absolutelyBangkok archive · Business & Economics
Originally published Sept. 5, 2008
You’re invested in Thai stocks and have to run for your money. That’s nothing new. But well, you’ve chosen the wrong stocks. You went for the large caps. How about small & mid caps.
Even though Thailand is in turmoil and its stock market capitalization dwindling, there’s no reason to panic, assures Paul A. Renaud who runs ThaiStocks.com. No reason to panic.
New assurances for the fainthearted, as we had them in our Renaud interview Mastering the Thai stock market. Get yourself reassured, here are Renaud’s latest takes:
By Paul Renaud, Thai Stocks
Messy politics is nothing new here. In the 1990s Bangkok was one of the biggest stock bull markets in history just as Thai politics was at its messiest.
Today I really think they are starting to solve the problems by saying enough with crooks/politicians/businessmen who don’t operate honestly and with some integrity. Meanwhile in many Western cultures people have just begun recognizing these issues which are better disguised.
In the U.S. it’s “Wall Street which ate the US economy.”
And the Swiss bank dishonor unfolding is a major catastrophe, never seen before and all brought on by their own doing. Some of this has spilled over to Asia like a financial tsunami. It will not change much and relative to the world.
Company earnings growth/dividend rates here will keep growing above global averages. Yet, growth companies in Thailand have just about zero effect by this fallout.
It’s not just USA’s Mr. Obama calling for change, and so riding on a hugely successful presidential ticket. In different corners of the world change will happen. Many good, honest, hard- working and above-average educated citizens of many nations are increasingly exhausted by the too many dirty dealings going on.
Citizens worldwide are disgusted with their politicians. And now private bankers are not far behind. They brought too much cheating, corruption, mismanagement, war, injustice, illicit big business benefits and lately “financial tsunamis.” Not just in the US but in Spain, England and other lands where you’ll now have a prolonged housing slump for years to come.
“Many people nowadays seriously want to help reduce global warming and pollution, to increase new alternative energy use and, accordingly, to demand more honest governemnt. This is happening in Thailand now.
There is a higher chance that UBS Bank goes “bankrupt” in Switzerland than we here entering a civil war or even a major prolonged uprising. You may see stalling short-term of tourism and foreign investment. Problems exist here, but every country has problems these days. Here we also have fast-growing companies to invest in at currently absurd bargain prices.
There are occasional fall-outs when history has shown it’s extremely important that value investors not panic. We are in such an adjustment at present. I am glad to own growth companies which pay high dividends, rather then capital in Swiss banks with their “Ninja” housing bonds and so-called “accelerators.”
Thailand has a better recovery potential.
The demonstrators we see on TV are more like a peaceful carnival. This should turn into a positive over time and so a re-valuation of the SET.
Consider that a large rock concert or a football match, with 80% fewer people attending then are demonstrating in Bangkok now, has on average 3 times more violence then the 99% peaceful gathering here to date.
At this point it still looks likely that Thailand’s economy will be growing around 5%, or the second fastest growth rate in the region, after China’s. Tourism represent only 6-7% of GDP. Thai exports are doing well and are above expectation year-to-date.
One reason is that Thailand is a major food producer and basic manufacturing exporter benefiting from the oil-rich countries in the Middle East as well as from being the country between China and India.
The problem is that world investors nowadays do not want to own shares of any kind. Even though Oil and Gold are not the place to be of late they are not looking at Thai stocks.
Even though Chinese stock markets are down the most in the region this year, far more then Thailand, China gets far more praise and still has double the valuation compared to an average Thai stock.
To compare a bit, Mexico a large developing country with some oil/gas reserves in 2008 is expected to grow only 2%, and Australia only 1/2%. And there are many more countries like them, especially after the posted “sky high” oil prices seen at mid year.
So in comparison, Thailand’s GDP growth of +5% still looks impressive.Yet the valuation of the SET is at half the p/e ratios of those other markets. Isn’t that too much of a discount?
They talk about Baht weakness, but the Australian $ has lost a lot more then the Thai Baht when compared to the US $ lately! Marc Faber says Thailand is in a “recession”… and many others talk about currency weakness here, when it’s the Euro and Aussie $ which have truly weakened of late.
And where are all those former dollar-bears now? What are they saying? I keep listening and all the while I accumulate Thai value shares with high growth and large cash dividends.
Via RightSide
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