Biggest Thai Fund Sees Buying Opportunity After Stock Rout

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Thailand’s largest money manager said a recent slump that sent the benchmark stock index into a correction has made the equity market attractive.

Tourism and commerce companies in particular offer a bargain, Win Phromphaet, the head of investment at Social Security Office, wrote in his blog. Thai companies can endure an economic slowdown as they have high cash reserves and low debt, while the government and the Bank of Thailand have room to increase stimulus, he said.

The SET Index entered a correction on Tuesday after dropping 10.4 percent from its Feb. 13 high, dragging valuations to the lowest level since January, as tepid exports and consumption weigh on southeast Asia’s second-largest economy. The gauge was little changed at 1,447.84 at Wednesday’s close, after falling as much as 1 percent earlier.

“Weak sentiment may offer an opportunity for investing in some Thai shares for long-term investors,” Win, who helps manage 1.2 trillion baht ($35 billion) in pension contributions at SSO, wrote in his blog. The SET index is “very attractive” near 1,400, he said.

Thailand’s gross domestic product may expand 3 percent in 2015, slower than the government’s April forecast of 3.7 percent, Finance Minister Sommai Phasee said on July 15.

Foreign Selling

The SET Index trades at 13.8 times its estimated 12-month earnings, compared with this year’s peak valuation of 15.4 times on Feb. 6, according to data compiled by Bloomberg. The MSCI Emerging Markets Index is valued at 11.5 times.

The Thai stock gauge has lost 3.8 percent in July, erasing this year’s gain, as international investors withdrew $527 million from local stocks through Tuesday. Thailand has seen the biggest foreign outflows this year among eight Asian markets tracked by Bloomberg.

Overseas investors will continue to be underweight on Thai stocks amid the baht’s weakness and delays in government spending, Win said.

The Thai baht dropped 0.5 percent on Wednesday, poised for an eighth day of declines and its weakest level since May 2009.

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