Thailand stocks lure foreign money
DOUBLE your money! is the type of hollow-sounding pitch that drops with regularity into email in-boxes. But for investors who have kept faith with equities in
Bangkok may not be the biggest market in Asia but it has been one of the best in recent months. The benchmark SET index rose 4.47 points or 0.8% to 572.84 points today, pushed higher by continued foreign buying and underpinned by a robust domestic economy.
With turnover at a record level, the market is at a six-year high, its best showing since the regional financial crisis broke.
The market's performance was featured in this column at the start of July, when the lead index was closing in on 500 points, up by more than a third since the start of the year.
Since then the good times in Bangkok have only got better. Gains are now approaching 60%. And if Citigroup Smith Barney is right, plenty of upside remains - it has just raised its SET target to 800 points. That is more than double the level at which the market started the year.
Citigroup said gross domestic product growth was strong; Thailand's main export markets were doing better; liquidity was favourable; stocks remained cheap and the outlook for corporate profits good.
It also praised the economic management delivered by populist leader Thaksin Shinawatra. In short, it said, Bangkok was still a strong buy.
'Despite the SET's 50% rise since 1 January 2003, the market's valuation remains historically cheap,' Citigroup said.
In January it traded on a 12-month forward price-earnings ratio of nine times, the bank's team said. On Monday, on the same forward measure, it is trading on 9.3 times.
'Companies have learned the lessons of the past. They are avoiding diversification into unrelated businesses and returning surplus cash to shareholders via high dividends or share buybacks,' it said.
Monday's rise was supported by fresh data on the sizzling economy. The State-run National Economic and Social Development Board said the economy was set to expand by between 5.8% and 6.2% this year. Market bellwether Bangkok Bank was level at 77 baht.
In South Korea, share prices backtracked as investors tried to gauge the extent of the damage wrought by a typhoon that slammed into the south of the country late on Friday.
The Seoul Composite retreated 8.7 points or 1.1% to 758.76 amid worries that the storm could dent economic recovery. South Korea slipped into a shallow recession in the first half.
Technology favourite Samsung Electronics faced selling pressure, dropping 20,000 won or 4.3% to 442,000 won. Shipbuilder Hyundai Heavy Industries slid 800 won or 2.8% to 28,100 after the storm lashed its facilities.
Australian stocks was treading water despite a stronger tone for resource plays which gained on hopes for sustained growth in demand as the global economy picks up.
Rio Tinto rose 20 cents or 0.6% to A$33.80 and BHP Billiton was better by four cents or 0.4% at A$10.83.
The All Ordinaries was level, closing just >3.6 points off at 3191.6, a fraction of 1%.
Financial markets in Japan were closed for a holiday.
