Economy January 04, 2014 00:00

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Some Myanmar rail lines set to be privatised

Myanmar’s government is planning to privatise some of the country’s state-owned railway lines soon, including the Yangon circular railway system, according to the Rail Transportation Ministry.
 The privatisation will include the Yangon circular line, the Yangon-Mandalay line and the Yangon-Myitkyina line. 
 The privatisation plan is under way and the Yangon-Myitkyina rail line will be prioritised, the ministry said.
 Many changes have been made in Myanmar’s railway sector since 2011. The Yangon-Mandalay railroad and the Yangon circular railway system are currently undergoing upgrades. 
 Buildings under the ministry have been rented out to private companies, and a plan to renovate Yangon Central railway station is also under way.
 The ministry said that only a few of the more than 400 train lines under its management across the country could be described as money-makers. – Eleven Media  
TFEX reports strong growth, aims to increase liquidity 
The Thailand Futures Exchange plans to improve its current products and services, especially SET50 index futures and options, in order to increase liquidity this year. 
 Starting next month, US dollar futures holders will be able to receive physical dollars on the last trading day at Krung Thai Bank. 
 TFEX managing director Kesara Manchusree said the exchange would continue to develop its existing projects – such as the “TFEX Challenge”, an intensive trading simulation, and “TFEX Open House”, an intensive seminar for technical analysts – and cooperate with other organisations to present other financial instruments for currency risk management. 
 Moreover, the new trading and clearing system for derivatives is expected to go live in May.
 TFEX’s average daily trading volume jumped 55.2 per cent last year to 68,017 contracts, mainly driven by a 2.9-times rise in stock futures. 
 The total trading volume last year was 16,664,126 contracts, or 68,017 contracts per day, up from 43,823 contracts daily the previous year. Most of the derivatives contracts traded were stock futures, up 288 per cent to 34,351 contacts per day. 
 SET50 futures rose 41 per cent to 23,218, while gold futures dropped 39.4 per cent to 9,009 and US dollar futures decreased 64.5 per cent to 977 contracts per day. 
 The average daily trading value was Bt26.97 billion. Total derivatives trading accounts reached 87,693 accounts.
 “Due to the volatility of indices and stock prices in 2013, stock futures and SET50 futures became popular for risk management. In addition, investors were able to manage their portfolios more efficiently after TFEX amended stock futures’ rules by increasing position limits and reducing the minimum size required for block trade transaction of high notional-valued contracts. 
 “Also, TFEX added additional underlying securities for stock futures, to make a total of 60,” Kesara added.
Emirates signs firm contract for 50 more Airbus A380s
Emirates Airline and Airbus have completed discussions and signed the firm contract for 50 additional A380s originally announced at the Dubai Airshow on November 17. 
 The contract documents were finalised by Tim Clark, Emirates Airline president, during a visit to Airbus’s headquarters in Toulouse, France.
 “The A380 is our flagship aircraft. It is popular with our customers and delivers results for us in terms of operational performance. That is why we have ordered these additional 50 aircraft, to add to our A380 fleet,” he said.
 John Leahy, Airbus chief operating officer, Customers, said: “This order is a major vote of confidence in the A380. Since delivery of their first aircraft in July 2008, Emirates’ A380 fleet has grown to be the largest in the world, with 44 A380s in operation. 
 “We congratulate Emirates on this impressive achievement and thank the airline for their continued support of our flagship aircraft. As Tim Clark has often said, ‘The A380 really is a game-changing aircraft.’”
 Since first entering service in 2007, some 122 A380s have been delivered to 10 world-class carriers. 
S&P could downgrade Thai rating if instability prolonged: PDMO 
Credit agency Standard & Poor’s might downgrade Thailand’s sovereign currency rating if the ongoing political instability remains unsolved, Chularat Suteethorn, director-general of the Public Debt Management Office (PDMO), said yesterday.
   Referring to S&P’s having affirmed Thailand’s sovereign currency rating at “BBB+/A-2” and local currency sovereign rating at “A-/A-2”, she said the ratings firm had noted that political uncertainty had been the weak point in Thailand’s credit rating during the past few years. 
   The several changes of government have been a barrier for infrastructure investment and limited the country’s economic growth, while the current anti-government protesters are a high risk to the Kingdom’s tourism, it said.
S&P also rated Thailand with a “stable” outlook.
SET slump spurs Aberdeen Asset into buying mode
The worst start to a year for Thai stocks since at least 1988 has spurred Aberdeen Asset Management to buy after valuations fell to the lowest levels in 18 months.
   The benchmark Stock Exchange of Thailand (SET) Index tumbled 5.2 per cent on Thursday amid concern that prolonged political unrest will curb economic growth. 
   That left the measure valued at 10.8 times earnings estimates for the next 12 months and, according to Bloomberg data, this is the cheapest since June 2012. 
   The gauge’s 14-day relative strength index sank to 19.91, below the 30 threshold that some traders use as a signal to buy. The last time it fell this low, in October 2008, the SET rallied 20 per cent in two weeks.
   While stock-exchange data showed local institutions unloaded stocks on Thursday after political groups opposed to caretaker Prime Minister Yingluck Shinawatra threatened to surround government ministries and occupy major intersections in Bangkok on January 13, foreign investors were net buyers. 
   However, the prospect of prolonged tension will make most investors reluctant to buy Thai shares despite cheaper prices, said Prasert Khanobthamchai, the chief investment officer at Kasikorn Asset Management.
   Political uncertainty may delay the government’s Bt2-trillion infrastructure spending plan and curtail private investment, while the weak baht will raise import costs.
   “Market sentiment is very weak, with no foreseeable solution on the current political deadlock in the near future,” Prasert said yesterday. – Bloomberg
Exporters of processed food welcome baht’s depreciation
The depreciation of the baht towards 33 per US dollar will create good opportunities for Thai exporters, and especially those making agricultural products, where profit margins are relatively low, Visit Limprana, president of the Food Processing Industry Club and vice president of the Federation of Thai Industries, said yesterday.
   He said that if the baht were in a range of 31-32 against the dollar, it would make exporters more competitive than when the unit was between 29 and 30 per greenback – when they could not compete on price. 
   However, the negative side of the baht’s weakness is that it will result in higher prices for imported goods, he added.
   “If the Bank of Thailand is able to stabilise the baht at its current value in the long term, Thai exporters will benefit and it will be a good opportunity for them to boost their export volume to compensate for the sluggishness of domestic sales, which have been adversely affected by the drop in consumption caused by the current political conflict,” said Visit.
Bt130 bn to be borrowed for BAAC use in rice-pledging scheme
The Public Debt Management Office plans to borrow Bt130 billion for the Bank for Agriculture and Agricultural Cooperatives (BAAC) to use in the rice-pledging scheme in the 2013/2014 harvest seasons.
   The amount is part of the total budget of Bt270 billion recently approved by the Cabinet for rice pledging for the 2013-2014 harvests, BAAC executive vice president Supat Eauchai said yesterday.
   Caretaker Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong, meanwhile, confirmed that the Bt270-billion budget was not part of the revolving fund of Bt500 billion spent on the rice-pledging scheme in the past four harvest seasons.