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Thai Stocks to Advance 5% to Be Asia's Next Bull Market, Julius Baer Says
Thai stocks may rise at least 5 percent to become Asia’s second bull market this year amid a return of manufacturing and investments, according to Bank Julius Baer & Co.
Thailand is becoming more attractive to manufacturers with China turning more “domestic demand-oriented,” said Venkatraman Anantha-Nageswaran, global chief investment officer at Julius Baer, which oversees $140 billion of assets. Foreigners, who sold a net $359.5 million of Thai stocks this year, the only one among nine markets tracked by Bloomberg to record outflows, are starting to buy again.
“Thailand is a market we feel one should really not ignore, because it has got some pockets of manufacturing strength,” Anantha-Nageswaran said in an interview in Singapore yesterday. “It has far better infrastructure and is more internationally connected” than other Asian emerging markets.
The benchmark SET Index is the second-best performer among Asia’s 10 biggest stock markets after Indonesia this year, according to data compiled by Bloomberg. The measure has climbed more than 18 percent from its May 25 low following the slump in global stocks amid the European debt crisis, close to the 20 percent increase that investors define as a bull market.
The SET rose 0.1 percent to 854.59 yesterday, advancing for a sixth day, the longest stretch of gains in more than four months, data compiled by Bloomberg showed. The index may cap its gains at the 900 level, Anantha-Nageswaran said. “It will probably cross the criteria for a bull market, but it’s not likely to go far,” he said.
SET’s Gain
The SET climbed 15 percent since Anantha-Nageswaran advised investors on May 24 to add Thai stocks, compared with a 6.6 percent gain in the MSCI Asia Pacific Index. Indonesia’s Jakarta Composite index surged 23 percent since its May 25 low yesterday, the first among Asia’s 10 biggest markets to enter a bull market since the debt crisis.
Tisco Securities Co., which has a tie-up with Deutsche Bank AG on research in Thailand, said this week it expects the SET to advance to 1,000 in 12 months.
Foreigners bought 2.83 billion baht ($88 million) of Thai stocks than they sold on July 23, the highest level since April 7, according to data compiled by Bloomberg.
Overseas investors bought more shares even as Prime Minister Abhisit Vejjajiva tightened security this week in Bangkok, a city already under emergency rule, after a bomb killed one person and injured 10 others hours after polls closed in the first by-election since anti-government demonstrations. The explosion marked the first violence since May 19, when a military assault to end the protests sparked rioting in Bangkok.
Not Pulled Back
“Investors expect these to happen,” Anantha-Nageswaran said. “Unless it’s a very extreme event, I don’t think they’re going to be pulled back in their enthusiasm by these blasts.”
A grenade also exploded at 1 a.m. in Bangkok in an area where the protesters battled troops earlier this year, wounding one person, the police said.
The return of foreigners comes after Thai investors drove the benchmark index beyond a two-year high on confidence in earnings growth, Charamporn Jotikasthira, president of the Stock Exchange of Thailand said in a July 22 interview. Locals have offset waning overseas demand in the first half following the nation’s worst political clash in two decades, he said.
Overseas investors continued to add more Thai stocks this week, with 3.74 billion baht of net inflows in the first three trading days, the data showed. The markets were closed for a holiday on July 26.
‘See the Light’
“After the crisis, they are beginning to see the light,” said Prapas Tonpibulsak, chief investment officer at Bangkok- based Ayudhya Fund Management Co., which manages about $2.2 billion of assets. “Earlier this year, foreign investors didn’t see any solution for Thailand in the medium and long-term.”
The central bank said July 23 it expects the economy to expand the most in at least seven years in 2010 as an export rebound limited the impact from the political clash that left at least 89 people dead. Gross domestic product may expand 6.5 percent to 7.5 percent, compared with an April forecast for growth of 4.3 percent to 5.8 percent.
Exports climbed to a record $18.04 billion in June, helped by the end of the riots and a recovery in the global economy. Automakers Ford Motor Co., General Motors Co. and Mitsubishi Motors Corp. all announced plans to build factories in Thailand in the past month.
“With 74 million people and demographics still in their favor, and some manufacturing experience and know-how, Thailand can still give the newcomers in the game of export manufacturing such as Vietnam and Cambodia a run for their money,” Julius Baer’s Anantha-Nageswaran said.
To contact the reporter responsible for this story: Kristine Aquino in Singapore at kaquino@bloomberg.net
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