US-China deal a relief for global economy but Thailand faces political challenges

[webfact]

US-China deal a relief for global economy but Thailand faces political challenges

By Wichit Chaitrong
The Nation

 

Thanathorn and his large crowd of supporters held a brief protest against the latest EC move on Saturday in downtown Bangkok and they vowed to intensify their fight against alleged dictatorship on streets next year.

 

External risk may decrease following the easing of US-China trade tensions, but domestic political risks may rise, an economist warned while a stock analyst advisee investors to go back to basics by diversifying their investment portfolio.

 

Anusorn Tamajai, the director of the Economic and Business Research Centre for Reform at Rangsit University's Institute of Economics, said that the global economy may be in better shape next year after the US and China reached a phase one deal of their trade agreement last week.

 

President Donald Trump has cancelled a new round of tariff hike on Chinese products scheduled to come into force on Sunday. US also agreed to cut by half the previous tariff hike while China agreed to purchase more of US farm products and promised to open banking, insurance, brokerage services as well as relax technology transfer regulations.

 

U.S.-China trade deal still leaves huge cloud over American business

 

US investors on Friday were still confused about the trade agreement due to lack of specific details and numbers.

 

Anusorn said in a general context that the agreement may rescue global trade previously adversely affected by their trade war. World trade expansion will benefit Thailand’s exports and those of other countries, said Anusorn.

 

Thailand was previously expected to gain more from trade diversion, which was expected to rise when the trade war intensified as the US would have bought more Thai products and imported fewer Chinese products. After the trade tensions eased to some extent, Thailand is expected to gain less from trade diversion as US would buy more Chinese products, he said.

 

Thai products that could replace Chinese products in the US market included farm products, food, frozen sea food and processed food, chemical products, plastic pellets, steel and aluminium and home and office appliances.

 

“Investors who previously planned to move their factories to Thailand and other Asean countries may review their plans following the US-China trade deal,” he said.

 

However, markets are still closely watching how the trade deal will further develop as the two sides agreed to negotiate a phase two deal.

 

The trade direction may be clearer after the US election next year, he said.

 

Asean countries have a competitive edge and offer generous incentives to foreign investors and may still draw in foreign direct investment, he said.

 

The impact of Brexit is seen as less worrying after the Conservative Party's triumph in the UK election. 

 

“Thailand needs to accelerate free trade negotiations with both the United Kingdom and the European Union,” said Anusorn.

 

He warned about domestic policy risk following the Constitutional Court ruling to disqualify popular opposition leader Thanathorn Juangroongruangkit as a member of Parliament and the Election Commission (EC)'s petition to the court to disband his Future Forward Party.

 

“Political risk will increase because law enforcement does not uphold the rule of law, potentially leading to a political crisis, which will damage investor confidence,” he said, hinting at allegations of double standards of Thai courts and the EC.

 

Thanathorn and his large crowd of supporters held a brief protest against the latest EC move on Saturday in downtown Bangkok and they vowed to intensify their fight against alleged dictatorship on streets next year.

 

Meanwhile, Kavee Chukitkasem, the deputy managing director at Kasikorn Securities, said that trade tensions between the US and China is expected to continue as they rival each other for global leadership, therefore investors are advised to be cautious on the global trade front.

 

He, however, is optimistic that investment opportunities are also present even though stock markets are highly volatile. “We really don’t know what US President Trump will do next, but we can lessen investment risks by adopting a diversified investment strategy,” he suggested.

 

Investors may need to invest in both equities in emerging markets and developed markets, invest in bonds, gold and property, to shield themselves against risks, he added.

 

Source: https://www.nationthailand.com/business/30379479

 

-- © Copyright The Nation Thailand 2019-12-16

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[neeray]

With political unrest on the horizon, unquestionably, a foreigner company would feel considerably uneasy with the idea of investing in Thailand.

Tourism is also quite likely to take a hit.

[pegman]

Why would other countries want to trade with Thailand with its ridicules excise taxes and currency manipulation? That's on top of a lack of political transparency.  

[harada]

It may be relief this week but the chances are that next week the manchild or one of his minions will once again insult the Chinese and it will be off again, and the revolving door goes round and round.

[yellowboat]

3 hours ago, neeray said:

With political unrest on the horizon, unquestionably, a foreigner company would feel considerably uneasy with the idea of investing in Thailand.

Tourism is also quite likely to take a hit.

Yes, a perfect time to demand freedoms and the ouster of the janta.

[hotchilli]

5 hours ago, webfact said:

World trade expansion will benefit Thailand’s exports and those of other countries, said Anusorn.

Assuming the strength of the Thai baht falls back to where it should be thus making products affordable, if not alternative sources will be found by those "other countries".

Thailands export market is not driven by the China USA spat, up to now that's been an excuse to shield the high baht value.... as Thailand will find out this year when exports remain lower than predicted.

[DLock]

...and these thousands of US companies that were looking to exit China in favor of setting up manufacturing in Thailand and invest in the EEC?

 

This is bad news for Thailand - prolonged conflict could have been useful.

[Isaan sailor]

OK, since Phase One of the great trade war  nears completion—can we please see the Baht relax a bit?  They have sworn to us that the trade war jacked up the Baht (although no other SE Asian country experienced this).  We won’t hold our collective breaths, though.

[zydeco]

6 hours ago, webfact said:

US investors on Friday were still confused about the trade agreement due to lack of specific details and numbers.

That's because there is no deal. The No Deal Deal will not be made public (so how can businesses make plans), each side will sign its own version of the No Deal Deal, and there are no enforcement provisions if China cheats, which it has been doing for more than 30 years every time they make one of these agreements. And read THIS THREAD to see why former USDA chief economist and USTR agriculture negotiator Joe Glauber says it is impossible to the point of silliness to think China can quadruple US soybean imports as the No Deal Deal promises. All this is why commodity prices declined after the No Deal Deal announcement was made.

[Baerboxer]

6 hours ago, pegman said:

Why would other countries want to trade with Thailand with its ridicules excise taxes and currency manipulation? That's on top of a lack of political transparency.  

 

You may well ask.

 

There has been considerable investment by foreign firms here over the last few years. Easy to research the ones as they were usually announced in the media. Similarly many trade missions, Ministers, agencies etc etc have made official visits here from numerous individual countries and amalgams such as the EU.

 

Why don't you contact them all and ask them?

 

Or consider why so many countries do business with their political rivals - US/China; EU/Russia etc etc. 

 

 

[Grumpy John]

Up here in the village we tend to buy more online as time passes.  Not so much because of the lack of products,  which happens sometimes, but more to do with the fact we can get cheaper prices....on Aliexpress....which suits me.  OK,  I do buy from Lazada sometimes.....but the ratio would be 5-1 in Aliexpress favour. The point I am getting at is it isn't cheap to live in Thailand and anyone who has a bit of sense will buy from elsewhere when they can.   I have no allegiance to Thailand or it's greedy importers and sellers. 

[Peterphuket]

1 hour ago, Grumpy John said:

Up here in the village we tend to buy more online as time passes.  Not so much because of the lack of products,  which happens sometimes, but more to do with the fact we can get cheaper prices....on Aliexpress....which suits me.  OK,  I do buy from Lazada sometimes.....but the ratio would be 5-1 in Aliexpress favour. The point I am getting at is it isn't cheap to live in Thailand and anyone who has a bit of sense will buy from elsewhere when they can.   I have no allegiance to Thailand or it's greedy importers and sellers. 

Did you know that Lazada belongs to Alibaba?

[Redline]

8 hours ago, pegman said:

Why would other countries want to trade with Thailand with its ridicules excise taxes and currency manipulation? That's on top of a lack of political transparency.  

Any transparency 

[Nice Boyd]

6 hours ago, harada said:

It may be relief this week but the chances are that next week the manchild or one of his minions will once again insult the Chinese and it will be off again, and the revolving door goes round and round.

We can only Hope, China going down

[Scot123]

The haters just can't help it. Every chance in fact any post about anything the venom against Trump comes spitting out. As for the "you just have to read about all the foreign investment coming into Thailand". Lol you really believe that. You need to look back to the Kingsgate theft and the 75% of foreign investment that pulled out and the factories closed since the Generals rolled in. Have you forgotten Toyota and the Prius debacle and Toyota closing the factory down. Stop believing the properganda and any information where the figures are obtained from the Thai government. 

[Traubert]

13 hours ago, Nice Boyd said:

We can only Hope, China going down

I wouldn't waste too much time hoping, if I were you.