Thai Property News

Thai Property News picked up this little nugget from Sriwipa Siripunyawit, Bangkok Post (Oct 14) who reports the Thai financial market has weathered the US sub-prime storm and should now head on a bull run largely due to solid fundamentals and the upcoming election, which will lead to improved consumer and investor confidence.

Head of fixed income at Aberdeen Asset Management, says the volatility in the global financial markets caused by the US crisis has subsided. The markets have slowly recovered after the US Federal Reserve cut the policy rate by half a point last month. Positive quarterly earnings reports from major US banks and brokerages also boosted sentiment.

Emerging market economies will continue to grow at an attractive pace. In particular, China and India have started boosting other emerging economies around the globe.

“The Thai stock market is still considered very cheap when compared to those of neighbouring countries.”  “Investors can continue to collect quality yet underpriced stocks.”

The upcoming election will lead to more spending by both consumers and investors.  The prediction is for the SET index, currently at 852 points, to hit 900 by the end of this year and reach 1,000 next year.

According to Nasu Chunsom, the head of equities at Ayudhya Fund Management, investors should stick to the banking, energy, contractors and retail sectors.

Interestingly in Nasu’s view, “The sectors that should be avoided are export-oriented businesses and condominiums as the baht is still considered strong and the condo market is now oversupplied.”

Over the short term, however, volatility looks likely to persist as investors remain cautious and focused on a return to political normalcy, as well as the policies of the new government.  The King’s recent health scare will likely fuel that volatility.  Corporations continue to generate large amounts of cash with healthy balance sheets. With low debt levels and low capital expenditure, dividend payouts are highly attractive.

On a relative basis, the Thai stock market is trading at a 15-20% discount to regional peers, while dividends rank among the highest in the region.

So…a cautiously optimistic outlook on the Thai economy. 

And at a 15 times price-to-earnings ratio with an attractive dividend yield of 4-5%, Thai portfolios are trading at a discount to the Asia Pacific region. 

Good reason to overweight investment in Thailand and maintain a positive longer-term outlook…?