Tata Consultancy Services, the leading IT services, business solutions and outsourcing firm today announced that the Reminbi currency trading platform for the Chinese inter-bank market, an initiative of China Foreign Exchange Trade System (CFETS), a subsidiary of People’s Bank of China (PBoC) has successfully gone live nationwide. The New Generation CNY Trading System (NGCNYTS) is a forward-looking trading system, which aims to incorporate the future vision of the Chinese Interbank market and relevant international best practices. It is designed to meet the fast growing requirements of the Chinese financial market with efficient risk management and real time monitoring systems. It supports multiple trading methods, including special features for market makers.
NGCNYTS is a next generation system providing unified platform across Debt, Money and Derivative Markets. NGCNYTS gained national importance, as it is the primary trading platform for all financial institutions such as Commercial Banks, Pension, Trust & Mutual Fund, Securities firms and Insurance companies in China.
Speaking on the successful implementation of this landmark project, Girija Pande, Executive Vice President and Head, TCS Asia Pacific, said, “We are extremely pleased to successfully deliver the CFETS project built based on our experience in other global markets and in close cooperation with CFETS who have experience in Chinese domestic market. It also provides flexibility to connect with third party front ends and other external interfaces. Deploying in ten markets at a time is a unique challenge which TCS could complete successfully.”
“The project is among the most prestigious venture of TCS in the APAC region, involving a highly dedicated multi-cultural team of over 130 associates spanning a period of more than 2 years. The team will be maintaining the system going forward and enhancing the system for additional markets,” he further added.
TCS’ trading solution at CFETS is scalable and can handle rapid growth in volumes with ease. Due to its scalable and configurable architecture, it also simplifies the addition of multiple financial products thus reducing the overall time to market.
Besides CFETS, TCS has successfully delivered the mission critical trading systems for the National Stock Exchange of India Limited, India, National Commodity and Derivatives Exchange, India and Clearing Corporation of India Limited (CCIL). TCS is also the chosen strategic partner involved in maintaining the trading applications at Deutsche Boerse AG, Germany.
TCS pioneered the entry of Indian IT industry in China in 2002 and remains at the forefront of that thrust with 1100 consultants in China and four Global delivery Centres (Beijing, Shanghai, Tianjin& Hangzhou). In 2005, TCS was invited by Chinese Government to form a Joint Venture to create a large scale global sourcing base in China. TCS China is serving over 30 Global and domestic clients like Eaton, Motorola, Cummins, China Foreign Exchange Trade System (CFETS), Guangdong Provincial Rural Credit Cooperative Union (GDRCC), China Trust Bank, Hua Xia Bank.
Wednesday, December 16, 2009
Thursday, December 3, 2009
Thai bourse announces its four strategies for 2010
The Stock Exchange of Thailand (SET) announced its four main strategies to strengthen the Thai exchange both in its quality and transaction volume to be a strong foundation for the Thai capital market and the nation’s long-term economic growth. These strategies are: 1) Enhancing the market quality and integrity; 2) Increasing liquidity; 3) Building foundation for future development and 4) Continue preparing for SET’s demutualization.
“SET Board of Governors approved SET’s next year plan, which follows its five year-strategic framework. In addition to following the four strategies, SET will continue to operate projects for the long-term development of the Thai capital market through the Capital Market Development Fund (CMDF),” revealed SET President, Patareeya Benjapolchai.
“SET will uplift the integrity of the Thai capital market by screening listed companies for transparency in management and disclosure, including implementing proactive measure in market surveillance and listing and disclosure by improving governance assessment measures, increasing transparency and build confidence of investors”
For transaction volume, SET aims at increasing market capitalization by THB100 billion from new listings. In addition, SET plans to launch new products, including THB10 gold futures in Q1/2010, interest rate futures in Q4/2010, and four more exchange-traded funds (ETFs), to increase investment opportunities and be risk management tools for investors,” said Ms. Patareeya. “Moreover, SET will increase the securities holding proportion of local institutional investors to 12-15% (As of June 2009, it was at 9.85%) of total market capitalization, to increase the Thai capital market’s stability. SET plans to have a daily average trading value at THB17.5-22.0 billion of total market capitalization and a daily average trading volume of SET50 Index Futures at 10,000-12,000 contracts,”
“SET will focus on increasing the number of listed companies with good management quality, transparency in disclosure and compliance with corporate governance principles. SET will encourage large companies or the subsidiaries of state enterprises to list, including prepare the readiness of capital market professionals, e.g., auditors or financial advisors, to support the disclosure-based listing starting in 2011, which aims at supporting medium and small-sized companies having growth potential and wanting to raise funds. Moreover, SET will promote the attraction of medium-sized companies in the eyes of investors and amend rules and regulations that obstruct listed companies’ fundraising processes,” disclosed SET Chief Marketing Officer, Issuer & Listing, Vichate Tantiwanich on the strategy to enhance the market quality and integrity.
“Aside from launching new products and increasing liquidity to the existing ones, SET will increase liquidity to medium-sized securities whose firms have had sustained impressive performance, increase the securities holding proportion of institutional investors, and increase transaction volume of institutional investors in the derivatives market. To reach its objectives, SET will develop channels and adjust its rules and regulations to facilitate institutional investors’ access, including encouraging Bank of Thailand to permit placing foreign currency as collateral to reduce cost and exchange rate risks, and increase flexibility for foreign institutional investors,” revealed Chief Marketing Officer, Markets & Post-trade Services, Sopawadee Lertmanaschai on the strategy to increase liquidity.
“The major plan in developing IT Master Plan, which will be accomplished in 2009, aims at enhancing the information technology of the securities industry to be able to increase business competitiveness and cross-border trading between the regional exchanges and other exchanges in other regions in the future. Through the ASEAN Linkage project in 2010, SET will work with its alliance exchanges intensively to develop systems supporting cross-border trading in Q1/2011. SET will be one of ASEAN exchanges to trade securities between exchanges through the ASEAN Linkage project; this will be the first such phenomenon in this region,” said SET Chief Operating Officer Nongram Wongwanich about the strategy to build foundation for future development.
Moreover, SET will increase cooperation with countries in Indochina in providing joint services, or dual listings, including revising rules to facilitate foreign companies which list on SET as their primary listing to be the gateway to Indochina as planned in the five-year strategies framework.
“In 2010, we will work on approval of laws on SET’s demutualization, together with building accurate understandings about the roles and SET’s demutualization to target groups and the general public. Besides, SET will work with the Securities and Exchange Commission (SEC) to define and delineate each other’s roles, and the governance structure after the demutualization to prevent conflict of interest,” revealed Chief Strategy Officer & Executive Director, Capital Market Research Institute, Veerathai Santiprabhob, PhD, about the preparations for SET’s demutualization, which is one of the eight measures of the Thai Capital Market Development Plan.
“At the same time, SET will be responsible for long-term capital market development to support the four strategies. This will be done through CMDF, which was established by SET to disseminate knowledge on investment and promote corporate governance and corporate social responsibility in the capital market, including supporting capital market-related research and build networks between academics and professionals in the capital market,” continued Ms. Patareeya.
“SET will promote corporate governance principles among listed companies, focusing on listed companies with prices lower than their book values, and encourage medium-sized companies to apply investor relations guidelines into action to create deeper understanding of firms among shareholders and investors,” Executive Director, Industry Development Center, Chaiyoot Chamnanlertkit.
“SET will work with commercial banks and the Thai Financial Planner Association in reaching out to savers, expanding the investor base by disseminating investment knowledge to bank customers through the campaign Wealth Manager @ Bank and Wealth Customer @ Bank. Currently, there are about 1.7 million bank accounts with the potential to invest. Besides, SET will organize the Modern Marketing campaign to enhance marketing officers’ quality to be able to give integrated advice on investment products and cooperate with Association of Securities Companies in promoting securities companies to develop their marketing officers’ skills in both quality and quantity,” SET Executive Director, Market Education Center, Punsak Vejanurug revealed.
“2010 will be a year of establishing a strong foundation to support a big change of the Thai capital market according to the Thai Capital Market Development Plan, both the demutualization of SET and the impending liberalization. SET strategies in 2010, therefore, focus on the operations that are in accordance with and support the Thai Capital Market Development Plan, in developing both quality and transaction volume, giving importance to responding to customers’ needs, e.g., listed companies, investors, and intermediaries, increasing SET effectiveness and business competitiveness and getting ready for demutualization to be a public company limited in 2011. These actions will make the Thai capital market an important mechanism driving the nation’s long-term economic growth,” concluded Ms. Patareeya.
“SET Board of Governors approved SET’s next year plan, which follows its five year-strategic framework. In addition to following the four strategies, SET will continue to operate projects for the long-term development of the Thai capital market through the Capital Market Development Fund (CMDF),” revealed SET President, Patareeya Benjapolchai.
“SET will uplift the integrity of the Thai capital market by screening listed companies for transparency in management and disclosure, including implementing proactive measure in market surveillance and listing and disclosure by improving governance assessment measures, increasing transparency and build confidence of investors”
For transaction volume, SET aims at increasing market capitalization by THB100 billion from new listings. In addition, SET plans to launch new products, including THB10 gold futures in Q1/2010, interest rate futures in Q4/2010, and four more exchange-traded funds (ETFs), to increase investment opportunities and be risk management tools for investors,” said Ms. Patareeya. “Moreover, SET will increase the securities holding proportion of local institutional investors to 12-15% (As of June 2009, it was at 9.85%) of total market capitalization, to increase the Thai capital market’s stability. SET plans to have a daily average trading value at THB17.5-22.0 billion of total market capitalization and a daily average trading volume of SET50 Index Futures at 10,000-12,000 contracts,”
“SET will focus on increasing the number of listed companies with good management quality, transparency in disclosure and compliance with corporate governance principles. SET will encourage large companies or the subsidiaries of state enterprises to list, including prepare the readiness of capital market professionals, e.g., auditors or financial advisors, to support the disclosure-based listing starting in 2011, which aims at supporting medium and small-sized companies having growth potential and wanting to raise funds. Moreover, SET will promote the attraction of medium-sized companies in the eyes of investors and amend rules and regulations that obstruct listed companies’ fundraising processes,” disclosed SET Chief Marketing Officer, Issuer & Listing, Vichate Tantiwanich on the strategy to enhance the market quality and integrity.
“Aside from launching new products and increasing liquidity to the existing ones, SET will increase liquidity to medium-sized securities whose firms have had sustained impressive performance, increase the securities holding proportion of institutional investors, and increase transaction volume of institutional investors in the derivatives market. To reach its objectives, SET will develop channels and adjust its rules and regulations to facilitate institutional investors’ access, including encouraging Bank of Thailand to permit placing foreign currency as collateral to reduce cost and exchange rate risks, and increase flexibility for foreign institutional investors,” revealed Chief Marketing Officer, Markets & Post-trade Services, Sopawadee Lertmanaschai on the strategy to increase liquidity.
“The major plan in developing IT Master Plan, which will be accomplished in 2009, aims at enhancing the information technology of the securities industry to be able to increase business competitiveness and cross-border trading between the regional exchanges and other exchanges in other regions in the future. Through the ASEAN Linkage project in 2010, SET will work with its alliance exchanges intensively to develop systems supporting cross-border trading in Q1/2011. SET will be one of ASEAN exchanges to trade securities between exchanges through the ASEAN Linkage project; this will be the first such phenomenon in this region,” said SET Chief Operating Officer Nongram Wongwanich about the strategy to build foundation for future development.
Moreover, SET will increase cooperation with countries in Indochina in providing joint services, or dual listings, including revising rules to facilitate foreign companies which list on SET as their primary listing to be the gateway to Indochina as planned in the five-year strategies framework.
“In 2010, we will work on approval of laws on SET’s demutualization, together with building accurate understandings about the roles and SET’s demutualization to target groups and the general public. Besides, SET will work with the Securities and Exchange Commission (SEC) to define and delineate each other’s roles, and the governance structure after the demutualization to prevent conflict of interest,” revealed Chief Strategy Officer & Executive Director, Capital Market Research Institute, Veerathai Santiprabhob, PhD, about the preparations for SET’s demutualization, which is one of the eight measures of the Thai Capital Market Development Plan.
“At the same time, SET will be responsible for long-term capital market development to support the four strategies. This will be done through CMDF, which was established by SET to disseminate knowledge on investment and promote corporate governance and corporate social responsibility in the capital market, including supporting capital market-related research and build networks between academics and professionals in the capital market,” continued Ms. Patareeya.
“SET will promote corporate governance principles among listed companies, focusing on listed companies with prices lower than their book values, and encourage medium-sized companies to apply investor relations guidelines into action to create deeper understanding of firms among shareholders and investors,” Executive Director, Industry Development Center, Chaiyoot Chamnanlertkit.
“SET will work with commercial banks and the Thai Financial Planner Association in reaching out to savers, expanding the investor base by disseminating investment knowledge to bank customers through the campaign Wealth Manager @ Bank and Wealth Customer @ Bank. Currently, there are about 1.7 million bank accounts with the potential to invest. Besides, SET will organize the Modern Marketing campaign to enhance marketing officers’ quality to be able to give integrated advice on investment products and cooperate with Association of Securities Companies in promoting securities companies to develop their marketing officers’ skills in both quality and quantity,” SET Executive Director, Market Education Center, Punsak Vejanurug revealed.
“2010 will be a year of establishing a strong foundation to support a big change of the Thai capital market according to the Thai Capital Market Development Plan, both the demutualization of SET and the impending liberalization. SET strategies in 2010, therefore, focus on the operations that are in accordance with and support the Thai Capital Market Development Plan, in developing both quality and transaction volume, giving importance to responding to customers’ needs, e.g., listed companies, investors, and intermediaries, increasing SET effectiveness and business competitiveness and getting ready for demutualization to be a public company limited in 2011. These actions will make the Thai capital market an important mechanism driving the nation’s long-term economic growth,” concluded Ms. Patareeya.
LCH.Clearnet’s OTC SwapClear service clears one millionth trade
SwapClear, LCH.Clearnet Limited’s (LCH.Clearnet) market leading OTC interest rate swap clearing service, has cleared its millionth trade, taking the notional value of trades in SwapClear to US$206 trillion.
Launched in 1999, SwapClear currently clears 64% of the global interbank interest rate swap market and the range of products cleared has been extended to include overnight index swaps of up to two years in four currencies and interest rate swaps in tenors of up to 30 years in up to 14 currencies.
Joe Reilly, Director, SwapClear, LCH.Clearnet said; “SwapClear’s continued success demonstrates the market demand for effective and robust clearing services for vanilla OTC products. For 10 years, SwapClear has successfully mitigated risk and provided operational efficiencies in the OTC interest rate swap market.”
The resilience of SwapClear’s default management process was demonstrated in September 2008 when it successfully handled Lehman’s $9 trillion interest rate swap default. The highly effective default management process ensured that 66,390 trades were hedged and auctioned off to other clearing members in a timely fashion and that the default was managed well within the margin held and with no recourse to the default fund.
Further developments are planned for SwapClear, including extensions to tenors to up to 50 years in some of the 14 currencies currently cleared and a service tailored for the buy-side.
LCH.Clearnet Limited is both a Financial Services Authority (FSA) Recognised Clearing House and a Commodity Futures Trading Commission (CFTC) registered Derivatives Clearing Organization (DCO).
Launched in 1999, SwapClear currently clears 64% of the global interbank interest rate swap market and the range of products cleared has been extended to include overnight index swaps of up to two years in four currencies and interest rate swaps in tenors of up to 30 years in up to 14 currencies.
Joe Reilly, Director, SwapClear, LCH.Clearnet said; “SwapClear’s continued success demonstrates the market demand for effective and robust clearing services for vanilla OTC products. For 10 years, SwapClear has successfully mitigated risk and provided operational efficiencies in the OTC interest rate swap market.”
The resilience of SwapClear’s default management process was demonstrated in September 2008 when it successfully handled Lehman’s $9 trillion interest rate swap default. The highly effective default management process ensured that 66,390 trades were hedged and auctioned off to other clearing members in a timely fashion and that the default was managed well within the margin held and with no recourse to the default fund.
Further developments are planned for SwapClear, including extensions to tenors to up to 50 years in some of the 14 currencies currently cleared and a service tailored for the buy-side.
LCH.Clearnet Limited is both a Financial Services Authority (FSA) Recognised Clearing House and a Commodity Futures Trading Commission (CFTC) registered Derivatives Clearing Organization (DCO).
Foreign investors continued to be net buyers of Thai stocks
Offshore interest in investing in the Thai capital market continued to expand, as foreign investors have now been net buyers for the eight consecutive months through October 2009. At the same time, daily average trading value continued to rise, reaching a 27-month high. Locally, the number of active trading accounts and trading value per account consistently rose. Nevertheless, worries over the global economic recovery as well as negative rumors in the domestic market led to a drop in The Stock Exchange of Thailand (SET) Index and market capitalization.
Meanwhile, daily average trading volume of every product in Thailand Futures Exchange PCL (TFEX) increased, particularly in gold futures, which made a new high for the second consecutive month since it started trading. This rise resulted from investors’ interest in the global gold prices, which continued to increase.
Operating performance of the Banking Sector in Q3/2009 improved, both for the year-on-year and quarter-to-quarter comparison basis. In particular, its net profits rose, while the non-performing loans (NPL) decreased.
Regarding the liberalization of commission fee for stock trading using sliding scale in 2010 and the enforcement of the full liberalization in 2012, the favorable environment and improved structure of Thai securities business today should help them be better prepared for the adjustment, compared to the previous liberalization attempted in 2000. This is due to the increased financial strength of the securities industry, the growth in trading value, the rise in number of trading accounts, the increased variety and diversification of sources of income, and new services and products to meet investors’ needs in every market environment.
1. Performance Overview: Thai vs. regional exchanges
The Stock Exchange of Thailand (SET) Index as of end-October 2009 decreased by 4.44% from end-September 2009, due to investors’ worries over the global economic recovery combined with negative rumor in the domestic market. The decrease in SET Index resulted in a drop in forward P/E ratio to 11.9 times as of October 30, 2009, which remained among the lowest in the region. Meanwhile, the market dividend yield was at 3.68%, the highest in the region.
2. Summary of Thai capital market performance
In October 2009, the Thai capital market was affected by negative rumor during October 14-15, which resulted in the month’s lowest SET Index at 670.72 on October 15, before rebounding after the news had been clarified. However, at the end of October, SET Index decreased again, in line with other regional exchanges’ indices. As of end-October 2009, SET Index closed at 685.24, down 4.44% from the previous month. On the other hand, the mai Index closed at 209.93, or 4.43% rise from the previous month.
As of October 2009, the total market capitalization of SET and mai was at THB5.5 trillion (approx. USD165.34 billion), a 4.28% drop from end-September 2009, mainly as a result of a decrease in SET Index.
As of October 2009, the number of securities having a price to book value ratio (P/BV) of less than one decreased slightly from 277 securities (as of September) to 275, equivalent to 53.29% of all 516 common stocks.
3. Trading activity
In October 2009, average daily trading value reached its highest level in 27 months. SET and Market for Alternative Investment (mai)’s combined average daily trading value reached THB27.01 billion (approx. USD810.56 million), the highest level in 27 months, or since July 2007, when the daily average trading value stood at THB32.18 billion (approx. USD965.77 million). In October 2009, the total trading value was THB567.33 billion (approx. USD17.02 billion).
Moreover, retail investors were more active than any other investor groups, accounting for 63% of total trading value. Local institutional investors and the securities companies’ proprietary trading held net sell positions, while retail and foreign investors held net buy positions. Foreign investors have had a net buy position for eight consecutive months. During January – October, 2009, foreign investors had a net buy position of THB55.72 billion (approx. USD1.67 billion), compared to a net sell position of THB162.35 billion (approx. USD4.87 billion) for the whole 2008.
Trading value by industry showed that the share of trading value in the Energy Sector stocks has decreased, while that of the Banking Sector has increased. The share of trading value in Energy Sector stocks has decreased to 27% from 32% in previous month. On the other hand, the share of trading value in Banking Sector stocks has increased to 24%, after dropping during the past two months. Stocks in the Other Industry Sectors which enjoyed an increase in trading value share were the Agribusiness Sector, up to 4.3% in October vs. a 1.3% in the previous month. Meanwhile, the share of trading value categorized by market capitalization of the stocks was close to that of the previous month. The share of trading value for securities in SET10 group slightly increased to 36%, from 34% in the previous month.
4. Active trading accounts
There were 143,108 active trading accounts as of end-September 2009, a rise of 39% over the same period of last year. The ratio of active accounts to total trading accounts in October rose to 25.8% from the 23.2% of the previous month. The average trading value of THB3.94 million per account in October was an increase of 61% over September 2008.
The number of active internet trading accounts in October 2009 rose 5% over September 2009. Meanwhile, the value of internet trading increased by 118%, compared to that of October 2008, but decreased by 4% decrease compared to that of September 2009. Internet trading value in October 2009 was at THB123.68 million (approx. USD3.71 billion), equivalent to 21.8% of total trading value, a slight decrease from 22.5% in the previous month.
5. Overview of the derivatives market
Gold futures’ trading volume has increased continually and reached a historic high since the start of trading. In October 2009, TFEX’s daily average trading volume was 16,012 contracts, a 22% increase from previous month, due to price fluctuations of the underlying product. Trading volume has increased for every derivative product. The product with the highest trading volume compared to that of the previous month was single stock futures, with an 85% increase, followed by gold futures, up 64%. Gold futures recorded the highest daily average trading volume (new high) for the second consecutive month since the start of trading in February 2009, due to heightened investors’ interest driven by rising gold prices.
6. Overview of the funds raised
In October 2009, listed companies raised total funds of THB2.85 billion (approx. USD85.54 billion) from the capital market, consisting of the funds raised via IPOs of THB248 million (approx. USD7.44 million) by Kiattana Transport PCL (KIAT) and Moong Pattana International PCL (MOONG). Meanwhile, THB2.60 billion (approx. USD78.10 million) was raised through seasonal equity offerings (SEOs). Among the key fund raising activities via SEO were Thai Vegetable Oil PCL (TVO) and PTT PCL’s group at THB845 million (approx. USD25.35 million) and THB582 million (approx. USD17.46 million), respectively.
Special Topic
1. Report on the Banking Sector’s operating performance for Q3/2009
In Q3/2009, the Banking Sector’s operating performance improved, when compared to the same period last year as well as the previous quarter. The net profits stood at THB24.99 billion (approx. USD749.74 million) in Q3/2009, an increase of 12.8% over Q2/2009, or an increase of 5.6% over the same period last year. This is due to rises in revenue from loan fees for retail customers and decreases in loan loss provision. Moreover, banks could maintain the quality of their assets, as demonstrating by the Non-performing loans of 5.7%, a decrease from 5.74% in Q2/2009 and from 6.46% in Q3/2008.
2. Liberalization of stock trading commissions
Given improved environment and industry structure, Thailand’s securities business is better prepared for the upcoming liberalization of stock trading commissions, which will be enforced on a sliding scale basis in 2010, following with the full liberalization in 2012. The industry should be better prepared to cope with challenges from the liberalization than during the previous liberalization in 2000 because of the following reasons:
1. Overall, securities firms have greater financial strength than in 2000: During 2005- Sept. 2009 (excluding the year 2008, when SET was affected by the economic crisis), the securities companies’ average net profit ratio was 20%. Moreover, total shareholder’s equity of all securities firms as of September 2009 reached THB57.13 billion (approx. USD1.71 billion), doubled that of the year 2000.
2. The number of active accounts and average trading value has soared. The number of active accounts per month (monthly average over 9M/2009) was at 102,652 accounts, more than two times of the figure in 2000, which were only 48,432 accounts. Meanwhile, daily average trading value during 2005 – October 2009 was at THB15.87 billion, roughly three times of the figure of THB4.9 billion during 1999-2000 (before the previous liberalization). Moreover, Internet trading, which provides lower commissions compared to other traditional channels, soared, accounting for 21% of total trading value (average rate of 9M/2009), compared to the very low rate in 2000 of less than 0.1% .
3. Securities companies’ variety and diversified sources of income
Income from proprietary trading For the past several years, securities companies have gradually emphasized generating income from proprietary trading, reflected in the increasing proportion of proprietary trading. As of October 2009, proprietary trading accounted for 12% of total trading value, compared only 1% of total trading value during 1999-2000.
Income generated from more financial products In 2006, TFEX launched its first derivatives products, SET50 Index Futures, followed by SET50 Index Option, Single Stock Futures and Gold Futures. Moreover, TFEX plans to launch two more products, mini-gold futures and interest rate futures in 2010. Increased variety of financial products would enable the Thai capital market to respond to investors needs in every market circumstance.
Income generated from a wider variety of services At present, securities companies can generate income form providing various new services including sales representative services for mutual funds and bonds, securities borrowing and lending (SBL), foreign stock trading as well as structured note issuance.
4. Finding alliances to strengthen business competitiveness. Over the years, regulators have relaxed the rules to enable securities companies to flexibly merge their businesses. In 2009, five securities firms merged in part as a preparation for the liberalization in 2012, namely, 1) KTB Securities Co., Ltd. and Seamico Securities Co., Ltd. joined to become KT Zimico Securities Co., Ltd., and 2) Finansa Securities Co., Ltd., Syrus Securities Co., Ltd. and ACL Securities Co., Ltd., combined to become Finansia Syrus Co., Ltd.
For above reasons, securities companies are expected to be able to adjust more efficiently to the challenges from the upcoming liberalization. This should result in greater competition and efficiency as well as high quality services that better respond to investors’ needs.
Meanwhile, daily average trading volume of every product in Thailand Futures Exchange PCL (TFEX) increased, particularly in gold futures, which made a new high for the second consecutive month since it started trading. This rise resulted from investors’ interest in the global gold prices, which continued to increase.
Operating performance of the Banking Sector in Q3/2009 improved, both for the year-on-year and quarter-to-quarter comparison basis. In particular, its net profits rose, while the non-performing loans (NPL) decreased.
Regarding the liberalization of commission fee for stock trading using sliding scale in 2010 and the enforcement of the full liberalization in 2012, the favorable environment and improved structure of Thai securities business today should help them be better prepared for the adjustment, compared to the previous liberalization attempted in 2000. This is due to the increased financial strength of the securities industry, the growth in trading value, the rise in number of trading accounts, the increased variety and diversification of sources of income, and new services and products to meet investors’ needs in every market environment.
1. Performance Overview: Thai vs. regional exchanges
The Stock Exchange of Thailand (SET) Index as of end-October 2009 decreased by 4.44% from end-September 2009, due to investors’ worries over the global economic recovery combined with negative rumor in the domestic market. The decrease in SET Index resulted in a drop in forward P/E ratio to 11.9 times as of October 30, 2009, which remained among the lowest in the region. Meanwhile, the market dividend yield was at 3.68%, the highest in the region.
2. Summary of Thai capital market performance
In October 2009, the Thai capital market was affected by negative rumor during October 14-15, which resulted in the month’s lowest SET Index at 670.72 on October 15, before rebounding after the news had been clarified. However, at the end of October, SET Index decreased again, in line with other regional exchanges’ indices. As of end-October 2009, SET Index closed at 685.24, down 4.44% from the previous month. On the other hand, the mai Index closed at 209.93, or 4.43% rise from the previous month.
As of October 2009, the total market capitalization of SET and mai was at THB5.5 trillion (approx. USD165.34 billion), a 4.28% drop from end-September 2009, mainly as a result of a decrease in SET Index.
As of October 2009, the number of securities having a price to book value ratio (P/BV) of less than one decreased slightly from 277 securities (as of September) to 275, equivalent to 53.29% of all 516 common stocks.
3. Trading activity
In October 2009, average daily trading value reached its highest level in 27 months. SET and Market for Alternative Investment (mai)’s combined average daily trading value reached THB27.01 billion (approx. USD810.56 million), the highest level in 27 months, or since July 2007, when the daily average trading value stood at THB32.18 billion (approx. USD965.77 million). In October 2009, the total trading value was THB567.33 billion (approx. USD17.02 billion).
Moreover, retail investors were more active than any other investor groups, accounting for 63% of total trading value. Local institutional investors and the securities companies’ proprietary trading held net sell positions, while retail and foreign investors held net buy positions. Foreign investors have had a net buy position for eight consecutive months. During January – October, 2009, foreign investors had a net buy position of THB55.72 billion (approx. USD1.67 billion), compared to a net sell position of THB162.35 billion (approx. USD4.87 billion) for the whole 2008.
Trading value by industry showed that the share of trading value in the Energy Sector stocks has decreased, while that of the Banking Sector has increased. The share of trading value in Energy Sector stocks has decreased to 27% from 32% in previous month. On the other hand, the share of trading value in Banking Sector stocks has increased to 24%, after dropping during the past two months. Stocks in the Other Industry Sectors which enjoyed an increase in trading value share were the Agribusiness Sector, up to 4.3% in October vs. a 1.3% in the previous month. Meanwhile, the share of trading value categorized by market capitalization of the stocks was close to that of the previous month. The share of trading value for securities in SET10 group slightly increased to 36%, from 34% in the previous month.
4. Active trading accounts
There were 143,108 active trading accounts as of end-September 2009, a rise of 39% over the same period of last year. The ratio of active accounts to total trading accounts in October rose to 25.8% from the 23.2% of the previous month. The average trading value of THB3.94 million per account in October was an increase of 61% over September 2008.
The number of active internet trading accounts in October 2009 rose 5% over September 2009. Meanwhile, the value of internet trading increased by 118%, compared to that of October 2008, but decreased by 4% decrease compared to that of September 2009. Internet trading value in October 2009 was at THB123.68 million (approx. USD3.71 billion), equivalent to 21.8% of total trading value, a slight decrease from 22.5% in the previous month.
5. Overview of the derivatives market
Gold futures’ trading volume has increased continually and reached a historic high since the start of trading. In October 2009, TFEX’s daily average trading volume was 16,012 contracts, a 22% increase from previous month, due to price fluctuations of the underlying product. Trading volume has increased for every derivative product. The product with the highest trading volume compared to that of the previous month was single stock futures, with an 85% increase, followed by gold futures, up 64%. Gold futures recorded the highest daily average trading volume (new high) for the second consecutive month since the start of trading in February 2009, due to heightened investors’ interest driven by rising gold prices.
6. Overview of the funds raised
In October 2009, listed companies raised total funds of THB2.85 billion (approx. USD85.54 billion) from the capital market, consisting of the funds raised via IPOs of THB248 million (approx. USD7.44 million) by Kiattana Transport PCL (KIAT) and Moong Pattana International PCL (MOONG). Meanwhile, THB2.60 billion (approx. USD78.10 million) was raised through seasonal equity offerings (SEOs). Among the key fund raising activities via SEO were Thai Vegetable Oil PCL (TVO) and PTT PCL’s group at THB845 million (approx. USD25.35 million) and THB582 million (approx. USD17.46 million), respectively.
Special Topic
1. Report on the Banking Sector’s operating performance for Q3/2009
In Q3/2009, the Banking Sector’s operating performance improved, when compared to the same period last year as well as the previous quarter. The net profits stood at THB24.99 billion (approx. USD749.74 million) in Q3/2009, an increase of 12.8% over Q2/2009, or an increase of 5.6% over the same period last year. This is due to rises in revenue from loan fees for retail customers and decreases in loan loss provision. Moreover, banks could maintain the quality of their assets, as demonstrating by the Non-performing loans of 5.7%, a decrease from 5.74% in Q2/2009 and from 6.46% in Q3/2008.
2. Liberalization of stock trading commissions
Given improved environment and industry structure, Thailand’s securities business is better prepared for the upcoming liberalization of stock trading commissions, which will be enforced on a sliding scale basis in 2010, following with the full liberalization in 2012. The industry should be better prepared to cope with challenges from the liberalization than during the previous liberalization in 2000 because of the following reasons:
1. Overall, securities firms have greater financial strength than in 2000: During 2005- Sept. 2009 (excluding the year 2008, when SET was affected by the economic crisis), the securities companies’ average net profit ratio was 20%. Moreover, total shareholder’s equity of all securities firms as of September 2009 reached THB57.13 billion (approx. USD1.71 billion), doubled that of the year 2000.
2. The number of active accounts and average trading value has soared. The number of active accounts per month (monthly average over 9M/2009) was at 102,652 accounts, more than two times of the figure in 2000, which were only 48,432 accounts. Meanwhile, daily average trading value during 2005 – October 2009 was at THB15.87 billion, roughly three times of the figure of THB4.9 billion during 1999-2000 (before the previous liberalization). Moreover, Internet trading, which provides lower commissions compared to other traditional channels, soared, accounting for 21% of total trading value (average rate of 9M/2009), compared to the very low rate in 2000 of less than 0.1% .
3. Securities companies’ variety and diversified sources of income
Income from proprietary trading For the past several years, securities companies have gradually emphasized generating income from proprietary trading, reflected in the increasing proportion of proprietary trading. As of October 2009, proprietary trading accounted for 12% of total trading value, compared only 1% of total trading value during 1999-2000.
Income generated from more financial products In 2006, TFEX launched its first derivatives products, SET50 Index Futures, followed by SET50 Index Option, Single Stock Futures and Gold Futures. Moreover, TFEX plans to launch two more products, mini-gold futures and interest rate futures in 2010. Increased variety of financial products would enable the Thai capital market to respond to investors needs in every market circumstance.
Income generated from a wider variety of services At present, securities companies can generate income form providing various new services including sales representative services for mutual funds and bonds, securities borrowing and lending (SBL), foreign stock trading as well as structured note issuance.
4. Finding alliances to strengthen business competitiveness. Over the years, regulators have relaxed the rules to enable securities companies to flexibly merge their businesses. In 2009, five securities firms merged in part as a preparation for the liberalization in 2012, namely, 1) KTB Securities Co., Ltd. and Seamico Securities Co., Ltd. joined to become KT Zimico Securities Co., Ltd., and 2) Finansa Securities Co., Ltd., Syrus Securities Co., Ltd. and ACL Securities Co., Ltd., combined to become Finansia Syrus Co., Ltd.
For above reasons, securities companies are expected to be able to adjust more efficiently to the challenges from the upcoming liberalization. This should result in greater competition and efficiency as well as high quality services that better respond to investors’ needs.
Saturday, November 21, 2009
Calypso System integrates with Bloomberg server API via Sky Road
Calypso Technology, Inc, a global application software provider of an integrated trading and risk management application suite to the capital markets industry, today announced the integration of the Bloomberg Server API (application programming interface) with the Calypso Platform via Sky Road LLC, a leading solutions provider to the financial community. The Bloomberg Server API is a significant enhancement to the multi asset class portfolio and risk management hosted solution that Calypso Technology and Sky Road launched in 2005, that has redefined the space with custom capabilities and unprecedented asset coverage. Bloomberg has completed the certification of the API integration and Bloomberg's high-quality real-time data is now available to Calypso Technology and Sky Road joint clients. Calypso Technology and Sky Road undertook this initiative to ensure that their clients have access to reliable and accurate market data from the leading providers.
The Bloomberg integration represents continuing growth of the Calypso Technology and Sky Road strategic partnership formed in 2005 to leverage the Sky Road platform on Calypso Technology's end-to-end derivatives and treasury processing solution to deliver cross-asset, front-to-back office trading capabilities in a flexible, hosted environment. The strategic partnership has resulted in numerous joint customers in the US and UK, with several new fund managers expected to license the solutions by year end 2010.
John Borse, CEO of Sky Road, notes, "We're very excited to be offering our clients access to Bloomberg data. The joint clients of Calypso Technology and Sky Road need sophisticated market data alternatives and we believe that the Bloomberg Server API integration will open up new opportunities and benefits for these firms."
Charles Marston, CEO of Calypso Technology, comments, "Since Calypso Technology and Sky Road first joined together, we have continuously worked closely together to develop what is a very powerful hosted solution, uniting the sophisticated technology and innovations of both firms to deliver the Calypso-based Sky Road solution. As we develop new ways to meet the needs of our clients, we look forward to the continued success of our partnership with Sky Road."
The Bloomberg integration represents continuing growth of the Calypso Technology and Sky Road strategic partnership formed in 2005 to leverage the Sky Road platform on Calypso Technology's end-to-end derivatives and treasury processing solution to deliver cross-asset, front-to-back office trading capabilities in a flexible, hosted environment. The strategic partnership has resulted in numerous joint customers in the US and UK, with several new fund managers expected to license the solutions by year end 2010.
John Borse, CEO of Sky Road, notes, "We're very excited to be offering our clients access to Bloomberg data. The joint clients of Calypso Technology and Sky Road need sophisticated market data alternatives and we believe that the Bloomberg Server API integration will open up new opportunities and benefits for these firms."
Charles Marston, CEO of Calypso Technology, comments, "Since Calypso Technology and Sky Road first joined together, we have continuously worked closely together to develop what is a very powerful hosted solution, uniting the sophisticated technology and innovations of both firms to deliver the Calypso-based Sky Road solution. As we develop new ways to meet the needs of our clients, we look forward to the continued success of our partnership with Sky Road."
Sunday, November 8, 2009
FUTURES FOCUS
The SET50 Index closed last week at 483.67 points, a decrease of 19.73 points or 3.92% from the previous week. For SET50 Index Futures, the nearest contract month S50Z09 (expiring in December 2009), was settled at 476.4 points, a decrease of 23.6 index points or 4.72% from a week earlier.
At the beginning of last week, the Dow Jones Industrial Average (DJIA) declined because of more stock selling in many sectors, concern about the consumer confidence index and the fall in single-family home sales after successive increases since June. However, on Thursday the DJIA increased sharply after the release of many better-than-expected economic indicators. Most notable was the US third-quarter GDP, which grew at an annual rate of 3.5% after having contracted for more than a year, which influenced the confidence in economic recovery and listed companies' earnings. Even so, the Dow still shed 2.6% on the week to close at 9,712.73.
In Thailand, the SET Index continued decreasing from the previous week because many foreign investors remained concerned about the strength of the economic recovery,while local investors remained in wait-and-see mode. Moreover,the Thai market would remain under pressure due to the Map Ta Phut case. A hearing on the government's appeal of the Administrative Court decision is scheduled for today.
On the TFEX, average daily trading volume was 18,136 contracts, an increase of 1,468 contracts from the previous week. Open interest was 44,614 contracts, an increase of 876 contracts from the previous week.
At the beginning of last week, the Dow Jones Industrial Average (DJIA) declined because of more stock selling in many sectors, concern about the consumer confidence index and the fall in single-family home sales after successive increases since June. However, on Thursday the DJIA increased sharply after the release of many better-than-expected economic indicators. Most notable was the US third-quarter GDP, which grew at an annual rate of 3.5% after having contracted for more than a year, which influenced the confidence in economic recovery and listed companies' earnings. Even so, the Dow still shed 2.6% on the week to close at 9,712.73.
In Thailand, the SET Index continued decreasing from the previous week because many foreign investors remained concerned about the strength of the economic recovery,while local investors remained in wait-and-see mode. Moreover,the Thai market would remain under pressure due to the Map Ta Phut case. A hearing on the government's appeal of the Administrative Court decision is scheduled for today.
On the TFEX, average daily trading volume was 18,136 contracts, an increase of 1,468 contracts from the previous week. Open interest was 44,614 contracts, an increase of 876 contracts from the previous week.
Saturday, October 17, 2009
Gold soars further as investors hedge against dollar, inflation
Gold advanced to a record for a second consecutive day as investors bought precious metals to hedge against a weaker dollar and faster inflation. Silver reached a 14-month high and platinum the most in 13 months.
The dollar index, a six-currency gauge of the dollar's value, slumped to the lowest level since August of last year on bets the Federal Reseve will trail other central banks in increasing borrowing costs.
Gold reached US$1,070.80 (Bt35,812) in London, while futures rose to $1,072 in New York as crude oil, used by some investors as an inflation guide, reached a one-year high. Taiwan's central bank said it might consider placing more of its reserves in gold.
"Most of the gold rally has been attributable to a weaker dollar," said Tobias Merath, head of commodity research at Credit Suisse Group in Zurich. "We are in uncharted territory. You still have robust investment flows and we think gold can easily reach $1,100 an ounce" this year, he said.
Immediate-delivery bullion added $1.15, or 0.1 per cent, to $1,065.45 an ounce by mid-morning local time. Spot prices have advanced 21 per cent this year and are heading for a ninth annual gain. December futures were 0.1 per cent higher at $1,066.40 an ounce on the New York Mercantile Exchange's Comex division.
"What's happening it that they are selling out of dollars and buying equities around the world, currencies and of course gold," said Mark Pervan, head of commodity research at ANZ Banking Group. "The dollar is being held hostage to increased rish appetite."
Taiwan may consider buying more gold, its central bank governor Perng Fai-nan told reporters in Taipei yesterday. The news helped boost bullion prices, Credit Suisse said in a note.
The dollar index slipped 0.5 per cent yesterday, taking its loss this year to 7 per cent. Oil futures gained as much as 1.4 per cent to $75.15 a barrel in New York and have soared 68 per cent this year.
"The all-night printing runs at the Treasury are chipping away at the dollar's ability to hold value compared to other currencies and commodities," Mike Sander, in Seattle, said on Tuesday. "With dollar weakness, inflation fears, a huge budget deficit, energy prices creeping up, metals such as gold, silver and copper will be pushed up in price."
US President Barack Obama has increased US marketable debt to a record as he borrows to reignite growth in the world's biggest economy. That's boosted speculation increased money supply will debase the currency and spur inflation.
The Federal Reserve has cut its main interest rate almost to zero and backed asset purchases and credit programmes to combat the recession. Chairman Ben Bernanke is leading plans to buy mortgage-backed securities, federal agency debt and treasuries.
"A weakening US dollar and easy liquidity conditions will mainly favour precious metals, and we expect prices of gold, silver and platinum all to register further gains over the next year," Morgan Stanley analysts said in a report yesterday.
Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged for a fourth day at 1,109.31 metric tonnes on Tuesday, according to the company's website. Assets in ETF Securities' exchange-traded products added 0.6 per cent to a record 8.493 million ounces on Tuesday, its website showed.
Silver jumped as much as 1.7 per cent to $18.085 an ounce, the highest since July of last year, and was last at $17.97. Platinum rose to a 13-month high of $1,365.50 an ounce before trading at $1,362 and palladium added 0.6 per cent to $330.60 an ounce.
The dollar index, a six-currency gauge of the dollar's value, slumped to the lowest level since August of last year on bets the Federal Reseve will trail other central banks in increasing borrowing costs.
Gold reached US$1,070.80 (Bt35,812) in London, while futures rose to $1,072 in New York as crude oil, used by some investors as an inflation guide, reached a one-year high. Taiwan's central bank said it might consider placing more of its reserves in gold.
"Most of the gold rally has been attributable to a weaker dollar," said Tobias Merath, head of commodity research at Credit Suisse Group in Zurich. "We are in uncharted territory. You still have robust investment flows and we think gold can easily reach $1,100 an ounce" this year, he said.
Immediate-delivery bullion added $1.15, or 0.1 per cent, to $1,065.45 an ounce by mid-morning local time. Spot prices have advanced 21 per cent this year and are heading for a ninth annual gain. December futures were 0.1 per cent higher at $1,066.40 an ounce on the New York Mercantile Exchange's Comex division.
"What's happening it that they are selling out of dollars and buying equities around the world, currencies and of course gold," said Mark Pervan, head of commodity research at ANZ Banking Group. "The dollar is being held hostage to increased rish appetite."
Taiwan may consider buying more gold, its central bank governor Perng Fai-nan told reporters in Taipei yesterday. The news helped boost bullion prices, Credit Suisse said in a note.
The dollar index slipped 0.5 per cent yesterday, taking its loss this year to 7 per cent. Oil futures gained as much as 1.4 per cent to $75.15 a barrel in New York and have soared 68 per cent this year.
"The all-night printing runs at the Treasury are chipping away at the dollar's ability to hold value compared to other currencies and commodities," Mike Sander, in Seattle, said on Tuesday. "With dollar weakness, inflation fears, a huge budget deficit, energy prices creeping up, metals such as gold, silver and copper will be pushed up in price."
US President Barack Obama has increased US marketable debt to a record as he borrows to reignite growth in the world's biggest economy. That's boosted speculation increased money supply will debase the currency and spur inflation.
The Federal Reserve has cut its main interest rate almost to zero and backed asset purchases and credit programmes to combat the recession. Chairman Ben Bernanke is leading plans to buy mortgage-backed securities, federal agency debt and treasuries.
"A weakening US dollar and easy liquidity conditions will mainly favour precious metals, and we expect prices of gold, silver and platinum all to register further gains over the next year," Morgan Stanley analysts said in a report yesterday.
Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged for a fourth day at 1,109.31 metric tonnes on Tuesday, according to the company's website. Assets in ETF Securities' exchange-traded products added 0.6 per cent to a record 8.493 million ounces on Tuesday, its website showed.
Silver jumped as much as 1.7 per cent to $18.085 an ounce, the highest since July of last year, and was last at $17.97. Platinum rose to a 13-month high of $1,365.50 an ounce before trading at $1,362 and palladium added 0.6 per cent to $330.60 an ounce.
Tuesday, October 13, 2009
Short-term correction flagged
Gold experts caution investors to be wary of a short-term correction, even as prices for the precious metal continued to rise yesterday on concerns about the US dollar's depreciation.
Gold prices in Hong Kong were quoted at $1,055 to $1,056 per ounce, up from Monday's close of $1,049 to $1,050. In the local market, buying prices were fixed yesterday at 16,550 baht per bahtweight (15.16 grammes), up 100 baht from Monday, according to the Gold Traders Association.
Satit Wannasilpin, managing director for GT Wealth Management, said gold prices could test $1,150 in the short term as investors sought a hedge against the depreciating US dollar.
Demand for gold from investors in the Middle East seeking an alternative investment to dollar-denominated assets is also driving metal prices upwards.
Mr Satit said many countries have cut back their holdings of US dollar assets in their reserves for fear of further dollar depreciation.
The US dollar now counts for less than 50% of international reserves, compared with an average of 60% five years ago and about 80% earlier this decade,he said.
"Many countries are reducing their USD holdings in their international reserves in exchange for gold. But if the global economy continues to recover,we may see a decline in gold prices on cyclical factors," Mr Satit said.
He said gold was unlikely to fall under $1,000 per ounce in 2010.
Kritcharat Hirunyasiri, president of MTS Gold, said investors should consider taking profits with the runup in prices.
Gold this week should trade between $1,030 and $1,060 per ounce, he said. If prices stand above $1,030 for a week,then technical factors could push prices to test $1,100."In any case, investors who are investing in gold futures should raise their reserves to 100,000 baht per contract from 70,000. The extra 30,000 baht will help serve as a cushion in case prices decline," said Mr Kritcharat.
Gold futures traded on the Thailand Futures Exchange are set for 50 bahtweight of gold per contract. Mr Kritcharat recommended that investors should closely monitor price trends, and revise their strategy if prices fall by more than 300 baht per baht-weight as margin calls could result in a sharp slide in prices.
The Futures Industry Club, meanwhile, has agreed to introduce a new futures contract for 10 baht-weight starting in the first quarter of 2010. Brokers also want to extend trading hours for gold contracts to midnight, resulting in an overlap with New York trading hours.
Gold prices in Hong Kong were quoted at $1,055 to $1,056 per ounce, up from Monday's close of $1,049 to $1,050. In the local market, buying prices were fixed yesterday at 16,550 baht per bahtweight (15.16 grammes), up 100 baht from Monday, according to the Gold Traders Association.
Satit Wannasilpin, managing director for GT Wealth Management, said gold prices could test $1,150 in the short term as investors sought a hedge against the depreciating US dollar.
Demand for gold from investors in the Middle East seeking an alternative investment to dollar-denominated assets is also driving metal prices upwards.
Mr Satit said many countries have cut back their holdings of US dollar assets in their reserves for fear of further dollar depreciation.
The US dollar now counts for less than 50% of international reserves, compared with an average of 60% five years ago and about 80% earlier this decade,he said.
"Many countries are reducing their USD holdings in their international reserves in exchange for gold. But if the global economy continues to recover,we may see a decline in gold prices on cyclical factors," Mr Satit said.
He said gold was unlikely to fall under $1,000 per ounce in 2010.
Kritcharat Hirunyasiri, president of MTS Gold, said investors should consider taking profits with the runup in prices.
Gold this week should trade between $1,030 and $1,060 per ounce, he said. If prices stand above $1,030 for a week,then technical factors could push prices to test $1,100."In any case, investors who are investing in gold futures should raise their reserves to 100,000 baht per contract from 70,000. The extra 30,000 baht will help serve as a cushion in case prices decline," said Mr Kritcharat.
Gold futures traded on the Thailand Futures Exchange are set for 50 bahtweight of gold per contract. Mr Kritcharat recommended that investors should closely monitor price trends, and revise their strategy if prices fall by more than 300 baht per baht-weight as margin calls could result in a sharp slide in prices.
The Futures Industry Club, meanwhile, has agreed to introduce a new futures contract for 10 baht-weight starting in the first quarter of 2010. Brokers also want to extend trading hours for gold contracts to midnight, resulting in an overlap with New York trading hours.
Monday, October 12, 2009
New one baht-weight gold contract could spur trade
The futures industry club will propose a new one baht-weight (15.16 gramme)gold futures contract to help attract retail investors interested in the gold market.
Kampanart Lohachareonvanich, the chairman of the Association of Securities Companies, said that reducing the nominal value of gold futures contracts would help reduce the entry costs for investors and increase trading liquidity on the Thailand Futures Exchange.
The current size of gold futures contracts traded on the TFEX is 50 bahtweight, a size set quite high compared with other derivatives markets worldwide.The contract size was set high in part to placate local gold retailers, who were concerned that the launch of gold futures earlier this year would draw investors away from the physical market in favour of derivatives.
Mr Kampanart noted that in India,contract sizes were only eight grammes,or little more than half of one bahtweight of gold.
He noted that India's futures market also offered currency futures for US dollars and rupees.
The TFEX and the Securities and Exchange Commission also want to introduce currency futures in the local market.But plans have been delayed amid concerns by the Bank of Thailand that such derivatives could be abused to speculate against the baht.
"India is not concerned about speculation because it limits currency futures trading to domestic investors only," Mr Kampanart said."The SEC is considering using the same principle for the Thai market and will propose a plan to the central bank."
He said currency futures would be useful for Thailand given the economy's heavy reliance on international trade.Futures contracts would be a key tool for importers and exporters to hedge against currency risk.
Kampanart Lohachareonvanich, the chairman of the Association of Securities Companies, said that reducing the nominal value of gold futures contracts would help reduce the entry costs for investors and increase trading liquidity on the Thailand Futures Exchange.
The current size of gold futures contracts traded on the TFEX is 50 bahtweight, a size set quite high compared with other derivatives markets worldwide.The contract size was set high in part to placate local gold retailers, who were concerned that the launch of gold futures earlier this year would draw investors away from the physical market in favour of derivatives.
Mr Kampanart noted that in India,contract sizes were only eight grammes,or little more than half of one bahtweight of gold.
He noted that India's futures market also offered currency futures for US dollars and rupees.
The TFEX and the Securities and Exchange Commission also want to introduce currency futures in the local market.But plans have been delayed amid concerns by the Bank of Thailand that such derivatives could be abused to speculate against the baht.
"India is not concerned about speculation because it limits currency futures trading to domestic investors only," Mr Kampanart said."The SEC is considering using the same principle for the Thai market and will propose a plan to the central bank."
He said currency futures would be useful for Thailand given the economy's heavy reliance on international trade.Futures contracts would be a key tool for importers and exporters to hedge against currency risk.
Thursday, October 8, 2009
GOLD "PRIMED TO HIT $2,000"
An expert predicted gold would hit US$2,000 (Bt66,700) per ounce after it climbed to a fresh all time high of $1,058 yesterday as the US dollar's slump prompted investors to buy commodities as a hedge against potential inflation.
Bullion is heading for a ninth annual gain as the US Dollar Index, a six currency gauge of the dollar's value, has shed 6.5 per cent this year. The price of gold hit a fresh record high above $1,058 an ounce here yesterday as the dollar renewed its fall.
Immediate-delivery bullion yesterday advanced as much as $14.28, or 1.4 per cent, to $1,058.48 an ounce and was at $1,054.45 at midmorning in London. December gold futures were 1percent higher at $1,055.10 an ounce on the New York Mercantile Exchange's Comex Division after climbing as high as $1,059.60.
Gold may top $2,000 an ounce in the next decade, said investor Jim Rogers.
"People are printing money, gold is going up," Rogers said, adding that he might increase his holdings.
"There are plenty of reasons to buy gold when the time is right," he said.
"Bullish gold gave support to the price of other commodities, including rubber," said Kazuhiko Saito, chief analyst at Tokyo based broker Fujitomi. Rubber futures gained as much as 2.1 per cent.
Local gold bar prices were quoted at Bt16,450 per baht weight for buying and Bt16,550 for selling, while gold ornaments were quoted at Bt16,206.04 for buying and Bt16,950 for selling.
Kritcharat Hirunyasiri, president of the Mae Thong Suk (MTS) Group and director of the Gold Traders Association, said gold would likely reach US$1,100 an ounce this year after continuously breaking records.
"Most investors have sold gold bars, while only 0.5 per cent of them have bought gold. They wanted to sell for a profit first. If they really want to invest, they must hold it long term. Those wishing to invest short term should instead do so in the derivatives market, which is more volatile," Kritcharat said.
MTS is a brokerage member for gold futures on the Thailand Futures Exchange. The group established MTS Gold Futures for this purpose.
Kritcharat said lately, the derivatives market for gold futures had been very active, with higher trading volume and a new record for daily trading volume: 3,380 contracts, up from 900 a day over the past seven months.
The dollar traded at 1.4762 against the euro late yesterday morning in Singapore, from 1.4691 the day before. It fell earlier this week on concern the US Federal Reserve would be slower to raise interest rates than policymakers in other nations.
Bullion is heading for a ninth annual gain as the US Dollar Index, a six currency gauge of the dollar's value, has shed 6.5 per cent this year. The price of gold hit a fresh record high above $1,058 an ounce here yesterday as the dollar renewed its fall.
Immediate-delivery bullion yesterday advanced as much as $14.28, or 1.4 per cent, to $1,058.48 an ounce and was at $1,054.45 at midmorning in London. December gold futures were 1percent higher at $1,055.10 an ounce on the New York Mercantile Exchange's Comex Division after climbing as high as $1,059.60.
Gold may top $2,000 an ounce in the next decade, said investor Jim Rogers.
"People are printing money, gold is going up," Rogers said, adding that he might increase his holdings.
"There are plenty of reasons to buy gold when the time is right," he said.
"Bullish gold gave support to the price of other commodities, including rubber," said Kazuhiko Saito, chief analyst at Tokyo based broker Fujitomi. Rubber futures gained as much as 2.1 per cent.
Local gold bar prices were quoted at Bt16,450 per baht weight for buying and Bt16,550 for selling, while gold ornaments were quoted at Bt16,206.04 for buying and Bt16,950 for selling.
Kritcharat Hirunyasiri, president of the Mae Thong Suk (MTS) Group and director of the Gold Traders Association, said gold would likely reach US$1,100 an ounce this year after continuously breaking records.
"Most investors have sold gold bars, while only 0.5 per cent of them have bought gold. They wanted to sell for a profit first. If they really want to invest, they must hold it long term. Those wishing to invest short term should instead do so in the derivatives market, which is more volatile," Kritcharat said.
MTS is a brokerage member for gold futures on the Thailand Futures Exchange. The group established MTS Gold Futures for this purpose.
Kritcharat said lately, the derivatives market for gold futures had been very active, with higher trading volume and a new record for daily trading volume: 3,380 contracts, up from 900 a day over the past seven months.
The dollar traded at 1.4762 against the euro late yesterday morning in Singapore, from 1.4691 the day before. It fell earlier this week on concern the US Federal Reserve would be slower to raise interest rates than policymakers in other nations.
Tuesday, September 22, 2009
SET50 KEEPS PACE WITH WORLD
The stock Exchange of Thailand 50 Index last week edged up 2.65 points, or 0.52 per cent, to 510.85 points, while the SET 50 Index futures, with S50U09, with the nearest maturity expiring at the end of this month, rose 2.90 points, or 0.57 per cent, to 511.6 points.
Stock markets around the world last week increased from the previous week. The Dow Jones Industrial Average set the year's record to close at 9,791.71 points on the back of the higher production figure in August,an increase for two straight months, the three-year high of US retail sales, and fed Reserve Chairman Ben Bernanke's speech that the recession is likely over.
The positive factors enhanced investors' confidence.
The SET index last week also climbed up from the previous week. Energy stocks were the most active. Some investors, however, stayed on the sideline in latje last week to see the outcome of the red-shirt rally stagfed on Saturday.
Average dailfutures trading was 10,652 contracts, down by 3,413. Open interest contracts as of last Thursday numbered 53,693, up 2,496 from the previous week.
Total weekly futures trading contracts numbered 53,259 worth a combined Bt25.21 billion, Of these, 42,625 were for SET 50 Index futures, 3,710 were for single-stock futures, 4,324 were for gold futures and 2,600 were for SET 50 Index options.
Stock markets around the world last week increased from the previous week. The Dow Jones Industrial Average set the year's record to close at 9,791.71 points on the back of the higher production figure in August,an increase for two straight months, the three-year high of US retail sales, and fed Reserve Chairman Ben Bernanke's speech that the recession is likely over.
The positive factors enhanced investors' confidence.
The SET index last week also climbed up from the previous week. Energy stocks were the most active. Some investors, however, stayed on the sideline in latje last week to see the outcome of the red-shirt rally stagfed on Saturday.
Average dailfutures trading was 10,652 contracts, down by 3,413. Open interest contracts as of last Thursday numbered 53,693, up 2,496 from the previous week.
Total weekly futures trading contracts numbered 53,259 worth a combined Bt25.21 billion, Of these, 42,625 were for SET 50 Index futures, 3,710 were for single-stock futures, 4,324 were for gold futures and 2,600 were for SET 50 Index options.
Sunday, September 20, 2009
AUSTRALIAN ARRESTED OVER GOLD SCAM
A 64-year-old Australian accused of swindling investors in Pattaya out of millions of baht was arrested last week at Suvarnabhumi Airport by immigration officials while trying to re-enter the country.
A warrant for the arrest of Lance Frederick Shaw was issued by Pattaya police in July last year for his alleged involvement in a Ponzi investment scheme, which fraudulently promises to pay returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.
Mr Shaw is being held at Nong Palai prison on fraud charges and will not be granted bail due to the seriousness and number of charges, Pattaya police said. A police official estimated Mr Shaw allegedly defrauded investors of 10 million baht.
Six cases have been filed against the Australian, though the number has continued to increase since his arrest. The Bangkok Post's Spectrum magazine reported on the allegations against Mr Shaw in an Aug 16 article "Gold fever sinks a posse of investors".
The investors, mostly from the UK and Australia, alleged they lost amounts between US$10,000 (341,000 baht) and $250,000 each investing in an online gold investment vehicle known as Hiperfinance.com which advertised monthly profits of 10-20%.
Mr Shaw denied any wrongdoing, saying he was was merely an investor who lost $20 million himself.
He said that while he promoted the scheme to others, he was not behind the operation. Allegations against Mr Shaw will feature in an upcoming episode of Big Trouble In Tourist Thailand, a television series airing on the UK's Bravo Channel.
A warrant for the arrest of Lance Frederick Shaw was issued by Pattaya police in July last year for his alleged involvement in a Ponzi investment scheme, which fraudulently promises to pay returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.
Mr Shaw is being held at Nong Palai prison on fraud charges and will not be granted bail due to the seriousness and number of charges, Pattaya police said. A police official estimated Mr Shaw allegedly defrauded investors of 10 million baht.
Six cases have been filed against the Australian, though the number has continued to increase since his arrest. The Bangkok Post's Spectrum magazine reported on the allegations against Mr Shaw in an Aug 16 article "Gold fever sinks a posse of investors".
The investors, mostly from the UK and Australia, alleged they lost amounts between US$10,000 (341,000 baht) and $250,000 each investing in an online gold investment vehicle known as Hiperfinance.com which advertised monthly profits of 10-20%.
Mr Shaw denied any wrongdoing, saying he was was merely an investor who lost $20 million himself.
He said that while he promoted the scheme to others, he was not behind the operation. Allegations against Mr Shaw will feature in an upcoming episode of Big Trouble In Tourist Thailand, a television series airing on the UK's Bravo Channel.
Friday, September 18, 2009
Glitch hits TFEX
The Thailand Futures Exchange was forced to delay its preopening session by 1.45 hours yesterday due to technical problems.
Pre-opening was delayed from the normal start at 9.15 to run from 11-11.15 am,15 minutes shorter than normal, with the opening session set from 11.15 to 12.30. The afternoon session was opened normally, with pre-opening from 14.00-14.30 and trading from 14.30-16.55.
Trade on the SET, the Market for Alternative Investment and the Bond Electronic Exchange was normal.
Pre-opening was delayed from the normal start at 9.15 to run from 11-11.15 am,15 minutes shorter than normal, with the opening session set from 11.15 to 12.30. The afternoon session was opened normally, with pre-opening from 14.00-14.30 and trading from 14.30-16.55.
Trade on the SET, the Market for Alternative Investment and the Bond Electronic Exchange was normal.
Monday, September 7, 2009
Prices to top $1,000 this week
Gold prices yesterday continued to climb near US$1,000 per ounce amid investor concerns about rising inflation and fresh hiccups for the global economic recovery.
Gold in Hong Kong yesterday closed at $995.5 to $996.5 per ounce, up from $987 to $988 on Friday.
In the local market, the buying price for 99.99% gold bars was 16,175.72 baht per baht-weight, up from 16,084.76 on Friday. Prices for 96.5% pure bars were quoted with a buying price of 15,800 baht per baht-weight.
On the Thailand Futures Exchange,trading activity has leapt in recent sessions, with gold futures contracts hitting an all-time high last Thursday of 2.12 billion baht. Yesterday volume for gold contracts totalled 1,026, with open interest of 4,708 contracts.
MTS Gold Futures, a TFEX gold broker,expects gold to break $1,000 per ounce within a few days.
Concern about rising bank collapses in the US and uncertainties about the global economic recovery have helped push up prices, said MTS Gold president Kritcharat Hirunyasiri.
Reports that bullion held in the SPDR Gold Trust, the world's largest gold exchange traded fund, rose 14.65 tonnes on Thursday also helped push up prices,said Mr Kritcharat.
"Investors are concerned about the global economy. This is putting pressure on funds to shift to lower-risk assets,"he said."Inflation is another concern,as is the trend towards US dollar depreciation."
He predicted that trading for TFEX gold futures will reach 900 contracts per day this month, as local investors follow the global trend. Contracts for October gold futures (GFV09) are likely to trade between 15,700 to 15,900 baht, he added.
"Gold futures will be more attractive for investment in the future and we will see trading value reach 3 billion baht per day very soon," he said.
Jitti Tangsithpakdi, president of the Gold Traders Association, said gold prices could post a modest decline this week as investors take profits from recent gains.
"However, for the long term we are confident that the price will continue to rise, and this year will set a new high.Last year it had its highest price at $1,034 per ounce," he said.
Apichat Laksanasirisak, managing director of TC Ausiris Futures, predicted gold will hit $1,100 per ounce within six months due to factors such as inflation,the weak US currency and asset allocation shifting from equity to gold.
Gold in Hong Kong yesterday closed at $995.5 to $996.5 per ounce, up from $987 to $988 on Friday.
In the local market, the buying price for 99.99% gold bars was 16,175.72 baht per baht-weight, up from 16,084.76 on Friday. Prices for 96.5% pure bars were quoted with a buying price of 15,800 baht per baht-weight.
On the Thailand Futures Exchange,trading activity has leapt in recent sessions, with gold futures contracts hitting an all-time high last Thursday of 2.12 billion baht. Yesterday volume for gold contracts totalled 1,026, with open interest of 4,708 contracts.
MTS Gold Futures, a TFEX gold broker,expects gold to break $1,000 per ounce within a few days.
Concern about rising bank collapses in the US and uncertainties about the global economic recovery have helped push up prices, said MTS Gold president Kritcharat Hirunyasiri.
Reports that bullion held in the SPDR Gold Trust, the world's largest gold exchange traded fund, rose 14.65 tonnes on Thursday also helped push up prices,said Mr Kritcharat.
"Investors are concerned about the global economy. This is putting pressure on funds to shift to lower-risk assets,"he said."Inflation is another concern,as is the trend towards US dollar depreciation."
He predicted that trading for TFEX gold futures will reach 900 contracts per day this month, as local investors follow the global trend. Contracts for October gold futures (GFV09) are likely to trade between 15,700 to 15,900 baht, he added.
"Gold futures will be more attractive for investment in the future and we will see trading value reach 3 billion baht per day very soon," he said.
Jitti Tangsithpakdi, president of the Gold Traders Association, said gold prices could post a modest decline this week as investors take profits from recent gains.
"However, for the long term we are confident that the price will continue to rise, and this year will set a new high.Last year it had its highest price at $1,034 per ounce," he said.
Apichat Laksanasirisak, managing director of TC Ausiris Futures, predicted gold will hit $1,100 per ounce within six months due to factors such as inflation,the weak US currency and asset allocation shifting from equity to gold.
Sunday, September 6, 2009
TFEX sees slowdown in hedging need
The Thailand Futures Exchange (TFEX)expects trading to slow as the stock market rally reduces the need for hedging.
Trading on the bourse may drop to about 10,000 contracts a day in the second half from 10,678 in the first six months,said Kesara Manchusree, the TFEX managing director. Average daily volume jumped 63% in the first half, boosted by record trading of 16,542 contracts a day in June, she said.
"Individual investors prefer to directly invest in equity securities now because they have more confidence in the stock market," Ms Kesara said."The demand for hedging instruments surged in the second quarter because they were unsure the rally would be sustainable and the market was very volatile."
The SET index jumped 48% so far this year, set for its best performance in six years, on expectations that an economic rebound will boost corporate earnings.Thailand's economy may expand in the fourth quarter after contracting the past four quarters, as the government spends more and exports recover, Finance Minister Korn Chatikavanich said this week.
Futures trading has averaged 10,690 contracts a day so far in September,down from 12,205 in August and 15,001 in July, according to TFEX data.
The number of futures trading accounts has risen to 25,000 from 15,894 at the end of last year. About 55% of the accounts are individual investors, she said.
Kim Eng Securities, the country's biggest stock brokerage, said recently that derivative trading would be the main area of growth for most local securities companies and it added more analysts and traders to cope with the increased business volume.
Trading on the bourse may drop to about 10,000 contracts a day in the second half from 10,678 in the first six months,said Kesara Manchusree, the TFEX managing director. Average daily volume jumped 63% in the first half, boosted by record trading of 16,542 contracts a day in June, she said.
"Individual investors prefer to directly invest in equity securities now because they have more confidence in the stock market," Ms Kesara said."The demand for hedging instruments surged in the second quarter because they were unsure the rally would be sustainable and the market was very volatile."
The SET index jumped 48% so far this year, set for its best performance in six years, on expectations that an economic rebound will boost corporate earnings.Thailand's economy may expand in the fourth quarter after contracting the past four quarters, as the government spends more and exports recover, Finance Minister Korn Chatikavanich said this week.
Futures trading has averaged 10,690 contracts a day so far in September,down from 12,205 in August and 15,001 in July, according to TFEX data.
The number of futures trading accounts has risen to 25,000 from 15,894 at the end of last year. About 55% of the accounts are individual investors, she said.
Kim Eng Securities, the country's biggest stock brokerage, said recently that derivative trading would be the main area of growth for most local securities companies and it added more analysts and traders to cope with the increased business volume.
Monday, August 31, 2009
RALLIES FAIL TO SPUR SET
Last week the SET50 Index went up 7.86 points or 1.70 per cent to 470.69 while the SET50 Index Futures, with S50U09 having the nearest maturity expiring at the end of September, rose 7 points or 1.53 per cent to 463.9.
The Dow Jones Industrial Average surged throughout the week. Higher new home sales and the renomination of Federal Reserve chairman Ben Bernanke boosted investor confidence.
Other major stock markets also rallied, thanks to the rising oil price and higher confidence in the US economic turnaround.
The SET Index, however, moved narrowly as investors preferred staying on the sidelines despite the solid economic indicators announced by the Fiscal Policy Office and the rise in the petrol price.
Average daily futures trading volume was 5,558 contracts, lower than the previous week's 8,918. Openinterest contracts as of last Thursday numbered 42,886, up 988 from the previous week.
The total weekly futures volume was 44,592 contracts worth Bt19.81 billion. Of these, 35,892 were for SET 50 Index Futures, 2,648 were singlestock futures, 3,967 were gold futures and 2,085 were SET50 Index options.
The Dow Jones Industrial Average surged throughout the week. Higher new home sales and the renomination of Federal Reserve chairman Ben Bernanke boosted investor confidence.
Other major stock markets also rallied, thanks to the rising oil price and higher confidence in the US economic turnaround.
The SET Index, however, moved narrowly as investors preferred staying on the sidelines despite the solid economic indicators announced by the Fiscal Policy Office and the rise in the petrol price.
Average daily futures trading volume was 5,558 contracts, lower than the previous week's 8,918. Openinterest contracts as of last Thursday numbered 42,886, up 988 from the previous week.
The total weekly futures volume was 44,592 contracts worth Bt19.81 billion. Of these, 35,892 were for SET 50 Index Futures, 2,648 were singlestock futures, 3,967 were gold futures and 2,085 were SET50 Index options.
Friday, August 28, 2009
GOLD TRADERS WARN OF VOLATILITY IN WEEKS AHEAD
The next few weeks will be a crucial period for gold prices, and slight volatility is expected to indicate whether bullion prices will rise to US$1,000 (Bt34,100) or fall to $880 an ounce this year.
Gold traders have warned of volatility from the derivatives market rather than physical gold trading. Oil prices and the US dollar are still affecting gold prices more than real gold consumption is, but it is uncertain whether oil prices will continue to increase, because movements to date are believed to have been forced by hedging.
Gold Traders Association deputy secretary-general Kritcharat Hirunyasiri said that over the past month, there had been no clear signs of whether gold prices would rise or fall. Prices had moved in a range of $935 to $965 an ounce, but the range was narrowing, and it was expected that a clear direction would become obvious within the next two weeks.
Kritcharat said if the gold price broke through the $963-an-ounce level, it could rise to $980 and then $1,000 by year-end. However, if it failed to break $930 an ounce, the price could fall to $900.
"The dollar has more of an effect on gold prices," Kritcharat said. "For example, last Friday night the gold price increased $15 per ounce after the dollar depreciated from 1.422 to the euro 1.435, while oil prices made a smaller impact."
Although the golbal economy has begun to recover from the economic crisis, the US Federal Reserve is unlikely to adjust its interest rate in the short term. Inflation remains low and does not affect gold prices much even though inflation and gold prices are correlated, he said.
President Jitti Tangsithpakdi said it was possible gold would reach $1,000 an ounce this year, because the global economy had still not stabilised. Therefore, people are still investing in gold. As well, there is always high demand for gold at the end of a year.
However, gold prices will not swing as much as they did last year, because funds are investing in many markets, including equities, oil and gold, he said.
Secretary-general Pichaya Phisuthikul said that in the middle of the month, the gold price declined, but it increased again in the past week as oil prices rose to $60 to $70 a barrel.
Gold prices will remain volatile, he said. Normally, gold prices move contrary to the Equity Index, but recently when equities have risen, gold prices have sometimes risen, as well.
"The present gold price is not related to real consumption at all but rather affected by funds investing in the gold market.
"The recovery, which has been seen in stock markets like Wall Street, including oil-price increases, is still not certain. I believe the economy, which has been severely damaged, needs more time for recovery. Therefore, the present oil-price and Equity Index rises may be an illusion, because they show an adjustment much better than fundamentals," Pichaya said.
If oil prices and the Equity Indexes fall again, the gold price will also be affected. In Pichaya's view, gold prices are capable of peaking at $980 an ounce or bottoming at $880.
Meanwhile, Bloomberg said gold, little changed in London yesterday, might decline as a stronger dollar erodes the metal's appeal as an alternative investment. Palladium rose to its highest price in almost a year.
The US Dollar Index, a six-currency gauge of the greenback's value, rebounded from a two-week low, gaining as much as 0.4 per cent. Gold, which typically moves inversely to the dollar, added 1.4 per cent last Friday, the most this month.
"The market is likely to retreat towards $925 to $930 an ounce, provided the dollar rebounds from current lows," said VTB Capital analyst Andrey Kryuchenkov in London.
Immediate-delivery bullion climbed 45 cents, or 0.1 per cent, to $954.30 an ounce yesterday after advancing 0.6 per cent last week.
December gold futures rose 90 cents, or 0.1 per cent, to $955.60 an ounce on the New York Mercantile Exchange's Comex division.
Gold traders have warned of volatility from the derivatives market rather than physical gold trading. Oil prices and the US dollar are still affecting gold prices more than real gold consumption is, but it is uncertain whether oil prices will continue to increase, because movements to date are believed to have been forced by hedging.
Gold Traders Association deputy secretary-general Kritcharat Hirunyasiri said that over the past month, there had been no clear signs of whether gold prices would rise or fall. Prices had moved in a range of $935 to $965 an ounce, but the range was narrowing, and it was expected that a clear direction would become obvious within the next two weeks.
Kritcharat said if the gold price broke through the $963-an-ounce level, it could rise to $980 and then $1,000 by year-end. However, if it failed to break $930 an ounce, the price could fall to $900.
"The dollar has more of an effect on gold prices," Kritcharat said. "For example, last Friday night the gold price increased $15 per ounce after the dollar depreciated from 1.422 to the euro 1.435, while oil prices made a smaller impact."
Although the golbal economy has begun to recover from the economic crisis, the US Federal Reserve is unlikely to adjust its interest rate in the short term. Inflation remains low and does not affect gold prices much even though inflation and gold prices are correlated, he said.
President Jitti Tangsithpakdi said it was possible gold would reach $1,000 an ounce this year, because the global economy had still not stabilised. Therefore, people are still investing in gold. As well, there is always high demand for gold at the end of a year.
However, gold prices will not swing as much as they did last year, because funds are investing in many markets, including equities, oil and gold, he said.
Secretary-general Pichaya Phisuthikul said that in the middle of the month, the gold price declined, but it increased again in the past week as oil prices rose to $60 to $70 a barrel.
Gold prices will remain volatile, he said. Normally, gold prices move contrary to the Equity Index, but recently when equities have risen, gold prices have sometimes risen, as well.
"The present gold price is not related to real consumption at all but rather affected by funds investing in the gold market.
"The recovery, which has been seen in stock markets like Wall Street, including oil-price increases, is still not certain. I believe the economy, which has been severely damaged, needs more time for recovery. Therefore, the present oil-price and Equity Index rises may be an illusion, because they show an adjustment much better than fundamentals," Pichaya said.
If oil prices and the Equity Indexes fall again, the gold price will also be affected. In Pichaya's view, gold prices are capable of peaking at $980 an ounce or bottoming at $880.
Meanwhile, Bloomberg said gold, little changed in London yesterday, might decline as a stronger dollar erodes the metal's appeal as an alternative investment. Palladium rose to its highest price in almost a year.
The US Dollar Index, a six-currency gauge of the greenback's value, rebounded from a two-week low, gaining as much as 0.4 per cent. Gold, which typically moves inversely to the dollar, added 1.4 per cent last Friday, the most this month.
"The market is likely to retreat towards $925 to $930 an ounce, provided the dollar rebounds from current lows," said VTB Capital analyst Andrey Kryuchenkov in London.
Immediate-delivery bullion climbed 45 cents, or 0.1 per cent, to $954.30 an ounce yesterday after advancing 0.6 per cent last week.
December gold futures rose 90 cents, or 0.1 per cent, to $955.60 an ounce on the New York Mercantile Exchange's Comex division.
Subscribe to:
Posts (Atom)