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Phuket Business: When the financial gate slams shut

Legacy Phuket Gazette

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Phuket Business: When the financial gate slams shut | The Thaiger

PHUKET: Since I’m often writing about how I like alternative investment strategies, it may be a good idea to do a few pieces on the features of funds available to managers when they open.

This will help you understand what can happen when you invest in such a fund. This week is about gates – since most alternative funds write the option to put up a gate into their offer memorandums.

A gate is the ability to suspend redemptions if a certain percentage of the assets in a fund are redeemed at the same time. While this sounds like a bad thing, it can actually help save a fund and protect its remaining investors.

If a fund has illiquid assets and needs to dump them quickly, everyone loses. A gate is a way to prevent this from happening. Unfortunately, if you need to access proceeds from a sale and the fund puts up a gate, it might be some time before you get your cash.

If you’re looking at buying an alternative fund with illiquid assets, know that if there is a run a gate will likely be put up. I advise people to stay in funds where the underlying assets are exchange traded and can be liquidated quickly.

This way, a gate should never be a problem. However, some funds with illiquid underlying assets do provide extra diversification.

If you find yourself in a position where your fund has put a gate up, my personal opinion is to get your money back as soon as it becomes available again. Some would argue that if a gate is opened and lowered it means that the fund used it properly to protect the interests of remaining investors, and is therefore still a solid company.

I think that if there is a whiff of trouble with any investment you should get out as soon as possible. Whenever I’ve delayed acting on this instinct, my clients have suffered for it. Thus, I’m not going to delay getting out if a gate is lowered.

Many of the best fund managers in the world have lowering a gate as an option, so I don’t think it is good advice to avoid funds if you see they have it written into their offering
memorandum.

Just make sure you know what could happen in a moment of panic if the markets cause liquidity to drop and money to flow out of risk assets. This phenomenon might lead to a fund lowering its gates.

Make sure you know which fund assets would be easily disposed of and think of those holdings as likely to be true to the liquidity terms you read about on the fund fact sheet.

David Mayes MBA lives in Phuket and provides wealth management services to expatriates around the globe, specializing in UK pension transfers. He can be reached at 085-335-8573 or [email protected].

— David Mayes



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Business

Strong growth from key markets compensate for slight dip in Chinese tourists

The Thaiger

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Strong growth from key markets compensate for slight dip in Chinese tourists | The Thaiger

by Thanchanok Phobut | Senior Coordinator, Thailand

CBRE, international property consultants, believe that the Thai tourism market is still as resilient as ever.

Earlier this year, the Ministry of Tourism and Sports announced they are expecting more than 40 million tourists to visit Thailand this year, up from the record-breaking 38.3 million last year. According to the latest figures, the first two months of 2019 showed a 2.5% year-on-year growth in international tourist arrivals at 7.3 million, compared to 7.1 million the previous year.

In the first two months of 2019, the total number of Chinese tourist arrivals decreased slightly by 2.2% – 2.17 million in 2018 to 2.12 million this year. Chinese tourist arrivals in February, the month in which the Chinese New Year was celebrated this year, decreased by 12.3% year-on-year.

Other key feeder markets like Malaysia, India, Korea, and Japan showed double-digit growth in the first two months of 2019, with India having the highest growth at 20.1% year-on-year. Even though the combined number of tourists from these four feeder markets was smaller than that of the Chinese market alone, this positive trend could replace any loss of Chinese tourists. The challenge remains for Thailand to win back this biggest feeder market now that the most significant holiday for Chinese people has passed.

Bangkok still attracts tourists from around the world. The number of international tourist arrivals to Bangkok in the first two months of 2019 was 4.68 million, a 3% year-on-year growth. The development of a third runway in Suvarnabhumi International Airport, approved by the government on April 17, will strengthen Bangkok’s capacity to handle larger numbers of tourists in the future.

“In the first quarter of 2019, Rosewood Bangkok, a 159 key luxury hotel next to Phloen Chit BTS station, opened its doors to the public. This was one of Bangkok’s most highly-anticipated luxury hotel openings together with Capella Bangkok and Four Seasons Hotel Bangkok on the Chao Phraya River, both of which will open later this year, underpinning renewed interest in the riverside area and capitalising on recent developments outside of the hotel sector,” comments Mr. Atakawee Choosang, Head of Capital Markets – CBRE Hotels in Thailand.

CBRE believes that Bangkok will continue to be one of the top tourist destinations in the world with new luxury hotel openings, improving infrastructure, and attractions that appeal to a wide range of tourists.

Strong growth from key markets compensate for slight dip in Chinese tourists | News by The Thaiger

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World Bank downgrades Thailand’s 2019 GDP growth to 3.8%

The Thaiger

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World Bank downgrades Thailand’s 2019 GDP growth to 3.8% | The Thaiger

The World Bank is downgrading Thailand’s growth projections to 3.8% from 3.9% for 2019. This compares to last year’s 4.1% GDP. The Bank says that export growth has shrunk to 5.7% from last year’s 5.9%.

The World Bank’s senior economist for Thailand, Mr. Kiatpong Ariyapratya, says that the Word Bank also projects that Thailand’s growth rate for next year would remain at 3.8%. He was citing the East Asia and Pacific Update report,

“Thailand’s export growth projection for this year was adjusted down because of a global economic slowdown as a result of the simmering trade war between the US and China. Growth in tourist arrivals to Thailand this year is also projected to drop slightly.”

Thai PBS reports that, although Thailand’s growth projection is lower than the average 4%-5% rate for the rest of ASEAN, Mr. Kiatpong said that Thailand’s economic growth trend was improving compared to the situation 2-3 years ago, especially investment in the government and private sectors and the private sector’s consumption is picking up, constituting the main engines of economic expansion, expected to grow 4.6% and 4.3% respectively.

He warned that investments by the government sector for the year 2021, as well as government procurement projects and private sector investments, might be affected if formation of the new government is further delayed.

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Transport Ministry and State Railways told to pay HK company 11.9 billion baht

The Thaiger

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Transport Ministry and State Railways told to pay HK company 11.9 billion baht | The Thaiger

The long running issue of Bangkok’s ‘stonehenge’ has been resolved after the Supreme Administrative Court handed down its findings today over the disputed contract of the 60 kilometre link from central Bangkok to Don Mueang Airport.

The Thai Ministry of Transport and the State Railway of Thailand have been dealt a costly blow after the Supreme Administrative Court today overturned the Administrative Court’s verdict and ordered the two state agencies pay almost 11.9 billion baht in compensation to the Hong Kong-based Hopewell Holdings Company for the termination of the Hopewell project – a 60 kilometre elevated highway and rail line from central Bangkok to Don Meuang international airport back in the 90s.

Thai PBS reports that the compensation, plus another 500 million baht in bank guarantees put up by Hopewell Holdings Company, must be paid within 180 days of the verdict from the Supreme Administrative Court.

The Thai court’s verdict will put an end to the long-running legal battle, between the Transport Ministry and the SRT on one side and HK’s Hopewell Holdings on the other.

Hopewell Holding was granted the 30 year concession in 1990 to manage the project, given the nickname of the Thai “Stonehenge”.  The project was riddled with difficulties and widely criticised, resulting in construction being suspended in 1992 and the eventual termination of the contract in 1998, with less than 20% of the work completed.

The dispute over compensation went through an arbitration process under the auspices of the Thai Arbitration Institute which in 2008 ruled in favour of Hopewell Holdings, with both the Transport Ministry and the SRT ordered to pay Hopewell about 12 billion baht in compensation for wrongful termination of the concession.

The two state agencies challenged the arbitration tribunal’s ruling by taking the case to the Administrative Court which in October 2014 overturned the tribunal’s ruling on the grounds that Hopewell’s claim was barred by a time limitation.

Hopewell Holdings then successfully appealed the ruling to the Supreme Administrative Court.

SOURCE: The PBS

Transport Ministry and State Railways told to pay HK company 11.9 billion baht | News by The Thaiger

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