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Finance: Yuan’s potential impact on stocks

Legacy Phuket Gazette

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Finance: Yuan’s potential impact on stocks | The Thaiger

PHUKET: China has fired a barrage in the ongoing global currency wars with its first devaluation in two decades in hopes of propping up its export-driven economy and reducing its politically dangerous loss of manufacturing jobs.

Despite the dramatic headlines, what’s looking like a mere two per cent devaluation is unlikely to trigger a bear market in the global stock market, or even a global economic downturn. After all, the yuan has steadily appreciated over the years from 8.4 to 1 US dollar to a level of 6.3 or so, and this largely unwanted appreciation has not exactly been helping the world’s second largest economy remain competitive as an exporter.

Nevertheless, investors need to be aware of the following potential impact on stocks in certain sectors, on certain countries, and on ETFs investing in these stocks or markets:

Commodity Exporters

Bank of America’s commodity team has estimated that a 1 per cent move in the yuan is associated with a 0.5-0.6 per cent decline in US dollar commodity prices, with commodities generally being priced in the US dollar. This will impact the commodity-driven economies of countries like Australia, Brazil and Chile, along with the top and bottom lines of commodity stocks that export to China.

Other Vulnerable Economies

The economies of Hong Kong, Taiwan, Malaysia and Thailand are also vulnerable as they depend to some degree on China’s demand for their exports and services while also competing with China in other export markets. In addition, they are popular destinations for mass market Chinese tourists who could decide to stay home as a weaker yuan makes foreign travel more expensive.

Emerging Market Currencies

The yuan devaluation will likely trigger further currency devaluations elsewhere as other export-driven economies, or emerging markets, seek to remain competitive.

Steel Makers

Chinese steel makers are keen to grab a bigger share of the global steel market which already suffers from a supply glut. Cheaper Chinese steel will hit South Korean and Japanese steel makers the most as their slower domestic economies mean they are more dependent on exports than, for example, US steel makers.

Smartphone Makers

Chinese smartphone brands like Xiaomi and Huawei could become cheaper and make further inroads at the expense of Apple and Samsung among cost conscious consumers, and especially consumers in emerging markets. Budget Chinese handset makers could also enter developed markets sooner than expected.

Luxury Goods and Certain Car Makers

China is a key market for many Western luxury goods makers such as Burberry, Coach, Hermes and LVMH, along with German car makers like BMW and Volkswagen – all of whom could see an impact on their top and/or bottom lines.

Nevertheless, the yuan’s value will remain heavily influenced by the US dollar which has been strengthening on expectations that later this year, the US Federal Reserve will raise interest rates for the first time in almost a decade.

Given China’s dependency on exports, currency devaluation quickly goes to the root of at least some of the country’s current economic problems as the still badly needed free market reforms take more time and remain difficult to implement.

Finally, China ultimately seeks to have the International Monetary Fund (IMF) endorse the yuan as a reserve currency which will help boost Beijing’s global clout. In the past, the IMF has cited the lack of market influence of the yuan as a reason for not doing so, but China’s Central Bank has pledged to give market forces a stronger role in setting the currency’s value. Thus far, the yuan is only allowed to trade in a narrow band versus the US dollar with the Central Bank setting the band.

Any currency liberalization will ultimately benefit China by deepening its capital markets as well as attracting more foreign capital to help finance the enormous capital needs of the country’s public and private sectors.

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.

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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Central Thailand

Airline executive arrested for failure to pay wages of 150 workers

Maya Taylor

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Airline executive arrested for failure to pay wages of 150 workers | The Thaiger
PHOTO: Wikimedia

An airline executive has been arrested in the central province of Samut Songkhram, after complaints from150 employees that they had not been paid. Chawengsak Noiprasan, who had a court warrant issued against him in October, was taken to Don Muang police station from a property in the Bang Khan Take sub-district. He is a board member of Siam Air Transport.

The airline began operations in October 2014 with services out of Don Mueang to Hong Kong, using 2 Boeing 737-300s. 2 Boeing 737-800s were added to its fleet in late 2015. It expanded by adding Zhengzhou and Guangzhou in China to its network in early 2015. In late 2015, the airline launched flights to Macau and Singapore. In 2017, the airline ceased all operations.

But according to an article in the Bangkok Post, the carrier operates a number of scheduled and charter flights from Bangkok’s Don Mueang Airport. The Post reports that, as Chawengsak signs the company’s legal paperwork, all legal matters concerning the airline fall to him.

The Metropolitan Police Bureau says the executive has admitted to ignoring a 30 day notice issued by the labour inspector and ordering the payment of wages to 150 workers. It’s understood he is also wanted in relation to 7 other cases.

The authorities sought Chawengsak’s arrest following complaints from employees who say they haven’t received their wages for 2 months. It’s understood the airline had previously deferred salary payments for over 8 months. 150 workers filed an official complaint with Don Mueang police and also approached media outlets, asking them to pressure the airline into paying the money owed.

SOURCE: Bangkok Post

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Business

Governments & old media versus social media – who will win? | VIDEO

The Thaiger

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. 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. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

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 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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