News Column

Big shareholders put faith in the roadmap

June 17, 2014

By Nuntawun Polkuamdee, Bangkok Post, Thailand

June 17--Institutional investors are remaining in Thai stocks after the junta's economic team vowed to keep the economy moving along the lines of the announced roadmap.

But a correction is believed to be imminent after a 12-13% rise in the SET index these past six months.

"Even though stock prices are quite high now, the SET index may reach 1,650 next year if the investment roadmap of the National Council for Peace and Order (NCPO) can be implemented by the end of this year," said Sombat Narawuttichai, secretary-general of the Government Pension Fund.

The GPF will maintain its local equity investment at 10.5% or 50 billion baht of the portfolio, increasing the share to 11.5% in the coming years.

Mr Sombat said the Thai stock market has already hit bottom and started to recover, as the political situation is stabler and economic confidence and investment activity can only improve.

"The GPF has adjusted its portfolio, selling stocks that jumped in the past few months and shifting to other fundamental stocks whose prices remain cheap," he said. "We have to prepare for a possible correction."

In terms of fundamentals, Mr Sombat said Thai shares should remain strong in the long term, especially those companies that had survived both the global and domestic economic crises.

He anticipates earnings-per-share growth for listed firms of 5% this year and 10% next year once the stimulus package launched by the NCPO begins to wend its way through the system.

His forecast for Thailand's GDP growth is a range of 2% to 2.25% this year and 4% to 4.5% next year.

The GPF will keep 64% of its portfolio in government bonds, 15% in foreign stocks, 5% in foreign bonds and property, and the rest in other vehicles.

Win Phromphaet, head of investment for the Social Security Office, said the SSO still has 2% or 20 billion baht of its portfolio to invest further in Thai shares, as the ceiling is 12%.

He voiced concern that the rapidly rising share prices could reach an upside limit, saying the SSO will wait for a market correction to about 1,200 points and start accumulative buying from there.

The SSO plans to raise the portion for global investment from the current 24 billion baht, expecting a better upside from Europe and Japan.

The office has invested in global bonds to the tune of 24 billion baht, generating a return of 6 billion baht. It plans to convert 5 billion baht out of a total 6 billion baht to equity and inject an additional 7 billion baht into new global equity assets.

Prinn Panitchpakdi, country head of CLSA Securities, agreed that Thai share prices were high now but said the NCPO's investment plan would carry growth momentum and the SET index could rise to 1,650 points next year.


(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)

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