Thai govt warned to brace for recession threat as funds flee markets

[webfact]

Govt warned to brace for recession threat as funds flee markets

By The Nation

 

 

Funds exited Thailand’s stock and bond markets on Thursday (August 15), as the Stock Exchange of Thailand Index dropped 0.95 per cent over the previous day and the market closed at 1,604.43, down 15.42 points.

 

Trade volume was high, reaching Bt100 billion on a single day. Foreign investors made net share sales worth Bt11.9 billion on Thursday, aggregating sales of Bt35.4 billion between August 1 and 15. However, their net buy was Bt25.3 billion from January 1 to August 15.

 

Foreign investors also sold government bonds worth Bt4.5 billion on Thursday, aggregating net sales of Bt1.4 billion since early this month and net sales of Bt23 billion year-to-date. Foreign investors sold both long-term and short-term bonds worth Bt2.6 billion and Bt1.8 billion respectively. However, the benchmark 10-year bonds dropped by six basis points to 1.42 per cent, suggesting that local financial institutions were buying, said Tada Phuttitada, president of the Thai Bond Market Association.

 

“Thailand also experienced an inverted yield curve, as a 10-year bond rate is lower than the short-term policy rate of the Bank of Thailand, which is currently set at 1.5 per cent,” said Tada.

 

The inverted yield curve in the United States has sparked investor concerns about a looming recession, and the three main stock markets in the US dropped 3 per cent on Wednesday.

 

In Thailand, the government has limited choice to handle an economic slowdown, he said. It is because Thai households suffer from high debt. Private investors may not want to invest more due to the unfavourable global economy. The government has also previously spent a lot of tax money, he said.

 

Sompop Manarungsan, president of the Panyapiwat Institute of Management, also voiced concerns about the threat of recession. The bond yield inversion is a credible signal of a looming recession. Currently there are massive amounts of bonds with negative yields worldwide, estimated at US$15 trillion or 25 per cent of total value of bonds estimated at $60 trillion globally, he said.

 

“This suggests there is huge liquidity in the market and financial institutions and investors are willing to subscribe to bonds although they may get less money back than they put in,” he said.

 

Sompop said the Bank of Thailand should not cut its policy rate again despite the clamour of exporters after the previous 0.25 percentage point cut. He said a rate cut would not help as the export sector was adversely impacted by the slowing global economy, not just a strong baht, he said. 

 

Thailand’s exports are expected to contract this year.

 

He suggested that the government speed up public investment such as the double-rail project, the high-speed rail and other projects in the Eastern Economic Corridor. Public investment would counter the negative impact of the global recession should it happen, he added.

 

Source: https://www.nationthailand.com/business/30374854

 

-- © Copyright The Nation Thailand 2019-08-16

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[gk10002000]

and bad exchange rates, difficult immigration rules, won't help things much either. 

[bluesofa]

9 minutes ago, gk10002000 said:

and bad exchange rates, difficult immigration rules, won't help things much either. 

Blaming the stock market is just an attempt at deflection of the issues above.

 

38 minutes ago, webfact said:

Foreign investors also sold government bonds worth Bt4.5 billion on Thursday, aggregating net sales of Bt1.4 billion since early this month and net sales of Bt23 billion year-to-date. Foreign investors sold both long-term and short-term bonds worth Bt2.6 billion and Bt1.8 billion respectively.

See! It's all their fault, not the government's.

 

[RichardColeman]

44 minutes ago, webfact said:

Public investment would counter the negative impact of the global recession

I'm sorry but I always fail to see how investing in these things helps exporters, their employees or their repayments to the bank. "We cannot export anything, hey let's build a new bridge, everybody forgets their financial problems when we build a new bridge"

[Nyezhov]

Whatever raises the value of the dollar is fine with me.

[PingRoundTheWorld]

57 minutes ago, webfact said:

Sompop said the Bank of Thailand should not cut its policy rate again despite the clamour of exporters after the previous 0.25 percentage point cut. He said a rate cut would not help as the export sector was adversely impacted by the slowing global economy, not just a strong baht, he said. 

Nonsense. The baht is at least 10% stronger against any major currency, literally meaning every single Thai export product is now 10% more expensive compared to alternatives from other countries. It's a complete no-brainer that this is the reason Thai exports are suffering. And now with China devaluing the Yuan it'll just makes things worse.

 

14 minutes ago, RichardColeman said:

I'm sorry but I always fail to see how investing in these things helps exporters, their employees or their repayments to the bank. "We cannot export anything, hey let's build a new bridge, everybody forgets their financial problems when we build a new bridge"

Investing in public projects in general stimulates the economy: it injects money into the economy by creating thousands of jobs - those people then spend more locally. It's true that exports won't rebound as a result, but most exporters also sell products locally, so if local consumption rises it'll help offset the drop in exports. Also better infrastructure usually means more productivity so it's good for the economy long term. The high speed rail project that'll connect DMK-Bangkok-BKK-Pattaya-UTP is especially a good idea as it'll encourage more tourism. Pattaya is "dead" today but if/when this project completes expect it to flourish.

 

Having said all of that - with both tourism and exports declining, there's simply no avoiding a recession - the only question is whether it's going to be bad or terrible. And let's not even start about the real estate/condo bubble and what happens when THAT explodes...

[bartender100]

Most western countries are also looking a bit dodgy at the moment, my money is out of the markets for the time being after a great run, A lot of uncertainly everywhere

 

DYOR

[DPKANKAN]

3 hours ago, RichardColeman said:

I'm sorry but I always fail to see how investing in these things helps exporters, their employees or their repayments to the bank. "We cannot export anything, hey let's build a new bridge, everybody forgets their financial problems when we build a new bridge"

It's like the saying "If we borrow 1,000 billion baht,  we can pay off all our debts"!!! 5555????????????????????????

[Paul Henry]

Some people did not read the TCC report of yesterday 4th quarter will see growth in the Thai economy after 3/4 of weakness. Who should one believe "Think I will read the tea leaves they will be more accurate and sensible"

[Isaan sailor]

Just lower the Baht.  Stupid BoT.

[peter14]

fix your immigration  hell  and maybe it would help people come back and spent...   SWIFT SWIFT OUTBOUND 

[petermik]

7 hours ago, Isaan sailor said:

Just lower the Baht.  Stupid BoT.

Too simple...they don,t do simple and logical things here....thai,s know best

[Chrisswe]

5 hours ago, gk10002000 said:

and bad exchange rates, difficult immigration rules, won't help things much either. 

This downgrade started slowley but safe c:a 5 years ago , and worse it will be !!! It's enough to walk or trevel around the country to see the reality !!!!!!

[hotchilli]

Wait until the high season starts & tourists don't arrive in the usual numbers... what spin will they put on that ?

[Topdoc]

As the volume of negative yielding debt goes exponential........... the global financial system of irredeemable currency, passes the 'event horizon' and follows Alice doune the rabbit hole.

 

 

 

[MartiniMan]

Told you so!! Check my post history!

The writing is on the wall and after reading the economic stimulus plan today - after I caught my breath from laughing so hard and making sure I hadn't missed something I can tell you all to short it to zero!!!!

Within the next year Thailand will erase a decade of economic development and reset its country.

There is no stimulus plan. It's like scribbles from a remedial student. 

The country is wealthy in natural abundance but amazingly its been ruined in just a short decade. Tourism is the heart of the GDP and without it there really isnt any industry to be excited about.

Tourism is down - way down. It wont come back

We take the stairs up and elevator down. There is biased blindness by nationals throwing their money in the fire right now but foreign investors know its over

Future puts traded yesterday record volume 5 billion contracts and moved over 50% in a day. In laymen terms bets on the stock market going down are at a all time high

Its over. There is no recovery. Stimulus doesn't exist. EEC is a fable. There will be no train line until 2030 when this mess has finally basined out and the public demand a capitalist takes control.

Edited August 16, 2019 by MartiniMan

[harada]

But, but, orders have already been issued to stop this, please explain. ????

[geoffbezoz]

5 minutes ago, harada said:

But, but, orders have already been issued to stop this, please explain. ????

Nah, the orders to stop it was just a coded message to make sure all the corrupt people had got their baht out of the country in time for the economic collapse. Apparently German and UK financial services companies have been grateful for the upturn in business in recent months 555

Edited August 16, 2019 by geoffbezoz

[Golden Triangle]

2 hours ago, MartiniMan said:

Told you so!! Check my post history!

The writing is on the wall and after reading the economic stimulus plan today - after I caught my breath from laughing so hard and making sure I hadn't missed something I can tell you all to short it to zero!!!!

Within the next year Thailand will erase a decade of economic development and reset its country.

There is no stimulus plan. It's like scribbles from a remedial student. 

The country is wealthy in natural abundance but amazingly its been ruined in just a short decade. Tourism is the heart of the GDP and without it there really isnt any industry to be excited about.

Tourism is down - way down. It wont come back

We take the stairs up and elevator down. There is biased blindness by nationals throwing their money in the fire right now but foreign investors know its over

Future puts traded yesterday record volume 5 billion contracts and moved over 50% in a day. In laymen terms bets on the stock market going down are at a all time high

Its over. There is no recovery. Stimulus doesn't exist. EEC is a fable. There will be no train line until 2030 when this mess has finally basined out and the public demand a capitalist takes control.

So, in plain English for us that don't understand, is this good or bad for expats and our exchange rates ? TIA.

[brain150]

10 minutes ago, Golden Triangle said:

So, in plain English for us that don't understand, is this good or bad for expats and our exchange rates ? TIA.

In a GLOBAL recession all currencies fall ... and the US Dollar, Pound and Euro are heading for a big cliff !!!

Winter is coming - and it's going to be a very cold one !!!

[Golden Triangle]

1 minute ago, brain150 said:

In a GLOBAL recession all currencies fall ... and the US Dollar, Pound and Euro are heading for a big cliff !!!

Winter is coming - and it's going to be a very cold one !!!

Fair point ???? My £ has already collapsed compared to 8 years ago, I reckon I am down about 20 k Baht a month at the moment and probably about to get worse due to the kerfuffle over BREXIT.

 

If (and that's a big IF) we get away with a relatively clean break from the EU it may recover slightly and if we avoid a recession it could claw back a few more % points. Not holding my breath though, Blue doesn't suit me ????  

[Handsome Gardener]

9 hours ago, RichardColeman said:

I'm sorry but I always fail to see how investing in these things helps exporters, their employees or their repayments to the bank. "We cannot export anything, hey let's build a new bridge, everybody forgets their financial problems when we build a new bridge"

Infrastructure provides jobs, jobs provides taxes, infrastructure attracts investment etc etc 

 

Whilst exports are important it is not the be all and end all

[Handsome Gardener]

7 hours ago, bartender100 said:

Most western countries are also looking a bit dodgy at the moment, my money is out of the markets for the time being after a great run, A lot of uncertainly everywhere

 

DYOR

Premature - with Brexit demolishing the UK pound you should have all your eggs in the FTSE100 - once the brexit damage really gets going you will be sat on a very nice return !

 

 

[gk10002000]

10 hours ago, Nyezhov said:

Whatever raises the value of the dollar is fine with me.

You know, frankly that even though I travel to and visit Thailand I probably agree with you.  I am not wishing them bad things, but since I have no investments in Thailand, I would put me first over Thailand and if it makes a better deal for me, so be it

[ExpatOilWorker]

4 hours ago, Topdoc said:

As the volume of negative yielding debt goes exponential........... the global financial system of irredeemable currency, passes the 'event horizon' and follows Alice doune the rabbit hole.

 

 

 

It is scary. In theory you could make a living from borrowing money.

 

 

Edited August 16, 2019 by ExpatOilWorker

[brain150]

31 minutes ago, gk10002000 said:

You know, frankly that even though I travel to and visit Thailand I probably agree with you.  I am not wishing them bad things, but since I have no investments in Thailand, I would put me first over Thailand and if it makes a better deal for me, so be it

It's a very well known fact that every reserve currency has to fail at one point !

The US dollar is no exception. 

... it's just a matter of time until the US dollar will fail. In fact it's already overdue to do so.

 

All currencies devalue ... the US dollar has lost 90% of its value already over the last 90 years..

Maybe you should learn something about what a currency actually is ! It is NOT money !!!

 

Expect a depression, not a recession - WORLD WIDE !!!

[gk10002000]

Just now, brain150 said:

It's a very well known fact that every reserve currency has to fail at one point !

The US dollar is no exception. 

... it's just a matter of time until the US dollar will fail. In fact it's already overdue to do so.

 

All currencies devalue ... the US dollar has lost 90% of its value already over the last 90 years..

Maybe you should learn something about what a currency actually is ! It is NOT money !!!

 

Expect a depression, not a recession - WORLD WIDE !!!

I don't need to learn anything about it.  It is not relative to the post I was commenting on.  If the US dollar improves against the Thai Baht, so be it.  If it doesn't, so be it. 

[Nyezhov]

1 hour ago, brain150 said:

In a GLOBAL recession all currencies fall ... and the US Dollar, Pound and Euro are heading for a big cliff !!!

Winter is coming - and it's going to be a very cold one !!!

Cool. Collapse of civie then. Max Max zombies and all that. Guess I'm not coming to Bangkok, just staying in the usa. Good thing I have a brace of ARs, thousands of rounds and cases of bingo tickets. Looks like  Those cute sjw gun control girls will probably end up in my house as part of my harem. 

[HLover]

2 minutes ago, Nyezhov said:

Guess I'm not coming to Bangkok, just staying in the usa. Good thing I have a brace of ARs, thousands of rounds

Your enlightening presence will be missed by many.

[Berkshire]

2 hours ago, Golden Triangle said:

So, in plain English for us that don't understand, is this good or bad for expats and our exchange rates ? TIA.

Foreign funds leaving the Thai financial markets is good news, and should lead to the weakening of the THB....albeit gradually.