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HSBC unit expects policy rate cut today

HSBC Global Research expects the Bank of Thailand to trim the policy rate today by 25 basis points to 2.00 per cent in response to the downside risks to growth posed by continued anti-government protests.

It also expects another cut in the coming months, taking the policy rate to 1.75 per cent by the end of the first half. It sees it as unlikely that the central bank will be able to consider moving interest rates upwards before the fourth quarter.

This is a change from HSBC's previous forecast, when it expected no change in the rate until late in the third quarter, when an improving cyclical backdrop would have allowed moderate hikes.

In light of the risks from the political situation, HSBC's research unit has also downgraded its 2014 and 2015 growth forecasts. It now expects Thailand's gross domestic product to grow by 3.5 per cent this year and 4.5 per cent in 2015, from a likely expansion of 2.8 per cent in 2013. This compares with its earlier 2014 forecast of 4.4 per cent and 5.2 per cent for next year.

Singer sees loan defaults

Singer Thailand says more of its customers are defaulting on instalment payments as farmers start to suffer liquidity problems.

Chief executive officer Boonyong Tansakul said farmers participating in the government's pledging scheme had been hit by delayed payments for their rice.

Singer Thailand has about 175,000 customers on its instalment plan for sewing machines and other electrical appliances.

Queries on trade fairs

Foreign clients planning to participate in exhibitions and trade fairs have raised concerns about the prolonged political unrest in Bangkok, the Commerce Ministry reports.

They have sought some reassurance on whether such events will go ahead as scheduled, the ministry said.

Many events are scheduled for March and April, such as TIFF 2014 and BIFF&BIL, both to be held from March 12-16 at Impact Muang Thong Thani; BIG&BIH, to be held between April 19 and 23 at Bitec Bang Na; and TAPA 2014, to be held between April 28 and May 1, also at Bitec. Bangkok Gems & Jewelry Fair 2014 is to be held between February 25 and March 1 at Impact.

Protests hurt Japan confidence

At a seminar hosted by the Konrad Adenauer Foundation in cooperation with Chulalongkorn University, Koji Sakuma, general manager and chief economist of the Institute for International Monetary Affairs in Japan, said Japanese investor confidence in Thailand could decline if the current political chaos continues.

"If the situation is prolonged, investors from Japan, especially new ventures in the Thai market, will take their business and investment elsewhere, since they are alternative markets in this region such as Indonesia and Malaysia," he said.

Sakuma said most Japanese investors with experience in Thailand would wait for the situation to calm down, but if this same cycle of political turmoil kept repeating itself, it might cause them to reconsider doing business here in the long term.

Production decline to continue

The Office of Industrial Economics expects a decline in manufacturing seen last year to continue into the current quarter.

Director-general Somchai Harnhirun said this forecast was based on the lack of clear signs that the global economy has recovered. Earlier the office estimated that production would pick up this year along with the economies of Thailand's trading partners.

Banks close 103 branches

Commercial banks had closed 103 branches in Bangkok as of 3.30pm yesterday, according to the Bank of Thailand.

Most of them, 68, were closed at some point during the day, while 35 did not open at all yesterday.

More than half belonged to Krungthai Bank, followed by Kasikornbank, which closed 27 branches.


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