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Focus back on US-China trade talks – Asian markets rise

Thaiger

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“A large percentage of the market thinks China may roll the dice and take advantage of what they think is Trump’s weakened political state.”

Asian markets rise today as investors resume their focus on the next round of China-US trade talks this week. But hopes for success are being tempered by mixed messages from both sides of the table. There has been a general feeling of positivity in recent weeks that a solution to the long-running tariffs saga can be found, providing some much-needed support to equities in the face of worsening economic data.

Beijing’s top trade envoy Liu He will meet with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin from Thursday this week.

But observers warn it is unlikely progress will be smooth, with reports this week saying China had cut back on the number of areas it is willing to discuss, suggesting leaders sense weakness in the White House as Donald Trump faces impeachment proceedings and a slowing economy.

Trump said late Monday he preferred to strike a big deal. “We’ve come this far. We’re doing well. I would much prefer a big deal and I think that’s what we’re shooting for.”

And on Monday, the US said it was blacklisting 28 Chinese entities it accuses of being implicated in rights violations and abuses targeting Uighurs and other mostly Muslim minorities in the Xinjiang region. The move bars them from buying US products.

The meeting comes just over a week before a new round of punitive tariffs is due to be imposed on China.

Stephen Innes, Asia-Pacific market strategist at AxiTrader says China is gaining confidence in the lead up to the negotiations.

“A large percentage of the market thinks China may roll the dice and take advantage of what they think is Trump’s weakened political state, trying to push negotiations closer to next November’s presidential election”.

“In this context… Trump may decide to hardball the upcoming talks, suggesting there could be a high level of disappointment even relative to the market’s muted expectations.”

Still, regional markets were enjoying some much-needed buying support today as the Chinese delegation heads to Washington. Hong Kong climbed 0.7% as dealers returned from a long weekend break to mixed US jobs data that eased concerns about a US recession while also keeping expectations for an interest rate intact. Shanghai rose 0.6% following the week-long National Day celebrations, while Tokyo went into the break 1% higher.

Sydney and Singapore were each 0.5% higher, Seoul rose 0.9%, Manila jumped more than 1%, and Taipei and Jakarta both put on 0.6%. Wellington was slightly lower.

Also on the agenda for investors is the release this week of minutes from last month’s US Federal Reserve policy meeting, which will provide an idea about the bank’s thinking leading up to its rate cut, while third-quarter earnings season also gets underway.

Key figures this morning…

Tokyo – Nikkei 225: UP 1.0% at 21,596.47 (break)

Hong Kong – Hang Seng: UP 0.7% at 26,010.07

Shanghai – Composite: UP 0.6% at 2,923.26

Euro/dollar: UP at $1.0976 from $1.0970 at 2040 GMT

Pound/dollar: DOWN at $1.2292 from $1.2297

Dollar/yen: UP at 107.34 yen from 107.29 yen

West Texas Intermediate: UP 34 cents at $53.09 per barrel

Brent North Sea crude: UP 40 cents at $58.75 per barrel

New York – Dow: DOWN 0.4% at 26,478.02 (close)

London – FTSE 100: UP 0.6% at 7,197.88 (close)

SOURCE: Agence France-Presse

 

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Economy

Stimulus package gives more back the more you spend

Neill Fronde

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PHOTO: A new stimulus package aims to get the middle class spending. (via Flickr - Marco Verch)

A new stimulus package targeting middle and high-income people aims at increasing spending by offering more e-voucher the more you spend. Ying Chai Ying Dai, which translates to “the more you spend the more you get”, will reward those who spend between 46,000 and 70,000 baht with a 7,000 baht e-voucher. This part of the government’s 225 billion baht stimulus package hopes to encourage 4 million qualifying middle- to upper-class people to spend more money by refunding 10-15% back, according to the Finance Ministry’s Fiscal Policy Office.

People wishing to participate must register and make their purchases through a government e-wallet system. The system works by refunding 10 to 15% of purchases with a maximum of 7,000 baht. So at 15%, a person who spent 46,000 baht would receive back the full 7,000. On the 10% scheme, 70,000 baht in spending would be necessary to reach 7,000 cashback. No details were available on what determines the percentage level.

An additional 2,000 baht will be available for people participating in the “Section 33 Rao Rak Kan” and “Rao Chana” scheme. The plans are expected to push 85.5 billion Baht back into the economy as recipients must spend the cash by the end of June.

The 50/50 stimulus program that has been popular with the government covering half of what people spend for half for food, drink, and other items up to 150 baht per person per day will also be expanded. That plan began on October 23, and ended at the end of 2020, covering 10 million people with each receiving 3000 baht. The second phase of the popular program added 5 million more people and raised the limit to 3,500 baht per person.

A third phase of the “Khon La Khrueng” stimulus plan is expected to begin in July with participants getting a maximum of 3,500 baht each to spend, and opening the program to 16 million new people. This massive expansion though will stipulate that anyone participating in this program cannot also participate in the Ying Chai Ying Dai scheme.

All of these cash and voucher benefits aimed at supporting vulnerable groups, along with cash handouts for people who have state welfare cards, are part of 245 billion baht the government is spending in an attempt to keep the economy from collapsing. This falls under an emergency loan decree allocating the government 1 trillion baht total to cope with Covid-19.

SOURCE: The Phuket News

 

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Economy

Thailand increases durian exports to China by 14% this year

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Thailand has exported 14% more durian to China in this year’s first quarter over the same period last year. The Trade Negotiations Department Director General says Thai durian auctions in the first quarter secured 186 million, making up 88% of the total amount of Thai durian exports to world markets.

Last year, Thailand exported US1.5 billion worth of durian to China, a 78% increase from 2019. China’s share accounted for 73% of total Thai durian exports to world markets. 18 countries have free trade agreements for fruit with Thailand. Thailand is actively exporting fresh fruit with its top buyers being Australia, Chile, China, Hong Kong, Indonesia, Malaysia, the Philippines, and Singapore. The most popular fruits are the national delicacy of durian, along with mango, mangosteen and longan.

Despite the increases in durian exports, farmers have been worried about Covid-19′s effect on the industry. Earlier in 2021 health authorities in China circulated a press release stating that imported cherries from Chile had been tested and found to have Covid-19 contamination. This statement prompted a huge drop in Chilean cherry prices. Thai growers are worried the same might happen to durian imports. As the seriousness of the Coronavirus in Thailand reaches new widespread levels, one instance of a durian container being linked to Covid-19 could spur a total ban on importing fruit from Thailand.

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SOURCE: MENAFN

 

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Economy

GDP forecast dropped to 1-2% with best, middle and worst case scenarios

Neill Fronde

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FILE PHOTO: Economic predictions continue to fall with Covid-19 spread and slow vaccination.

Mass vaccination will be the key stop the slump in economic growth after the Bank of Thailand revised their 2021 GDP forecast to between 1 – 2%. They had previously estimated a 3% growth in the gross domestic product but are now creating tiered predictions of a base level, worse situation, and a worst-case scenario, according to the Bank of Thailand’s Monetary Policy Committee.

The base GDP forecast, which you could call a best-case scenario, expects a 2% growth predicated on some rosy numbers like foreign tourism growing to 1.2 million people and unemployment staying around 2.7 million. It also operates on the assumption that Thailand reaches 100 million vaccines distributed by the end of the year which would allow herd immunity by the beginning of 2022.

The middle ground prediction is a 1.5% GDP growth if 64.6 million vaccines are administered, delaying herd immunity to the third quarter of 2022. It also allows for unemployment to grow by another 100,000 people, and tourism to reach only 1 million foreign visitors. If we don’t get this tourism growth and unemployment and underemployment expands to 2.9 million or above, and we distribute less than 64.4 million jabs, the worst-case scenario would be only a 1% GDP growth and herd immunity not being possible until the end of 2022 at the earliest.

The worst-case scenario would be a 5.7% drop in the GDP this year, a loss of 890 billion baht. The middle ground forecast would cost about 460 billion Baht, about a 3% drop in Thailand GDP.

The BOT had originally forecast stronger GDP growth but reduced from 3.2% to 3% before dropping their predictions to the 1% to 2% figure. With the devastating effect of the third wave of Covid-19 being much more far-reaching than originally expected, this new prediction was released now instead of when it was scheduled in June. They did state that government economic stimulus packages could still have a positive effect and allow the economy to grow 3 to 5.7%, assuming mass vaccination goes into effect quickly.

The tourism sector and small-to-medium-sized enterprises would be the most affected by the delays in vaccination. The Monetary Policy Committee stressed that the economy hinges on the speedy importing and administering of vaccines. Faster vaccination will prevent mutations, new strains, and new outbreaks, as well as allowing international borders to fully reopen more quickly and more successfully. They stress that government efforts to support the economy must continue as the government has recently announced they will extend cash stimulus programs and allot money to more low-income assistance.

SOURCE: Bangkok Post

 

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