Thailand’s top-performing equity fund manager, who sold shares from October amid anti-government protests, now sees buying opportunities after valuations dropped to the lowest level in 18 months.
The benchmark SET Index (SET) has tumbled 13 percent since Oct. 31 amid street demonstrations against Prime Minister Yingluck Shinawatra’s administration. The measure traded at 10.8 times projected 12-month earnings on Jan. 3, the cheapest since June 2012, after protest leaders said they plan to block seven Bangkok intersections starting Jan. 13 in an attempt to replace Yingluck’s caretaker government with an unelected council.
“The market has already priced in the political uncertainty and its impact on the economy,” Voravan Tarapoom, chief executive officer at BBL Asset Management Co., which runs seven of the top 10 Thai equity funds over the last three years, said in an interview with Bloomberg Television today. “It’s an opportunity for long-term value investors to pick up stocks that had big drops.”
BBL Asset, a unit of Bangkok Bank Pcl (BBL) with assets of about $9.6 billion, raised cash holdings starting in mid-October on expectations protests would trigger prolonged political conflict and hurt economic growth, Voravan wrote in an e-mailed interview on Nov. 4. The company joins Aberdeen Asset Management Plc and Credit Suisse Group AG in recommending Thai shares after recent losses.
Southeast Asia’s second-biggest economy may expand between 3.4 percent and 3.7 percent this year as political turmoil affects government spending on infrastructure projects and damps domestic consumption, Voravan said. The Thai Finance Ministry cut its 2013 growth estimate to 2.8 percent from 3.7 percent on Dec. 26.
The benchmark SET Index slid 5.3 percent on Jan. 2, its worst start to a year since at least 1988, before rallying 2.6 percent yesterday, the most since Sept. 19. The gauge fell 0.4 percent at today’s close in Bangkok, halting a two-day gain.
Aberdeen bought shares during the market slump on Jan. 2 on expectations that the current political deadlock will be resolved, Adithep Vanabriksha, the company’s Bangkok-based chief investment officer for Thailand, said on Jan. 3.
Some stocks are “nearing possible support valuations,” Dan Fineman and Siriporn Sothikul, analysts at Credit Suisse, wrote in a report yesterday. Banks and property developers are “clearly cheap,” they said.
The Thai Banking Index has tumbled 16 percent since Oct. 31 and was valued at 7.9 times forward earnings on Jan. 3, the cheapest since March 2009. The Property Developers Index has slumped 24 percent in the same period, trading at 10.1 times forecast profits on Jan. 3, the lowest since November 2011.
Yingluck’s administration has endured more than two months of street demonstrations that protest leaders say are aimed at erasing her family’s political influence. Allies of Yingluck’s brother, Thaksin Shinawatra, have won the past five elections, including two since his ouster in a 2006 coup. Eight people have been killed in clashes between rival political groups in the past month.