Market turmoil in China ‘may hit exports, tourism’

THAILAND’S EXPORT and tourism sectors will take a hit if the Chinese economy tanks, Dr Somkid Jatusripitak, the deputy prime minister for economic affairs, has warned.

Finance Minister Apisak Tantiworawong, meanwhile, said the state of the global economy and money markets – shaken by the share-market crisis in China, plus the geopolitical conflict in the Middle East, and the US Federal Reserve’s interest-rate increase – was likely to affect economic recovery here, especially any pick-up in exports.

Thai exports dropped by about 5 per cent in 2015 but the government expects the export sector to rebound this year and it has forecast a 5-per cent growth target.

Somkid, head of the economic team, said the government had prepared measures and tools to cope with global fluctuations that are expected this year.

The Finance Ministry is closely monitoring the situation in China, according to Somkid, while the Bank of Thailand is ensuring that the baht is managed so that it stays within a range suitable for the Thai economy.

But concern remains about the global outlook because of signs of further slowdowns in China and Europe, while the World Bank has recently downgraded its global economic-growth forecast for this year to 2.9 per cent.

“The global outlook is not so good and we do not know how bad the China situation is, but I believe that China will be able to take care of its economy,” Somkid said.

Finance Minister Apisak said: “The China factor greatly affects Thailand’s exports, so what we are doing is managing our domestic economy by boosting domestic investment and consumption so as to support the country’s economic recovery.”

The economic team has admitted that the projected growth of Thailand’s gross domestic product of more than 3 per cent for 2016 could be negatively affected by the China factor if the situation is not under control.

Stock Exchange of Thailand president Kesara Manchusree said the situation in China had no direct impact on the Thai stock market.

She said listed companies that are worried by the decline of share prices relative to their companies’ value could seek permission from the SET to buy back shares up to the 10-per-cent limit.

Currently, 114 of 129 listed companies that got permission from the SET last year have treasury stock, while six other firms are in the process of buying back some of their shares.

“We allow listed firms to do that if they are qualified, such as if they have sufficient earnings to pay their debt and have cash to issue treasury stock,” she said.

 

Top dividend payers to be revealed

Kesara said the SET would reveal the stocks/companies paying the highest dividends next week. This is part of efforts to boost confidence so investors maintain their interest in the Thai market.

The SET Index rebounded yesterday to close up 1.57 per cent at 1,244 points, with trading value of Bt36.9 billion, after falling 2.79 per cent on Thursday.

Meanwhile, the People’s Bank of China (PBOC) increased the yuan mid-point rate to 6.5636 per US dollar, up 0.02 per cent from its mark on Thursday and higher than the yuan’s onshore closing rate of 6.5929 on Thursday.

It was the first time in nine days that the PBOC had increased the yuan’s reference rate after eight consecutive days of cuts, while Beijing also extended the trading suspension for more than 1,300 listed companies in mainland China.

China last year halted the trading of at least 1,331 companies on mainland exchanges. That represents the freezing of about US$2.6 trillion worth of shares, or about 40 per cent of the country’s market capitalisation for six months.

The suspension was supposed to end yesterday but it was extended for another three months.

The latest development in the yuan reference rate and the lock-up period has increased investors’ confidence, as evidenced by yesterday’s recovery of share prices.

The Shanghai Shenzhen CSI 300 index managed to rebound, up 3.09 per cent to reach 3,396 points as of 12.30pm yesterday.