As Thailand’s Baht Surges, Rice Farmers Feel the Pain By Bloomberg

(Bloomberg) — Thailand’s rice industry is enduring one of its most painful periods as a strong baht makes exports uncompetitive, according to one of the sector’s leaders.

The nation is on course to lose its position as the world’s second-biggest rice exporter if the situation doesn’t improve, Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said in an interview.

“It’s killing us all,” he said Thursday in Bangkok. “We don’t know what else we can do. We tried reducing costs, but the baht keeps making our rice more expensive. We can only just sit and wait, and some might have to quit the business.”

The rice industry is a crucial one for Thailand because of the sheer number of people who depend on it for their livelihoods. The industry supports as much as 30% of the country’s 69 million population, according to Chookiat.

The baht has strengthened more than 9% against the dollar in the past year, the most in emerging markets, leaving rice exports exposed to more competition from large producers like India, Vietnam and China.

Thai white rice is selling at $425 per ton, but that figure would be about $380 per ton if the baht was at the same level now as this time last year, according to the association. The trade body includes 75% of all rice exporters in Thailand.

“The industry is heading toward a dead end,” Chookiat said. “We can’t compete anymore.”

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Hong Kong’s Economy Starts to Feel the Hit from Protest Chaos By Bloomberg

© Reuters. Hong Kong’s Economy Starts to Feel the Hit from Protest Chaos

(Bloomberg) — Hong Kong is beginning to reckon with the economic cost of ongoing protests against the government’s extradition bill, as the disruption risks driving away local shoppers and deterring tourists from mainland China.

The Hong Kong Retail Management Association said Tuesday that “most members” reported a single-to-double-digit drop in average sales revenue between June and the first week of July, when multiple demonstrations converging on major office and retail districts took place.

The threat to Hong Kong’s vital retail sector will hit its economy at a time when it is already slowing. Retail sales data for June is due for release on August 1, with the value of goods sold having contracted every month since February.

The “industry is worried that these events will damage Hong Kong’s international image as a safe city, a culinary capital, and a shopping heaven,” the association said in a statement.

Chief Executive Carrie Lam’s bid to ease extraditions to the mainland prompted hundreds of thousands of protesters to take to the streets in a wave of historic protests that has brought parts of the city to a halt since early last month.

Hong Kong Financial Secretary Paul Chan said at a briefing July 15 that second quarter economic output is expected to be “slow,” though there haven’t been obvious capital outflows amid the demonstrations.

Sales Drop

Sa Sa International Holdings Ltd., a seller of cosmetics, reported a 15.3% drop in same store sales in Hong Kong and Macau for the three months through June. The company said the demonstrations had affected some stores, as had a high comparison from the previous year.

For the same period, Chow Tai Fook Jewellery Group Ltd. reported an 11% decline. The political backdrop and a decline in mainland visitors increases the likelihood of a two percentage-point reduction in its first-half operating margin, Catherine Lim, an analyst at Bloomberg Intelligence in Singapore, wrote in a note.

These Brands Are Caught in the Middle of Hong Kong’s Protests

The chances of a marked economic impact from the protests raises comparisons with the Occupy movement that blocked parts of central Hong Kong five years ago. Economic growth slowed in the fourth quarter of 2014 from the previous period, and the government at the time partially blamed that weaker performance on the protest, saying it “affected tourism, hotel, catering, retail and transport industries.”

Carry On

This year, the number of visitors to the city from mainland China has been increasing strongly, thanks in part to the opening of a new bridge linking Hong Kong with the city of Zhuhai, in Guangdong province. Arrivals in May surged 23.6 percent from a year earlier, with the June tally not yet available.

Images of protesters blocking major city thoroughfares — and retail outlets — is likely to pose a significant risk if the demonstrations continue. On July 1, a gathering that ultimately saw protesters break into and vandalize the city’s legislative building hampered retailers in the shopping district of Causeway Bay and elsewhere.

Hong Kong Turmoil Has Wealthy Eyeing Havens Beyond China’s Grasp

Yet most businesses are attempting to carry on.

“There were so many people, it was a mess, no one wanted to come in,” said Chen Yan, 30, who works at the counter of a pharmaceutical store in Causeway Bay. “But we haven’t changed our operations because of the protests. We expect it to be temporary.”

(Updates association comment in second paragraph.)

Nordic economies expected to feel pinch of global trade tensions: Reuters poll By Reuters

Nordic economies expected to feel pinch of global trade tensions: Reuters poll

By Stine Jacobsen

COPENHAGEN (Reuters) – Nordic economies are seen expanding at a slightly slower pace next year as lingering tensions between the United States and its trading partners hurt world growth, despite growing signs of a global monetary policy easing cycle, a Reuters poll found.

“These are countries orientated toward trade so lower growth in the global economy will inevitably mean lower growth in the Nordic economies,” said Nordea’s chief economist Helge Pedersen.

Sweden’s economy has topped the region’s growth league for more than half a decade but growth in its gross domestic product is now seen dropping from 1.8% this year to 1.6% in 2020, lower than the 1.7% previously forecast.

It is seen bouncing back to 1.8% in 2021.

Norway is expected to be the fastest-growing Scandinavian economy both this year and next, while Denmark, the final member of the Scandinavian trio, is seen expanding at a slightly slower pace.

“Norway is least exposed because they have their oil,” Pedersen said. “As long as the oil price is above $40 per barrel, investment activity will remain high.”

Brent crude futures () traded at around $66 a barrel on Tuesday.

Norway’s mainland economy is seen growing 2.3% this year followed by 1.8% in the two following years. Denmark’s GDP is seen slowing from 1.7% in 2019 to 1.6% in 2020.

Mainland, or non-oil, growth excludes oil and gas output but includes the indirect effects of the petroleum industry’s cyclical swings.

As a major producer of oil and gas, the Norwegian economy slumped following the 2014 crash in energy prices, but has since picked up speed as the price of crude gradually recovered.

(Polling by Hari Kishan and Sarmista Sen; Writing by Stine Jacobsen in Copenhagen and Esha Vaish in Stockholm; Editing by Jonathan Cable and Frances Kerry) OLUSECON Reuters US Online Report Economy 20190717T071501+0000

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Exxon quarterly profit to feel pinch of weaker natural gas, chemical earnings

(Reuters) – Exxon Mobil Corp (XOM.N) said on Monday lower natural gas and chemical margins in its second quarter would offset improved crude and refining operations, pointing to flat profits sequentially and down from a year-earlier.

FILE PHOTO: A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes/File Photo

The U.S. oil major said in a securities filing it expected improved crude prices to boost second-quarter profit by $400 million to $600 million. However, natural gas NGc1 prices which have dropped to multi-year lows in the face of tepid demand, were expected to offset it by an equal measure.

RBC Capital Markets analysts in a note said the magnitude of weakness across refining, chemicals and natural gas and the lack of sequential improvement, “leaves us heading into another disappointing quarter for Exxon’s earnings momentum.”

Jennifer Rowland, analyst at Edward Jones, expects second-quarter upstream earnings to be weaker compared with a year ago. She lowered the brokerage’s profit estimates to 88 cents per share from 95 cents previously. That is below Wall Street’s mean estimates of 97 cents and the year-ago quarter’s 92 cents a share.

“We have to be more patient with their turnaround plan,” said Rowland.

Exxon said weaker margins in its chemical business is expected to reduce second-quarter profit by $100 million to $300 million over the first quarter. It also estimated a potential gain of $200 million over the first quarter from a lack of impairment charges.

The company is scheduled to release its results on July 26.

Rowland expects refining and marketing to return to profitability due to higher margins while chemicals should continue to post weaker results given lower margins and scheduled maintenance.

In April, the company reported first-quarter profit that slumped 49% to $2.4 billion and missed analysts’ estimates due to a weakness across its major businesses.

Exxon shares, which have risen about 12% this year to Friday’s close, ended the day off 7 cents a share at $76.56 compared with a 0.1% rise in the S&P 500 Energy index .SPNY as a result of oil prices that steadied as OPEC extended supply cuts until March 2020 during a meeting in Vienna.

Reporting by Shanti S Nair in Bengaluru; Editing by Shailesh Kuber and Lisa Shumaker

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Pakistanis feel crunch of rising prices By Reuters

© Reuters. Vendor arranges different types of rice at his shop in a wholesale market in Karachi

By Saad Sayeed and Syed Raza Hassan

ISLAMABAD/KARACHI (Reuters) – Pakistan’s surging petrol prices have more than halved the income of taxi driver Yasir Sultan, just one of many consumers whose faith in a government elected last year on a pledge to help the poor has been shattered.

Inflation at its highest in more than five years has shocked many Pakistanis who voted for Prime Minister Imran Khan and his promise to eradicate poverty, create jobs and build an Islamic welfare state.

“Imran Khan has said big things about getting rid of poverty, but he isn’t erasing poverty. He is erasing the poor,” Sultan, 30, told Reuters.

“Sometimes I think I should set this taxi on fire,” he said from behind the wheel of his rundown 1980s-era Suzuki Mehran.

Wrestling with a ballooning current account deficit as it seeks a 13th bailout package from the International Monetary Fund, the government has a hard choice – impose pain now or face a balance of payments crisis that could crash the economy.

Foreign reserves of $8.5 billion are better than the start of the year, but barely cover two months’ worth of imports.

“Demand compression is part of stabilization to bring down current account and trade deficits,” said Asad Sayeed, an economist at the Collective for Social Science Research.

Inflation was over 9.4 percent in March, its highest since November 2013, with strong increases in food and energy, the two most sensitive items for most consumers.

The central bank forecasts growth at 3.5-4 percent in the 12 months to end June, well off a government target of 6.2 percent.

With a large pool of surplus labor keeping wage rises in check, living standards will suffer, Sayeed said.

“I voted for PTI believing in Khan’s slogan for the change. Now, I am repenting,” said Sara Salman in the bustling eastern city of Lahore, referring to the prime minister’s party, Pakistan Tehreek-i-Insaf.

With the rupee losing over a quarter of its value in the past year, the squeeze is acute in the creaking power sector where the government is under pressure to cut subsidies cushioning consumers against sharp price hikes.

Authorities on Monday hiked petrol prices by 6 rupees to 98.88 rupees ($0.70) a liter, bringing pain to skilled workers who earn 1,000-1,300 rupees ($7.08-9.20) a day and laborers who make up to 600-800 rupees.

The price hikes will keep consumers away from all but essential items, economists say.

“The fiscal trajectory now depends on what extent the government is going to adjust energy prices,” said Saad Hashmey, chief economist at Topline Securities, adding it has to fix the energy deficit and bring earnings in line with production costs.

“If they are to go the full extent they need to plug the gap, then inflation in a few months will go into double digits,” he said.


Finance Minister Asad Umer has said an IMF deal could be agreed by May, its 13th bailout since the late 1980s and the last one needed by Pakistan, the government says.

While talks continue, Pakistan has sought help from China, its partner in the $60-billion China-Pakistan Economic Corridor, part of Beijing’s vast Belt and Road infrastructure initiative.

Saudi Arabia and the United Arab Emirates have also extended about $11 billion in loans and credit arrangements on oil deliveries in recent months.

The government says it is stepping up efforts to replace imports with domestic production and build up an export sector that has traditionally relied on textiles with special economic zones designed to attract new investment.

It is also trying to widen the tax net to boost collections, but has struggled on both fronts.

Rising oil prices and a currency devaluation “were bound to happen”, Information Minister Fawad Chaudhry said this week, adding, “God willing, a better time will be coming.”     

For a government that promised an “Islamic welfare state” focused on uplifting the poor, the forecast is uncomfortably vague, observers say.

“They have to undertake a very painful economic adjustment,” said Khurram Hussain, business editor of Pakistan’s Dawn Newspaper. That means higher taxes and interest rates, lower imports and government spending, and a devalued rupee, he said.

“In that environment it is extremely difficult to deliver on welfare oriented promises,” Hussain said.

While economists believe Pakistan has no choice but to cut spending and raise prices, consumers’ patience is wearing thin.

“The current financial policies and price-hike shows contempt for the people,” said Muhammad Waqas, a Lahore school teacher. “If the PTI government cannot resolve these problems, it should step down.”

Walmart holiday-quarter sales jump, ‘feel pretty good about consumer’

(Reuters) – Walmart Inc said on Tuesday it sees no signs of weakness in U.S. consumer spending and posted its strongest holiday-quarter sales growth in a decade, citing robust grocery and e-commerce sales and assuaging concerns about a looming U.S. recession.

Shares of the world’s largest retailer rose nearly 4 percent on Tuesday and were up 7 percent so far this year.

Walmart’s performance and rival Target Corp’s strong holiday sales growth reflected the health of the U.S. consumer as spending remained robust due to a strong labor market and cheaper gasoline prices.

“We still feel pretty good about the consumer. We haven’t seen much of a change,” Walmart Chief Financial Officer Brett Biggs told Reuters. “The data we are seeing still looks pretty healthy. Gas prices are down year over year, which helps.”

Walmart’s performance addressed some concerns about an impending slowdown in U.S. spending this year but investors urged caution.

Charles Sizemore, founder of Sizemore Capital Management LLC, which owns Walmart shares, said retail sales data coming out right now looks strong but the overall picture is still mixed.

“There are definitely some storm clouds on the horizon,” Sizemore said. “A big example would be delinquent loans in the auto sector which are rising … the consumer may be on hard times and in 2008 that was the prelude to the global economic slowdown.”

U.S. retail sales recorded their biggest drop in more than nine years in December, the government reported last week, as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

Overall sales for the 2018 U.S. holiday shopping season hit a six-year high as shoppers were encouraged by early discounts, according to a Mastercard report in late December.

Walmart sales at U.S. stores open at least a year rose 4.2 percent, excluding fuel, in the fourth quarter ended Jan. 31. The gain exceeded analysts’ expectations of 2.96 percent, according to IBES data from Refinitiv.

Sales were also boosted after federal officials distributed food stamp aid early during the partial government shutdown. The demise of retailer Toys R Us helped Walmart gain toy market share, the company said.

Adjusted earnings per share increased to $1.41 per share, beating expectations of $1.33 per share, according to IBES data from Refinitiv. But the retailer’s gross margins declined for the seventh consecutive quarter due to higher transportation costs and e-commerce investments.

FILE PHOTO: Walmart’s logo is seen outside one of the stores in Chicago, Illinois, U.S., November 20, 2018. REUTERS/Kamil Krzaczynski/File Photo


Online sales jumped 43 percent in the quarter, in line with the previous quarter’s rise, helped by the expansion of Walmart’s online grocery pickup and delivery services and a broader assortment on its website.

But the company reiterated that it expected e-commerce losses to increase this year due to ongoing investments. Chief Executive Officer Doug McMillon said on a conference call the company was focused on getting return customer visits and strengthening product assortment.

The company has expanded a program that allows customers to order groceries online and pick them up at its U.S. stores, a move the retailer said helped expand market share in the category. It said it will have the service at 3,100 stores by next January. At the end of the fourth quarter it was offered at more than 2,100 stores.

Walmart will offer grocery deliveries to about 800 more stores by the end of the year, bringing the total to 1,600 stores.

Grocery sales currently make up 56 percent of total revenue for the retailer. Inc is trying to crack the food category, especially since it bought organic supermarket chain Whole Foods.

Walmart is partnering with third-party couriers and working with so-called gig, or freelance, drivers, who are cheaper than full-time employees, to push down costs, Reuters recently reported.

Google-backed Deliv, a Walmart delivery partner in Miami and San Jose, ended its relationship with the retailer, Reuters reported last week.

The U.S. retailer, which overtook Apple Inc to become the third largest e-commerce retailer last year, is likely to capture a 4.6 percent share of the U.S. e-commerce market, behind eBay Inc and Amazon, according to research firm eMarketer.

Walmart repeated its forecast that fiscal year 2020 earnings per share would decline in the low single digits in percentage terms, compared with last year. Excluding the acquisition of Indian e-commerce firm Flipkart, it sees an increase in the low- to mid-single-digits.

McMillon said the company was disappointed in India’s revised e-commerce regulations, which ban companies from selling products via firms in which they have an equity interest and also bar them from making deals with sellers to sell exclusively on their platforms.

He said the Indian government didn’t consult with Walmart and other U.S. companies before it changed the rules. “We hope for a collaborative regulatory process going forward, which results in a level playing field,” he said.

FILE PHOTO: People wait in line pay at a Walmart during a sales event on Thanksgiving day in Westbury, New York, U.S., November 22, 2018. REUTERS/Shannon Stapleton/File Photo

Walmart expects fiscal year 2020 comparable sales growth of 2.5 percent to 3 percent, excluding fuel and online sales growth of 35 percent.

Total revenue increased 1.9 percent to $138.8 billion, beating analysts’ estimates of $138.65 billion. Walmart has recorded 18 quarters, or over four straight years of U.S. comparable sales growth, unmatched by any other retailer.

The stock rose 3.7 percent to $103.68. Target and Costco Wholesale Corp were both up more than 1 percent.

Reporting by Nandita Bose in Washington; Editing by Jeffrey Benkoe

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