The USD/THB exchange rate has been in a strong downward trend this year, making the Thailand baht one of the best-performing currencies in the emerging markets. It peaked at 37.25 in May, where it formed a double-top pattern, and dropped by over 13.7% to 32.15.

Thailand interest rate cut

The Thailand baht was trading at 33.16 on Monday morning, a few points below last week’s high of 33.65 as investors reflected on last week’s interest rate decision. 

In it, the Bank of Thailand decided to slash interest rates by 25 basis points to 2.25% as it worked to cushion the economy from weakness. Before that, rates were at a decade-high of 2.50% for months.

The rate cut came at a time when Thai’s inflation has risen gradually in the past few months. Data from the statistics agency showed that the core Consumer Price Index (CPI) rose to 0.77% in October from 0.6% in the previous month. The CPI was better than the expected 0.75%.

It has been rising gradually after bottoming at 0.37% earlier this year. Before that, Thai’s inflation peaked at a multi-decade high of 3.23% in 2023 as energy prices jumped. 

The headline inflation, on the other hand, has remained low in the past few months. It rose slightly to 0.61% in September from 0.35% in the previous month. 

By cutting interest rates, the Bank of Thailand (BoT) joined other central banks that have been easing recently. For example, in Europe, the European Central Bank (ECB) slashed rates for the third time this year. 

Other European central banks like the Swiss National Bank (SNB), Bank of England (BoE), and the Riksbank have been cutting. Similarly, the Bank of Canada (BoC), South Africa Reserve Bank (SARB), and the Hong Kong Monetary Authority (HKMA) have all cut rates as inflation fell.

Thailand economy is doing well

The USD/THB exchange rate has dropped because of the ongoing strength of the Thailand’s economy, helped by the tourism sector. 

In its interest rate meeting, the bank raised the country’s GDP forecast from 2.6% to 2.7%. It also expects that it will expand by 2.9% in 2025, a small decrease from the previous estimate of 3.0%.

A key catalyst for the economic growth has been the tourism industry, which has continued booming this year. 

Thailand’s tourism visitors plummeted from 39.8 million in 2019 to 11.2 million in 2022 because of the pandemic. The government now hopes that the figure will get to 35 million this year and continue growing in the future. 

Other sectors of the economy are doing better than in most countries. For example, Thai’s manufacturing PMI has remained above 50 this year, while the unemployment rate has dropped to less than 0.99%. 

Other metrics have been encouraging, with the services PMI holding steady because of the tourism sector.

Federal Reserve cuts

The USD/THB pair has also been in a downward trend as the Federal Reserve has changed its tune on interest rates.

The Fed started cutting interest rates in the last meeting when it delivered a jumbo cut of 0.50%. 

Now, however, there are signs that the bank will start cutting rates gradually after the recent strong economic numbers.

US data showed that the labor market strengthened in September, with the unemployment rate falling to 4.1%. The country’s inflation rate fell at a lower pace than expected.

Therefore, analysts expect that the Fed will not deliver more jumbo rate cuts, which explains why Treasury yields have risen in the past few weeks. The ten-year yield has risen to 4.13%, while the five-year has moved to almost 5%. 

USD/THB technical analysis

USD/THB chart by TradingView

The daily chart shows that the USD to THB exchange rate peaked at 37.25 in May. This was a notable level since it was also the highest swing in October 2023, meaning that it formed a double-top chart pattern.

The pair dropped below the neckline at 34.10 on September 4. In most periods, a double-top is one of the most bearish patterns in the market.

It then formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. The death cross is a popular bearish sign, which explains why it dropped to a two-year low of 32.15.

Recently, the pair bounced back and reached a high of 33.63 on October 10 as the US dollar index rebounded. It then erased some of those gains and dropped to 33.15.

Therefore, the pair will likely continue falling as sellers target the next key support at 32.56, its lowest swing in January 2023. A break below that level will point to more downside. 

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Billionaire Elon Musk has launched a bold initiative, promising to give away $1 million each day until the November 2024 election to individuals who sign an online petition supporting the US Constitution.

The campaign, which blends philanthropy with political activism, is part of Musk’s broader effort to rally support for Republican candidate Donald Trump.

Musk wasted no time with his promise.

During a recent event in Harrisburg, Pennsylvania, he handed a $1 million check to John Dreher, an unsuspecting attendee, surprising the crowd.

“By the way, John had no idea. So anyway, you’re welcome,” Musk said as he made the announcement.

The giveaway is the latest example of Musk leveraging his wealth to influence the 2024 presidential race, which pits Trump against Democratic nominee Kamala Harris.

While the campaign has drawn both support and criticism, Musk’s actions underscore his desire to reshape the political landscape ahead of a crucial election.

Musk’s America PAC mobilizes voters in battleground states

At the heart of Musk’s effort is America PAC, a political action committee he founded to support Trump’s campaign.

The organization focuses on registering and mobilizing voters in key battleground states like Pennsylvania. However, reports indicate the group has encountered challenges in meeting its voter turnout goals.

Musk has emphasized the importance of this election, framing it as a defining moment for the nation.

Speaking at the Pennsylvania rally, Musk said,

“If Harris wins, it will be the last election,” suggesting that fundamental freedoms in the US could be threatened under a Harris presidency.

The event marked Musk’s third rally in Pennsylvania within three days, underscoring the strategic importance of the state in Trump’s re-election bid.

Musk also encouraged supporters to vote early and actively persuade others to head to the polls.

Controversial remarks and petition gather attention

Musk’s remarks at the rally drew attention for their provocative tone. He referenced two assassination attempts on Trump as evidence that the former president is disrupting the political status quo.

In contrast, Musk claimed that no one has attempted to harm Harris because she represents continuity.

“Assassinating a puppet is worthless,” Musk asserted, reiterating a point he had made previously on social media.

The $1 million-a-day giveaway is tied to an online petition that reads:

“The First and Second Amendments guarantee freedom of speech and the right to bear arms. By signing below, I am pledging my support for the First and Second Amendments.”

Those attending the Harrisburg event were required to sign the petition, which serves a dual purpose.

Beyond expressing support for constitutional rights, the petition allows America PAC to collect contact details from attendees, building a database of potential Trump voters for future outreach efforts.

Financial influence raises questions about democracy

Musk’s use of personal wealth to sway political outcomes raises questions about the role of billionaires in electoral processes.

While philanthropy is not unusual during election cycles, Musk’s direct financial involvement—through giveaways tied to political support—blurs the lines between charity and influence.

Political analysts point out that Musk’s actions reflect broader trends in US politics, where wealthy individuals and interest groups often play outsized roles in campaigns.

America PAC’s struggles, however, suggest that even with substantial resources, grassroots voter mobilization remains a challenging task.

What’s next in Musk’s strategy?

As the election nears, Musk’s strategy will likely continue to evolve. With daily giveaways set to continue until November, his campaign aims to build momentum and draw media attention.

Analysts note that the initiative also serves as a test of Musk’s influence and ability to rally support in critical swing states.

Whether Musk’s efforts will sway enough voters to secure a victory for Trump remains uncertain.

But his involvement in the campaign highlights the growing intersection of wealth, technology, and politics—a trend that is reshaping the way elections are contested in the digital age.

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China has reduced its benchmark lending rates in an effort to stimulate economic growth and address a struggling housing market.

The one-year loan prime rate (LPR) was lowered to 3.10% from 3.35%, while the five-year LPR was cut to 3.60% from 3.85%.

These moves follow a series of monetary easing measures introduced by the People’s Bank of China (PBOC) in late September.

This latest reduction exceeds the expectations of economists, who had predicted a smaller 20-basis point cut across both lending rates.

Instead, the size of the cuts, ranging from 20 to 25 basis points, aligns with previous statements by PBOC Governor Pan Gongsheng, suggesting a more aggressive approach to monetary easing.

Targeting borrowing and market stabilization

The LPR is set by a consortium of major Chinese banks and serves as a key reference point for the pricing of loans.

Most new and existing loans are linked to the one-year LPR, while the five-year rate plays a critical role in determining mortgage costs and other long-term loan pricing.

The reductions come as part of a broader strategy to encourage households and businesses to borrow more by lowering interest rates and increasing liquidity.

These measures are intended to boost lending, halt the property market’s decline, and ultimately restore economic momentum.

“The larger cuts confirm the PBOC’s commitment to faster monetary easing and reflect the Politburo’s recent push for more forceful rate cuts,” said Beckly Liu, head of China macro strategy at Standard Chartered Plc.

Yuan and bond markets react with stability

Following the announcement, the offshore yuan remained stable at around 7.12 per dollar.

Meanwhile, China’s 30-year government bond yield remained unchanged at 2.3% amid low trading volumes. The muted market reaction suggests that the rate cuts were largely anticipated.

China’s top policymakers had earlier emphasized the importance of revitalizing the property market, which plays a crucial role in the country’s economy.

In a Politburo meeting held in September, officials vowed to implement substantial interest rate reductions and introduce measures to prevent further deterioration in the real estate sector.

Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc., noted that the larger-than-expected cuts signal the government’s determination to stabilize the housing market.

Further easing measures likely

The PBOC has indicated that additional monetary easing could be on the horizon.

Governor Pan Gongsheng hinted at the possibility of another reduction in the reserve requirement ratio (RRR) by 25 to 50 basis points by year-end to increase bank lending capacity.

Though further interest rate cuts are not expected this year, analysts believe the PBOC could act more aggressively if unexpected economic shocks arise.

China’s largest state-owned lenders also reduced their deposit rates last week, a move intended to mitigate the impact of lower loan rates on bank profit margins.

A pivotal moment for China’s economy

The recent rate cuts mark another step in China’s effort to navigate a challenging economic landscape. As the property market faces headwinds and consumer sentiment remains fragile, the government hopes these measures will reinvigorate borrowing and spending.

While the PBOC’s actions aim to maintain stability in financial markets, economists caution that their effectiveness will depend on consumer and investor confidence.

With additional policy tools at its disposal, the central bank may have to balance further easing with long-term financial stability.

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With nearly $10 billion worth of investments being pulled out, October has emerged as the worst month on record for Foreign Institutional Investors (FIIs) withdrawing from India’s stock market.

The outflow has surpassed the previous high of $7.9 billion seen during the March 2020 COVID-19 market crash and has been attributed to a combination of factors, including a shift in global investor sentiment towards China and concerns about overvaluation in Indian equities.

However, despite the sell-off, the Nifty is down by only 4% this month, significantly less than the 23% decline during the March 2020 crash, when the domestic market was in turmoil, partly aided by Domestic Institutional Investors who have invested over Rs 74,200 crore so far in October.

Much like during the 2020 market crash, Domestic Institutional Investors (DIIs), primarily mutual funds, have acted as a counterbalance to the heavy selling by FIIs.

This follows a broader trend in 2024, where DIIs have made record investments of Rs 4 lakh crore in the Indian market.

Retail investors, unlike in previous market downturns, have shown resilience, refraining from panic selling even as foreign funds exit.

‘Buy China, Sell India’ trade drives FII sentiment…

One of the main drivers of the October FII outflow is the growing “Buy China, Sell India” trade.

Investors are increasingly optimistic about China’s economic prospects, with the Hang Seng Index up 14% and the Shanghai Composite Index rising 22% in the last month.

This contrasts with the 4% decline in the Nifty, which reflects concerns about India’s market valuations and corporate earnings performance.

“Investors expect that China will ultimately embark on meaningful stimuli that will not only underwrite ’24 growth but extend into ’25-26,” said Viktor Shvets, a strategist at Macquarie.

He added that investors believe the Chinese government is now focused on the economy and may de-emphasize political and geopolitical issues.

…but China is good for traders, not long-term investors, say economists

The investment community however remains divided on whether China’s recovery is sustainable. Noted economist and investment strategist Ed Yardeni advised caution regarding the “Buy China, Sell India” trade. Yardeni told Invezz,

I wouldn’t recommend selling India and buying China unless, again, it might be a good trade, but it’s not a good long-term investment. And India’s had a tremendous bull market, so it’s not exactly cheap. But I would stay invested in India.

Similarly, Chris Wood of Jefferies, who recently increased his weightage in China at the expense of India, reflects a growing sentiment of tactical shifts among global fund managers.

While some investors are bottom-fishing in Chinese markets in anticipation of stimulus, others view the move as a temporary trade rather than a sign of a structural turnaround.

Macquarie, too cautioned that this is more of a trading opportunity than a long-term investment strategy.

“It is quite possible that further announcements might propel China’s equities, even as structural issues fester. But, this is mostly a trading, not an investment call, which still heavily favours India,” the firm said in a report last week.

Overvaluation concerns loom over India

The sell-off by FIIs isn’t just about China. Concerns over India’s market valuations, which have soared following a prolonged bull run, are weighing on investor sentiment.

Analysts warn that Indian markets are trading at historically high valuations, which appear overly optimistic given the current economic backdrop.

Factors such as slowing growth, persistent inflation, high taxes, and elevated interest rates have raised doubts about the sustainability of these valuations.

Ajay Bagga, a market veteran, noted that investor tolerance for missing earnings is minimal in such an environment.

“When markets are at such elevated levels, there is very little tolerance for missing earnings and for bad news,” he said, adding that the rising dollar index, which is now above 103, is further pressuring emerging markets like India.

Weak corporate earnings and macroeconomic challenges

Indian corporate earnings for the most recent quarter have been lackluster across various sectors, adding to the concerns of foreign investors.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, pointed out that speculative capital had been flowing into India, with FIIs remaining net buyers as recently as September.

However, the narrative has since shifted, and investors are now turning their attention to Chinese markets, which offer more attractive short- to medium-term valuations.

“With elections ahead in the US, it is believed that the trade war with China will become more aggressive, and the same factors will continue to be in force whoever comes to power,” said Narender Singh, smallcase Manager and Founder at Growth Investing.

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South Africa is gearing up for a wave of initial public offerings (IPOs) and fundraising activities, set to begin as early as 2025, as the country’s economic outlook brightens after years of lackluster growth.

According to JPMorgan Chase & Co., investor optimism has surged, driven by the recent formation of a business-friendly coalition government following the African National Congress (ANC)’s loss of its parliamentary majority in the May election.

This shift in the political landscape has sparked renewed investor confidence, with multinational companies pouring in capital, a rally in the South African rand and bonds, and the benchmark stock index rising over 20% in dollar terms since June.

According to a report by Bloomberg, Edward Bell, managing director at JPMorgan in Johannesburg, noted,

We would expect primary activity to pick up. As equity market performance and valuations return to more appropriate levels, the incentive and the ability to issue equity or IPO a business becomes a viable option.

Johannesburg Stock Exchange prepares for key listings

Amid the positive sentiment, the Johannesburg Stock Exchange (JSE) is already preparing for several high-profile listings.

Pick n Pay Stores Ltd.’s Boxer unit is expected to list before the end of the year, drawing considerable interest from investors.

Similarly, Anglo American Plc is set to spin off its platinum and diamond businesses, both of which are highly anticipated by the market.

In addition to these upcoming listings, there is growing speculation about Coca-Cola’s potential IPO of its African bottling business, which could aim for an $8 billion valuation in 2025.

The JSE is also working to attract more inward and secondary listings from companies with African or sub-Saharan ties, offering more opportunities for growth in the region.

Investor confidence returns to South Africa

Despite foreign investors selling a net $5.5 billion worth of South African stocks this year, domestic stocks, particularly in the banking sector, have seen strong gains.

FirstRand Ltd., Standard Bank Group Ltd., and Capitec Bank Holdings Ltd. have all surged more than 25% since June, reflecting renewed confidence in South Africa’s economy.

JPMorgan predicts South Africa’s economy will grow by 1% in 2024 and by 1.4% in 2025, following years of average GDP growth below 1%.

Bell also highlighted the growing demand for sub-Saharan debt exposure, with investors seeking higher yields and stability from the region.

“Emerging market debt investors are looking for sub-Saharan exposure as it provides good yield and the region currently has a more stable economic outlook,” Bell added.

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