The ECB is following the route of Japan with the latest announcement this week of continuous easing by lowering the deposit facility rate by another 10 bps to -0.4%, the main refinancing rate was cut to zero, quantitative easing was raised to EUR80bn/month with effect from next month and corporate bonds are now included. In addition, a second series of LTRO is announced to be launched in Jun. And following the same playbook as with the Yen, the EUR fell towards the 1.08-figure at one point before spiking above the 1.12-figure shortly after ECB Draghi said he does not see a need for further rate cuts. So here’s some questions 1) @ what point is cash worthless? 2) Given that the clever folks in investing typically use DCF, what happens to the discount rate? Will companies now be worth infinity? 3) Will the US follow this global easing strategy and keep markets in a buoyant manner? If yes, we can continue to pop champagne, if not, how bad will the crash be? Or is the liquidity coming out of Europe and Japan enough to sustain markets? 4) Why are we reliant on central banks (i.e. governments) to boost capital markets?
JAS – the comedy show continues with one of the oddest share buybacks that I’ve ever seen, they announced it in the AM, only to revise the announcement by the late PM after realising one can’t just simply say “we will buy back @ a 40% premium to current prices.” So does this confirm that they are completely out of the telecom bidding? How loud are ADVANC and DTAC laughing now at TRUE? How angry will the government be that they’ve just lost out on some THB 75 bn of funding that may have been spent on populist policies? Is JAS just being cheeky with its cash and this is the best way to somehow to do a trade sale? (do the #’s the major shareholder will benefit more from the share buyback vs a special dividend)
BANPU – I have a history with this name, it was my first trade based on squiggly lines and where I first lost $ back in…’04 only to realise maybe I should understand what I’m buying after seeing the stock rise by 5x after I exited with a loss. They’ve just announced a recap and is perhaps the only Thai commodity related company that has the weakest balance sheet and has been slow to pivot to other businesses.
The SET has been on a roar and we whilst we aren’t surprised by the rebound, we were caught off guard by the speed of it, a quick review of market participant trading show that Proprietary traders in Thailand have been the largest buyers @ THB 15 bn (followed by foreign investors @ THB 8 bn w/ local insti’s and retail being net sellers)..this doesn’t quite bode well for the short term outlook…
These JAS moves are really playing with my head, they are doing the complete opposite of what they are supposed to if they were serious about paying for the 4G license. One would think they would do a capital increase and cut their dividend to raise cash but not Pete, if the borrowing plan with BBL is dead in the water their last hope is a foreign partnership with God knows who?
If this is indeed the case, True got majorly shafted and AIS comes out smelling of roses. No wonder the AIS executives were drinking Heineken and high fiving each other when they found out they didn’t win..
xavi
These JAS moves are really playing with my head, they are doing the complete opposite of what they are supposed to if they were serious about paying for the 4G license. One would think they would do a capital increase and cut their dividend to raise cash but not Pete, if the borrowing plan with BBL is dead in the water their last hope is a foreign partnership with God knows who?
Pon
Well its becoming more and more obvious that they won’t go ahead with 4G….
xavi
If this is indeed the case, True got majorly shafted and AIS comes out smelling of roses. No wonder the AIS executives were drinking Heineken and high fiving each other when they found out they didn’t win..