Thailand’s spending fails
Thailand’s economic growth slowed in the second quarter, as improving government spending and tourism failed to counter weak local demand and exports. GDP gained 2.8 percent in the three months through June from a year earlier, the National Economic and Social Development Board said in Bangkok yesterday. That matched the median estimate in a Bloomberg survey of 22 analysts and compares with 3 percent in the previous period. GDP grew 0.4 percent from the previous quarter. Thai Prime Minister Prayuth Chan-ocha has said he would reshuffle his Cabinet as pressure increases to bolster an economy struggling with a slump in manufacturing and sliding exports. Last week’s unexpected yuan devaluation is an added wrinkle for the government, which has pledged higher investment spending in its budget for the fiscal year starting Oct. 1.
Merkel sees IMF in bailout
German Chancellor Angela Merkel tried to reassure skeptical lawmakers on Sunday that the IMF would take part in a new bailout for Greece, before a parliamentary vote in which many of her conservatives may break ranks and reject the rescue. In her first public comments since her summer break, Merkel told broadcaster ZDF that she was sure IMF head Christine Lagarde would ensure the participation of the fund if conditions on Greek pension reform and debt relief were met. Uncertainty over the IMF role in the 86 billion euro (US$95.3 billion) bailout has become a headache for Merkel before tomorrow’s vote in the Bundestag. Lawmakers from her Christian Democratic Union and its Bavarian sister party, the Christian Social Union, want the IMF involved because of its reputation for rigor.
IndiGo confirms Airbus order
Indian airline IndiGo has confirmed an order for 250 A320neo planes, Airbus announced yesterday, the aviation giant’s largest-ever contract by number. The order is worth US$26.5 billion at catalog prices and brings to 530 the number of A320 and A320neo medium-haul planes owned by the low-cost operator. The purchase of the single-aisle A320neo planes confirms a draft deal signed in October last year. IndiGo, India’s largest passenger carrier, is the sole airline operating in the country to report profits consistently thanks to zealous cost controls — even with India’s high fuel taxes, ramshackle airport infrastructure and vicious fare fights. It marks IndiGo’s bet that air travel is only just taking off in the country of 1.25 billion people, analysts say.
Iron ore expected to drop
Iron ore may tumble about 30 percent over the next 18 months as supply expands while steel demand falters in China, according to Goldman Sachs Group Inc, which said the impact on the market from China’s devaluation was a sideshow. “Supply is likely to diverge further from demand,” analysts Christian Lelong and Amber Cai wrote in a report. “Contrary to market consensus, we believe that peak-steel production will be followed by a contraction” in China, they wrote, sticking with price forecasts for the next four quarters. Iron ore rebounded over the past five weeks from the lowest level since at least 2009 as steel prices advanced in China and shipments from the top exporters missed expectations. Iron ore was seen by Goldman averaging US$49 a tonne this quarter, US$48 in the final three months of this year, US$46 in the first quarter of next year and US$44 the following quarter, according to Friday’s report.
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
The output of the global smartphone industry this year is to contract by 7.8 percent on an annual basis as the COVID-19 pandemic ushers in a global recession, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report on Monday. The global production of smartphones is expected to fall to 1.29 billion units, as the pandemic dampens demand for consumer electronics, leading to a decline in shipments across Europe and North America, TrendForce said. With consumers delaying smartphone purchases and thereby lengthening the device replacement cycle, overall prices would suffer a setback that is expected to negatively affect the profitability of smartphone
ELECTRONICS Lite-On delays sale of unit Lite-On Technology Corp (光寶科技) yesterday said it would postpone the sale of its solid-state drives (SSD) business to Kioxia Holdings Corp, formerly known as Toshiba Memory Holdings Corp, due to disruptions amid the COVID-19 pandemic. Last year, the Taiwan-based electronics components supplier struck the deal with the Japanese firm, agreeing to sell the unit for US$165 million. Citing unfinished integration work due to the pandemic, Lite-On has deferred today’s closing date until further notice, adding that the delay would not have a negative effect on the unit’s operations. AUTO PARTS Hiroca approves dividend Automotive interior parts supplier Hiroca
ALL ABOUT STRATEGY: The company is optimistic, saying that its gross margin should increase year-on-year, but it is scaling back on its plans to expand capacity Quang Viet Enterprise Co (QVE, 廣越), which makes down jackets and garments for sportswear and outdoor brands including Adidas AG, yesterday said that revenue might drop 5 to 10 percent annually this year as some customers trimmed orders in response to the COVID-19 pandemic. That would mark its first revenue decline since 2016. Quang Viet posted record-high revenue of NT$16.26 billion (US$537.45 million) last year, up 22 percent from 2018. Down jackets made up 40 percent of it revenue last year. North Face Inc and Patagonia Inc are this year likely to reduce orders by 20 to 30 percent from a