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Thai Pension Fund Buying Stocks After Bear Market Plunge

A woman stands in front of an electronic stock board at Asia Plus Securities PCL headquarters in Bangkok. Photographer: Dario Pignatelli/Bloomberg
A woman stands in front of an electronic stock board at Asia Plus Securities PCL headquarters in Bangkok. Photographer: Dario Pignatelli/Bloomberg

Aug. 28 (Bloomberg) -- Thailand’s Government Pension Fund is boosting holdings of local equities after a bear market in the benchmark index sent valuations to the lowest levels in more than a year.

“This is a great buying opportunity,” Yingyong Nilasena, chief investment officer of the fund, which manages about $19 billion of assets, said by phone from Bangkok. “We have increased positions in some stocks recently. We plan to buy some more.” Yingyong declined to name specific companies.

The benchmark SET Index has fallen for 10 days, the longest losing streak since 1998. The gauge has declined more than 20 percent from this year’s high as data this month showed the nation entered a recession in the second quarter, while foreign investors sold more than $1 billion of local shares. The SET measure is valued at 11.4 times estimated profit for the next 12 months, the lowest level since July 2012, according to data compiled by Bloomberg.

“Overseas investors are too pessimistic about Thailand,” Yingyong said. “Many large-cap stocks are very attractive compared with their earnings outlook.”

The SET dropped 1.8 percent to 1,271.10 at 10:40 a.m. in Bangkok, heading for its lowest close since Sept. 13. Advanced Info Service Pcl and CP All Pcl were the biggest drags on the gauge, with both stocks losing more than 3 percent.

Capital Outflows

Foreign investors sold about $1.2 billion of Thai stocks and about the same amount of local bonds this month amid speculation that the U.S. Federal Reserve will reduce monetary stimulus this year. Outflows from Indonesian shares totaled $464 million, while investors withdrew $219 million from Philippine equities.

The three Southeast Asian markets led a four-year rally in global shares through May as growing local economies sent corporate profits to record highs and Fed stimulus spurred international investors to seek riskier assets.

The central bank won’t hesitate to contain excessive moves in markets if necessary, Bank of Thailand Governor Prasarn Trairatvorakul told a conference in Bangkok today. Outflows are “not an issue at all,” he said.

The baht weakened 0.3 percent to 32.28 per dollar, while yields on 10-year government debt rose three basis points to 4.33 percent, the highest level since November 2009, according to data compiled by Bloomberg.

Southeast Asia’s second-biggest economy will probably post a current-account deficit of $550 million in July, according to a Bloomberg survey of economists.

Yingyong said the slowdown will have a “limited impact” on the earnings of the companies the fund is buying.

The pension fund, which manages retirement savings for about 1.2 million state employees, had 12.1 percent of its assets in local equities and 2.7 percent in emerging markets as of June 30, according to data on its website.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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