Thursday, September 24, 2020

Covid-19 second wave leads to surge in demand for safe-haven assets

Jun 20. 2020
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By The Nation

Investors are likely to shift from risk assets to safe-haven assets due to uncertainty following the second wave of Covid-19 pandemic, experts said.

The baht this week moved between 30.94 and 31.24 against the dollar.

The dollar strengthened due to uncertainty following rising Covid-19 cases in the US and China, pushing up demand for the dollar and yen, which are low-risk currencies.

A currency analyst at CIMB Thai Bank expected the baht next week to move at between 30.80 and 31.30 against the dollar.

"We advise investors to follow the Covid-19 impact on the economy and the results of Thailand's Monetary Policy Committee [MPC] meeting on June 24," the analyst said.

The Stock Exchange of Thailand (SET) Index on Friday (June 19) closed at 1,370.82, down 2.16 points or 0.16 per cent, while transactions totalled Bt63.320 billion.

A stock analyst at Capital Nomura Securities expected the index next week to fluctuate between 1,330 and 1,404 due to the Bank of Thailand (BOT)'s move to order commercial banks and non-banking entities to cut the interest rates they charge for credit cards, personal credit and hire purchase.

"We advise investors to follow the MPC's meeting on June 24 whether the interest rate will be adjusted or not," the analyst said.

The price of gold stood at US$1,729 per ounce, while the price in Thailand stood at Bt25,400 per baht weight.

A gold stock analyst at YLG Bullion International said that tensions between the US and China had led to increase in demand for gold as a safe-haven asset.

"We advise investors who are able to take risks to buy gold when the price drops to the support line between $1,712 and $1,717 per ounce," the analyst said. "Investors can sell some gold to take profit when the price is unable to rise over the resistance line between $1,735 and $1,737 per ounce."

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