strategists wrote.
The Cabinet on Tuesday (July 14) agreed to grant financial aid worth Bt1.46 billion to Myanmar to improve its electricity system in Yangon’s North Okkalapa and North Dagon townships, government deputy spokesperson Ratchada Thanadirek said.
She added that this offering is part of efforts to forge sound relations with the neighbouring country.
The funding will be provided on a concessional loan basis, and Bt729 million of which will come from the 2021-2023 annual budget, while the remainder will come from the government’s 5-year loan from local financial institutions.
The 30-year loan to Myanmar carries an annual interest rate of 1.5 per cent and requires that the neighbouring country hire Thai contractors and engineers for the project as well as source materials worth 50 per cent of the loan value from Thailand. The loan is also subject to Thai law.
Bank of Thailand governor Veerathai Santiprabhob and other central bank executives meet with financial analysts on Tuesday to share their views on the latest economic situation.
Shop owners close their shops in the Passione mall, formerly known as Laem Thong, for two days of cleaning after an Egyptian soldier visited the mall and was later confirmed infected with Covid-19.
Ratchada Thanadirek
