Thai Top Money Manager Sells Stocks as Protests Hurt Growth

Thailand’s top-performing equity fund manager has reduced holdings of domestic shares on expectations that protests against the government’s amnesty bill will spur prolonged political conflict and curb economic growth.

BBL Asset Management Co., which runs seven of the ten best-performing Thai equity funds during the past three years, has raised cash holdings since mid-October, Voravan Tarapoom, chief executive officer at Bangkok-based BBL, which oversees about $10 billion, said in an e-mail. The benchmark SET Index plunged 2.9 percent yesterday, the most since Sept. 23, as an estimated 10,000 protesters marched through Bangkok’s streets.

Thailand’s opposition Democrat party is rallying opponents of the bill, which would exonerate people convicted of crimes linked to political clashes since the 2006 coup that ousted former Prime Minister Thaksin Shinawatra. The government has said the law is needed to heal social divisions, while opponents say it’s designed to exonerate Thaksin and politicians who ordered a deadly crackdown on pro-Thaksin demonstrators in 2010.

“The political conflict will intensify further, worsening the economic outlook,” Voravan said yesterday. Her firm’s BBL Bualuang Top-Ten Fund returned an annualized 28 percent during the past three years, the best performance among more than 200 local peers tracked by Bloomberg. “It’s still not a good time for returning to domestic equities, even after prices declined significantly to attractive levels.”

Relative Value

The SET Index retreated to a one-month low yesterday and traded for 15 times reported earnings, versus 12 times for the MSCI Emerging Markets Index. That’s the smallest valuation gap since February 2012, according to data compiled by Bloomberg.

Overseas investors sold a net $25 million of Thai shares yesterday, a third day of outflows, according to data compiled by Bloomberg. Turnover on the Stock Exchange of Thailand averaged about 32 billion baht ($1.02 billion) a day during the past two weeks, down 34 percent from the 12-month average.

“The escalating conflict increased the political risk for the overall economy and financial markets,” Voravan said.

The benchmark stock index gained 1.4 percent to 1,407.56 at the midday break in Bangkok, poised for its first advance in three days. Prime Minister Yingluck Shinawatra said in a televised address that the government will respect the Senate’s ruling on the amnesty bill.

Tourism Concern

The Senate may debate the bill starting Nov. 11 and a vote might occur within 60 days, speaker Nikom Wairatpanich said yesterday.

Airports of Thailand Pcl, the nation’s biggest airfield operator, climbed 3.2 percent, rebounding from yesterday’s 8.3 percent slide. True Corp. rose 5.1 percent, snapping a two-day decline.

Businesses are concerned that political tension will escalate and reduce tourism, Vorapak Tanyawong, the president of state-controlled Krung Thai Bank Pcl, the nation’s third-biggest commercial lender by assets, said yesterday. Thailand’s economic growth slowed to a 2.8 percent pace in the second quarter from 5.4 percent in the first three months of the year.

In its initial draft, the bill would have freed members of the public charged with crimes committed during past political clashes. A parliamentary committee amended the draft to include soldiers and politicians who oversaw deadly crackdowns on protesters, and people charged on the basis of investigations by state agencies established after the coup.

Public Opinion

Yingluck commands a majority in parliament through her ruling Pheu Thai party.

An Assumption University poll showed 87.2 percent of respondents aren’t confident the law will help reconcile Thai society and believe the bill is designed to benefit Thaksin. The poll surveyed 1,198 people in Bangkok and other major cities Oct. 28-Nov. 2, and had a margin of error of plus or minus 7 percent.

Demonstrations by supporters and opponents of Thaksin -- who was removed from power in the 2006 coup -- have led to an airport seizure, business center blockages and arson attacks in Bangkok during the past seven years. Thailand has had nine military coups and more than 20 prime ministers since 1946.

“Opposition against the amnesty bill has broadened to several parts of the society, while the government continues to push ahead with the amnesty bill,” said Voravan. “The political concern will affect the entire stock market and every sector.”

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