GPF sells some Thai shares, ING says buy

I commented earlier this week that I have an unnatural fear for the month of September as because its the month which I always travel overseas and there has always been a negative event in September since 2007 that rocks the markets badly.

Given that the SET has just fallen some 2% over the past 2 trading sessions and Bernanke speaking next week it would be remiss to not be slightly nervous with some portions of the portfolio.

But enough rambling onto the post, saw these two articles in the same day, one saying that the Thai Government Pension Fund is paring its domestic investments in the SET

The Government Pension Fund (GPF) has revised down its proportion of the domestic investments it has been making through local asset management firms, the better to cope with the recent market volatility.

Its domestic investment is now down to 33.5 billion baht, from 60 billion last year, said secretary-general Sopawadee Lertmanaschai.

Source: Bangkok Post

and another article from ING saying that the market will hit 1,314 points this year. Just goes to show the different viewpoints abound when investing.

ING Funds (Thailand) says the Stock Exchange of Thailand index will likely hit 1,314 points this year and earnings per share will grow by 23%, in line with the positive capital market trend until 2014.

Monrat Phadungsit, the chief investment officer, said emerging markets including Thailand’s share market remains an attractive destination for global funds, as the region is currently the highest growing economy, one least affected by the global financial crisis.

Source: Bangkok Post

Local PE and VC firms to pop up now?

There has been very minimal PE and VC onshore based activity in Thailand because quite simply the capital gains tax on such investments are too high, 30%. But with news that the SEC is slowly but surely relaxing regulations and despite that hubbub from the US that PE and VC firms are evil. I’m actually looking forward to this helping budding Thai entrepreneurs, I’ve always criticised with friends, and anybody who would care to listen, that it is virtually impossible for a Thai entrepreneur to crack the top 10 families here, due to lack of funding available unless you knew someone with deep pockets. So here’s hoping that there will be a change coming within the next decade.

Somchai Thaisa-nguanvorakul, chairman of the executive committee of SNC Former, said his company is a good example of how PEs can help small companies. Lombard Investment, a US-based private equity company, invested 600 million baht in it.

He said Lombard has helped SNC improve its operations and financial management, resulting in higher revenue _ from 8 million baht to 8 billion within six years of its investment.

Source: Bangkok Post

FDI up 62% in first 7 months

Despite the floods at the end of last year, foreign direct investment in Thailand was up at whopping 62% in the first seven months of this year. This can only bode well for several industries here, industrial estates, transport (airport), and banking. The main statistic I found interesting was the Singaporean investors were ranked second in terms of # of applications and value of applications.

Foreign direct investment (FDI) over the first seven months of the year (Jan-July) was up62 per cent from the same period last year, Board of Investment (BoI) secretary-general Atchaka Sibunruang said on Tuesday.

Source: Bangkok Post

S&P Revises Thailand’s Banking system upwards

S&P (rating agencies who believes them today?!) revised Thailand’s banking system upwards mid-week, but regardless it does finally demonstrate that Thailand has in fact improved a lot in the past 10 years despite the on going political rubbish.

We revised our industry risk score for Thailand (foreign currency BBB+/Stable/A-2, local currency A-/Stable/A-2, axAA/axA-1) because, in our view, the banking sector’s institutional framework has improved to “intermediate risk” from “high risk”, as our criteria define the term. This reflects the sustained improvement in the performance of the banking sector regulator since the Asian financial crisis of 1997. In our view, the regulator has become relatively more proactive toward reducing the banking system’s vulnerability to financial crises. We expect it to identify problems early on and quickly remedy them.

They made a couple interesting points during the announcement:

  • Thailand has low income levels and an underdeveloped infrastructure system
  • Expect loan growth to remain high in 2012
  • Economic imbalance in Thailand as low risk
  • Regulations & supervision are now broadly within international standards
  • Current government “highly supportive” towards domestic banking

Source: Reuters