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Finance: Track price action, not pundits’ talk

Legacy Phuket Gazette

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PHUKET: As I am writing this, I haven’t turned on a TV in more than 10 days. So I am not getting any news from a verbal source about nuclear confrontations with North Korea, Trump uncertainty or whatever else is going on in the world. However, I have been reading the news and it’s different when you read news versus just listening to people talk on TV.

I am also watching for the price action of the market, key indices and stocks. What I see is that despite all the scary news and uncertainty, the market appears to be coiled with many key indices or stocks about to spring forward.

Instead of dwelling on the negative, just consider the following signs about what is going right.

Track the iShares North American Tech-Software ETF (NYSEARCA: IGV) performance. This focuses on a high growth sector and its performance gives a better indicator about stocks than anything we would get from watching CNN, CNBC or any other ‘news’ channel. IGV is where the big strong growth companies and leadership stocks exist and it’s hitting all-time highs as of the end of April. If IGV were to break down, then I would be raising cash.

Secondly, Alibaba Group Holding Ltd (NYSE: BABA) has broken out. While it is a global Internet behemoth, right now it has one of the most bullish charts in the market as compared to just before the US elections. BABA then pulled back a bit only to hit a yearly high and now sits just below all-time highs and is above its IPO debut for retail investors.

Observe how other stocks have powered higher. Stocks such as online travel giant Priceline Group (NASDAQ: PCLN) and life sciences cloud computing stock Veeva Systems (NYSE: VEEV) have continued to act well with PCLN up 25 per cent since the start of the year and VEEV up 31 per cent (as of the end of April).

Look for tight lines on technical charts. Looking over the technical charts for leadership stocks such as Alibaba, Priceline Group, Alphabet (NASDAQ: GOOG) and Apple (NASDAQ: AAPL), we see no evidence that ‘smart money’ investors are selling shares or taking profits off the table.

Observe the Netflix (NASDAQ: NFLX) technical chart. Netflix is a good example of a stock hitting all-time highs and yet, not many investors are cashing out by selling shares. This means most investors believe its run-up is not over.

Amazon.com (NASDAQ: AMZN) looks resilient. Amazon is a juggernaut and since the US elections, it’s steadily powered higher as more traditional brick and mortar retailers continue to struggle to compete with it. AMZN’s chart also looks similar to Netflix as it steadily moves higher.

I am keeping an eye out for the overall S&P 500 index to finally break out of a two to three year bottoming formation to (more than likely) stair step to higher levels. If that were to happen, even weaker non-leadership stocks would likely be taken along for the ride.

Don Freeman, BSME is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 20 years of 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: freeman capital@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.

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Thai Airways’ creditors to vote on rehab plan today

Maya Taylor

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PHOTO: Pixabay

Today is D-Day for Thai Airways, with 13,000 creditors voting on whether or not to accept the struggling airline’s rehabilitation plan. According to a Bangkok Post report, a source at the airline has warned that should creditors reject the plan, the carrier will be declared bankrupt and they would only receive 12.9% of what they’re owed.

In the event of a bankruptcy declaration, the airline’s assets will be appraised to decide how much of its debts can be repaid. The estimate of 12.9% is based on the value of assets currently held by the carrier.

The Bangkok Post reports that the rehabilitation plan which was submitted in March covers debts of around 410 billion baht. It’s understood major shareholders own around 180 billion baht of that debt between them. Should the rehab plan be accepted today, it’s likely Thai Airways will be given a certain timeframe in which to turn itself around.

The plan calls for the repayment period of debts arising from unsecured bonds worth 70 billion baht to be extended to 10 years, with a debt moratorium in the early stages of repayment. The airline is also introducing tough cost-cutting measures, including job reductions via early retirement for thousands of its 20,000 workers.

It’s understood the plan does not call for the Ministry of Finance to provide a loan but says anyone can obtain the loan and the ministry can help with cash injection negotiations. The State Enterprise Policy Office has already stated that the government will not re-capitalise the airline.

SOURCE: Bangkok Post

 

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Government will not re-capitalise struggling Thai Airways

Maya Taylor

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PHOTO: Wikimedia

The State Enterprise Policy Office says the government will not back a billion-baht cash injection for Thai Airways. The national airline is currently been dragged through bankruptcy proceedings.

Pantip Sripimol from the SEPO says the Thai Finance Ministry will not re-capitalise the carrier, although it remains its largest shareholder. The Bangkok Post reports that there are concerns Thai Airways could become a state enterprise once more if the ministry were to assume a majority stake once more.

Last September, the Finance Ministry reduced its stake in the national airline to less than 50%, in an effort to facilitate the debt-rehabilitation process. As a result, the carrier is no longer a state-owned enterprise and it’s understood a number of cabinet ministers are concerned that, should the airline regain its status as a state enterprise, the government would have to guarantee a billion-baht loan to ensure its survival.

The Bangkok Post reports that both the Finance Minister, Arkhom Termpittayapaisith, and Deputy PM, Supattanapong Punmeechaow, both support re-establishing the airline as a state enterprise. They argue that doing so would improve its financial situation and provide more leverage for negotiating with creditors. Such a move would mean the Finance Ministry becoming a majority shareholder once again.

As it is, the airline’s bankruptcy proceedings have been taken up with renegotiating with creditors – mostly aircraft lessees. The majority of Thai Airways’ fleet remains grounded and gathering dust, parked at Suvarnabhumi airport.

However, Pantip says the ministry will not re-capitalise the airline and is prepared to reduce its shareholding if other investors purchased additional shares. The ministry currently has a 49.9% stake in Thai Airways, with Pantip saying it would be difficult to justify a further cash injection to shareholders.

With the airline now operating as a private business, the government is no longer obliged to prop it up monetarily, nor is the Finance Ministry obliged to offer financial help to a private company, despite being its largest shareholder.

On Wednesday, creditors will meet to discuss the airline’s debt restructuring plan and decide if they are to accept it.

SOURCE: Bangkok Post

 

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Thailand jumps on the electric bandwagon, aims to become EV production hub

Maya Taylor

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PHOTO: Flickr / JCT 600

The Thai government has ambitious plans to turn the Kingdom into a Southeast Asian hub for the manufacture of electric vehicles. Nikkei Asia reports that big companies in Thailand are preparing to invest substantially in the greener mode of transport, after the National Electric Vehicle Policy Committee suggested a new manufacturing target could mean half of Thailand’s auto-production is made up of electric vehicles by 2030.

The message to car manufacturers and energy suppliers is to grab this opportunity to invest in the necessary infrastructure to support electric vehicles, as the number of drivers using such cars is expected to rise significantly. The Thailand Board of Investment says that between 2017 and 2019, investment in EV production and its infrastructure reached 79 billion baht. That figure is expected to rise at a much quicker rate over the next 3 years.

According to the Nikkei Asia report, Toyota was the first car manufacturer to make EVs in the Kingdom, with Chinese manufacturers becoming more competitive in recent years. The latest Chinese firm to join the EV revolution is Great Wall Motor, which plans to launch electric vehicles this year. The number of EV manufacturers in Thailand is also growing, but Surapong Phaisitpattanapong from the Federation of Thai Industries’ Automotive Industry Club says they still need to overcome serious supply chain challenges. He says manufacturers of the traditional internal combustion engine now find themselves trying to supply parts for electric vehicles, including batteries, motors and converters.

“It’s all about the economy of scale. If the number of EV users goes up substantially, it would be worth investing, and everyone, including auto parts makers, would be ready to switch to producing EV parts, and that would create supply chains that are ready for the development of EVs, but it will take time.”

Surapong points out that the government hasn’t provided enough subsidies to encourage the purchase of electric vehicles, saying there needs to be more of an incentive to deliver the sales boost needed.

“We think there should be a more direct subsidy for EV buyers to promote EVs, but we haven’t seen the government issue any kind of subsidies like that yet.”

SOURCE: Nikkei Asia

 

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