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Finance: Ups and downs in the price of oil

Legacy Phuket Gazette

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Finance: Ups and downs in the price of oil | The Thaiger
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PHUKET: For somebody who pays attention to commodity prices, these are extremely interesting times. I still remember many talking heads on television predicting that we’d never see oil below 100 dollars per barrel. The argument was extremely convincing, especially when the markets seemed to be confirming its truth.

With the flood of shale oil and the lifting of embargoes on Iran as the main reason given behind a move nobody saw coming, oil has been in a free fall.

What’s interesting is that not a single oil analyst from the big financial institutions predicted this move. As far as I know, there weren’t even any lone conspiracy theorists or armchair analysts that got it right. This dramatically proves my point about nobody having a crystal ball and that all cycles come to an end. I didn’t expect the commodity cycle to end so dramatically, especially considering how much money has been printed in the last seven years, and nobody else seemed to have either.

The main question we need to ask ourselves is what this ultimately means for the world economy. Indeed, most econometric models weight the price of oil more heavily than other factors, and a low oil price should have a positive impact as it lowers costs of production and transportation.

However, markets will read whatever they want into any news event and the low price seems to be generating a negative interpretation.

The story that seems to be driving traders is that the low oil price is a leading indicator of a global slowdown rather than an opportunity for the economy to operate in a more favorable way. The thing to remember though, is that the price of an oil company is not the same as the price of oil. Oil companies are more closely correlated to the S&P 500 than the price of oil.

Take ExxonMobil for example. It is still trading at over 75 dollars per share at the time of this writing. It’s off of its high by about 25 per cent, compared to about 70 per cent decline in the price of oil. The direction oil companies’ stocks will trade from here is more likely to follow the broad market. Most serious investors know the price of oil will not remain low forever and this is reflected in the way most of the oil majors will trade alongside the market.

Investing in troubled, smaller companies is different. It’s very risky and best left to professional speculators. A buyout can yield amazing returns; however, it could lead to bankruptcy if you end up with worthless shares.

In any event, I know the current oil price is very bad news for many of Phuket’s expats who work in the industry in one form or another. Many offshore service providers are making mass layoffs, the latest being 10,000 jobs gone from Schlumberger. The good news is that everything is cyclical and eventually oil prices will begin to rise again. Don’t ask me when though, and if anyone out there tries to convince you that they do, think about how many people got it right when it came to predicting the current collapse in oil price.

David Mayes, MBA, resides in Phuket and provides wealth management services to expatriates around the globe, focusing on UK pension transfers. He can be reached at david.m@faramond.com or 085-335 8573. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.

— Davis Mayes

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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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The social media giants in battle with ‘old’ media and world governments | VIDEO

The Thaiger

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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Turbulence ahead for Thailand’s aviation industry | VIDEO

The Thaiger

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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Domestic air passenger numbers double those of January

Maya Taylor

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Domestic air passenger numbers double those of January | The Thaiger
PHOTO: Vietjet

Passenger numbers on domestic flights within Thailand have doubled within a month, rising from 4,000 in January to over 10,000 this month. Having nearly recovered to pre-pandemic levels, domestic travel plummeted once more when Covid-19 resurfaced late last year.

Apirat Chaiwongnoi from the Department of Airports says 15 of Thailand’s 29 airports are now operating domestic flights, with more expected to follow. He believes the aviation sector will continue to recover further in the coming 6 months, bolstered by the national vaccine rollout.

Around 120 domestic flights a day are now operating, which is twice the number that were operating at the lowest point in the crisis. Prior to the resurgence of the virus in December, domestic passenger numbers had recovered to 30,000 – 40,000 a day, around 80% of pre-pandemic numbers.

The DoA says airports must continue to adhere to the Covid-19 hygiene measures put in place by the Health Ministry and the Civil Aviation Authority of Thailand.

SOURCE: Bangkok Post

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