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Finance: Time to reinvest in bank stocks, ETFs

Legacy Phuket Gazette

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Finance: Time to reinvest in bank stocks, ETFs | The Thaiger

PHUKET: Bond yield curves have grown steeper and this means it is a good time to take a closer look at investing in bank stocks or bank ETFs, but risk-adverse investors will still need to be selective when choosing what to invest in.

STEEPER CURVES ARE GOOD FOR BANKS

To begin with some investing basics, short-term interest rates are set by central banks, but longer-term rates are determined by the market even though they can also be affected by long-term inflation expectations and central bank activities.

A yield curve is simply a line plotting interest rates (at a set point in time) for bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve – popular because it is used to benchmark other debt, such as mortgage or bank lending rates – compares the three-month, two-year, five-year and 30-year US Treasury debt. The shape of this yield curve is closely analyzed to help predict future interest rate changes along with the direction of the overall economy.

This yield curve will usually have one of three types of shapes: Normal, indicating that longer maturity bonds have a higher yield compared to shorter term bonds; inverted, pointing to shorter term yields being higher than longer term yields and is a sign that a recession could be coming; and flat, indicating that shorter and longer term yields are very close to each other and is a sign that some sort of an economic transition is coming.

Any rise in long-term rates can be viewed as an indication of an improving economy and this is reflected by a steeper yield curve.

Bank stocks of all sizes along with their margins and bottom lines will usually gain from steeper yield curves because they can borrow on lower short-term rates or use shorter term deposits to lend on higher long-term rates.

In addition, lending growth generally picks up when jobless rates fall while deal-making activity, which yields big fees for investment bankers and larger banks, also heats up when corporate executives feel more confident about the economy and financial markets.

A GOOD CASE FOR REGIONAL BANKS

Given the steady drumbeat of negative news or uncertainty surrounding China, the Euro/EU, Greece and now Puerto Rico, which appears to be heading in the same direction as Greece, risk-adverse investors might be hesitant to invest in bank stocks with a global footprint or direct exposure to these troubled countries or territories.

Moreover, many global banking behemoths have under-performed due to regulatory fines and new rules put in place since the financial crisis that have tended to decouple their financial performance from the actual economy.

Large banks have also searched for growth by bulking up potentially risky trading businesses or they have embarked on big cost-cutting or restructuring initiatives.

Given the problems and risks associated with larger banks, investors should take a closer look at regional banks operating in one region of a country, for example a state or within a group of states, but not internationally.

While there are many good regional bank stocks to consider, the SPDR KBW Regional Banking ETF (NYSEARCA: KRE) – which tracks the performance of the S&P Regional Banks Select Industry Index and comes with a 0.35% expense ratio – would be the easiest way to gain exposure to the sector.

KRE’s shares are also up over 9% YTD, 14% over the past year and 90% over the past five years plus the ETF has a yield of around 1.6%, which is better than most banks in developed countries are paying on deposits.

Don Freeman, BSME is president of Freeman Capital Management, a registered investment adviser with the US Securities Exchange Commission [SEC], based in Phuket. He has over 15 years experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Call for a free portfolio review. Don can be reached at 089-970-5795 or email: freemancapital@gmail.com.

— Don Freeman

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Business

Vietjet CEO, dreams to transform the world

The Thaiger

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Vietjet CEO, dreams to transform the world | The Thaiger
VietJet CEO Nguyen Thi Phuong Thao: “It is not technology that transforms the world but the human’s dreams; technology is merely a means, and it is created from the dreams of the people.”

“Start-ups shouldn’t ‘save on’ dreams but rather dream big and realise them by simple acts each day at your business or organisation.”

Meet the tour-de-force behind the establishment of VietJet, one of the region’s most successful aviation start ups.

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Any first-timers meeting Vietnam’s only self-made female billionaire Nguyen Thi Phuong Thao will be taken aback by the opposites she harbours. A petite woman with a bright smile always on her face, Nguyen will talk in her soft voice about her business motto… once you dream, dare to dream big.

‘Dream big and realise them’

Nguyen has been popular in the business since her young days studying abroad. Her hard work has paid off when she became a millionaire at the age of 21 – not a usual dream for a college student. But Nguyen is different. She strives to be the pioneer of everything she does by bravely conquering all challenges.

Upon returning to Vietnam, Nguyen has quickly made her appearance widely noticed by her successful investments in the finance-banking and aviation sectors. She is now the CEO of Vietjet Air and the Vice Chairman of the Board of Directors of HDBank.

To many young Vietnamese start-ups, Nguyen is the big inspiration and a role model for them to follow.

“Start-ups shouldn’t ‘save on’ dreams but rather dream big and realise them by simple acts each day at your business or organisation. We ourselves have turned the impossible into possible and made our dream come true. Millions for the first time have been able to fly and I’m extremely happy to learn that they are not only Vietnamese but people from other countries who have boarded a Vietjet flight for the first time.”

The billionaire’s motto has also inspired her own employees at Vietjet and HDBank to keep their dreams alive despite all adversities. Regardless of the Covid-19 pandemic’s impacts on the economy, the staff at Vietjet and HDBank are confident of their company’s new business strategy and solutions to overcome the pandemic.

Nguyen even envisions Vietnamese enterprises leading and creating a global sentiment by developing them into multinational, multicultural companies and integrating the most cutting-edge technologies.

“We need to be the pioneer of the digitalisation and automation trend in the industrial revolution 4.0 – the key factors for growth.”

Her message is realised at Vietjet as the airline has recruited nearly 6,000 employees coming from 50 countries and territories on its way to revolutionise the aviation sector of Vietnam, the region and the world. HDBank, meanwhile, has particularly grown by more than 20 times in the last decade after 30 years of relentless innovation since establishment.

‘An inspirer of kindness’

Recognised as a successful businesswoman, Nguyen though never thought of making money the ultimate goal of business. The values her company can create, especially for the sake of the community, is what truly matters to her. Nguyen also highly regards business ethics, stressing that “honesty will guide us to do the good things for the society”.

Nguyen has initiated the “Wings of Love” program to grant scholarships and gifts to children at orphanages and poor families, as well as to give winter clothes to children in remote regions.

“I understand more about the responsibility of the company and that of each of us to the community every time being on a charity trip and realise how brilliant the idea of our CEO, Mrs Thao, is. We all call her an inspirer of kindness,” a Vietjet employee said.

In addition to the “Wings of Love” program, HDBank has also supported the national chess sport via the HDBank Cup International Chess Tournament for the last 10 years, preparing the ground for the internationally famous chess players like Quang Liem and Truong Son. The bank has also organised the HDBank Futsal with a long-term goal of improving the physical health of young Vietnamese.

Despite unprecedented challenges due to the pandemic, Vietjet and HDBank are still committed to charity activities. The airline has helped to bring hundreds of thousands of passengers back to their home countries like South Korea, Japan and China, while operating hundreds of repatriation flights during the pandemic. It also gave 2.5 million of face masks to the people in the United Kingdom, France, Germany and the United States. Vietjet’s aircrafts have transported thousands of tons of medical equipment and essential goods to the people under social distancing as well as urgently delivered relief cargo to the flooded Central region.

The female billionaire and her employees have cooked and distributed more than 100,000 meals to disadvantaged people like motorbike taxi drivers or street lottery sellers. HDBank has launched special credit packages in support of those who were affected by the Covid-19 pandemic, while granting 1,000 premium hospital beds to the Ho Chi Minh City Department of Health and another thousands of health insurance passes to the people.

The popular magazine Tatler has honoured Nguyen as one of the 110 Asian figures in philanthropic activities due to her lasting acts of kindness through years.

Vietjet CEO, dreams to transform the world | News by The Thaiger

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Business

Slow return of foreign tourism makes more redundancies inevitable – Airlines Association of Thailand

Maya Taylor

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Slow return of foreign tourism makes more redundancies inevitable – Airlines Association of Thailand | The Thaiger
PHOTO: Wikimedia

The president of the Airlines Association of Thailand says further layoffs in the sector are inevitable, due to the slow return of international tourism. In a Bangkok Post report, Puttipong Prasarttong-Osoth says the sluggish revival of foreign tourism, now not expected until the last quarter of the year, means all carriers continue to face financial hardship. And while there was a surge in the domestic market during the last quarter of 2020, the return of the virus in late December brought demand to a grinding halt.

“We suffered a tremendous domestic impact during the second wave, and it will take months to climb back to its peak again. While re-opening for international markets will likely occur with few countries that have bilateral agreements with Thailand first, as health safety is a big issue for local communities.”

Significant layoffs have already happened over the course of the pandemic, with staff numbers at 7 carriers under the AAT umbrella now standing at 16,000, down from between 25,000 and 30,000, prior to Covid-19. Bangkok Airways has cut 20% of its workforce and only has 30% of its fleet in operation. Puttipong, who is also the airline’s president, says it transported just 300 passengers a day during the month of January. Peak passenger numbers prior to the pandemic were around the 5,000 mark. Covid-19 has also led to the demise of low-cost carrier Nok Scoot, which went out of business in June 2020.

Puttipong predicts that Thailand’s aviation sector could take 4 years to get back to anything like the 40 million foreign arrivals of 2019. He says all carriers will need to look at cost-saving initiatives as the only means of long-term survival. Thai Air Asia is one of 7 airline members of the AAT calling for a 14 billion baht soft loan. The carrier has been pushing the government to re-open, warning that Thailand risks losing its status as an international hub.

The Bangkok Post reports that the AAT plans to submit 3 requests to state agencies this week. They are calling for the vaccination programme to be extended to airline workers as a matter of priority, for the rapid introduction of a vaccine passport policy, and for the Transport Ministry to prepare the necessary regulations for international flights.

Puttipong has welcomed the recent decision to reduce quarantine for vaccinated arrivals, pointing out that the 14-day quarantine was the most significant hurdle preventing the return of foreign tourists.

“It’s quite impossible for tourists and business travellers to take 14-day quarantines before and after trips. They might have money to spend, but they don’t have the luxury of time to be kept in isolation for almost a month.”

SOURCE: Bangkok Post

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Thailand

Facebook removes “information-influencing” pages linked to Thai military

Maya Taylor

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Facebook removes “information-influencing” pages linked to Thai military | The Thaiger
PHOTO: Facebook

Facebook has confirmed the removal of 185 accounts run by the Thai military and allegedly involved in information-influencing. The social media giant says the accounts were deleted for engaging in what it calls, “coordinated inauthentic behaviour”. In total, 77 accounts, 72 pages, and 18 groups have been removed from the platform, in addition to 18 Instagram accounts. It’s the first time Facebook has taken such action against accounts linked to the Thai government.

The accounts were associated with the Thai military and were targeting people in the southern provinces, Facebook said its regular report on coordinated inauthentic behavior. The south of the country has been the scene of decades-long conflict, with insurgent groups in the majority-Muslim, Malay-speaking region calling for independence. To date, around 7,000 people have died in the ongoing struggle.

Facebook says the deleted accounts were most active last year and used both fake and real accounts to manage pages and groups, both openly military pages and pages that hid their links to the military. Some of the fake profiles pretended to be people from the southern provinces.

The report mentioned a post by the now-removed account named “comprehending the operation” in Thai. The page posted the logo for Amnesty International Thailand and wrote “The NGO never cares about ordinary citizens because they have no role in society. Normal people are not famous. Any case is not big news. They are not worth the investment of foreigners so they will not do anything to help. This is why we don’t see anything from the NGO.”

Facebook removes “information-influencing” pages linked to Thai military | News by The Thaiger

Image overlay translates to “The NGO never cares about ordinary citizens because they have no role nor money.”

On another now-removed account, named “truth about my home Pattani” in Thai, a post said “Muslim leader declares southern border is a peace zone. The southern separatists started a movement by spreading the idea that Thailand is under control by different believers so that people would come and fight for their religion. This was declared that the action clearly violates Islam faith.”

Facebook removes “information-influencing” pages linked to Thai military | News by The Thaiger

Image overlay translates to “Southern border is not Jihad zone.”

When contacted by Reuters, the military had no comment on the removal of the Facebook accounts, with a spokesman saying the organisation does not comment outside of official press conferences.

The head of Cybersecurity Policy at Facebook, Nathaniel Gleicher, has confirmed the reasons behind the platform’s decision.

“This is the first time that we’ve attributed one of our takedowns to links to the Thai military. We found clear links between this operation and the Internal Security Operations Command. We can see that all of these accounts and groups are tied together as part of this operation.”

He adds that the accounts had spent around US$350 on advertising on both Facebook and Instagram. One or more of the pages had about 700,000 followers and at least one of the groups had 100,000 members. Gleicher says the accounts were removed because of their misleading behaviour and not because of the content being posted. The content included support for the military and the monarchy, with allegations of violence and criticism of insurgent groups in the south.

It’s not the first time accounts linked to the Thai military have been removed by a social media platform. In October, Twitter removed 926 accounts it says had links to the army and posted pro-military and pro-government content. The Thai army has denied any involvement with the accounts in question. In November, Twitter also suspended an account posting pro-monarchy content that was found to have links to the palace and to thousands of other accounts posting similar content.

To read the February 2021 Coordinated Inauthentic Behavior Report, click HERE.

SOURCES: Reuters| Facebook

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