Potential changes to SET50 and SET100

The clever folks at Thanachart Securities put this out during the week as the changes in the SET50 and SET 100 are expected in the 2nd week of December ’13. Basically new additions in the SET 50 include VGI & THCOM replacing KKP & MAKRO, and for the SET100 +BMCL, CHG, ERW, N-PARK, TFD, TICON, UMI, replacing -DEMCO, GSTEL, MAKRO, MALEE, MDX, PF, SAT

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Source: Thanachart Securities Plc

Random Thoughts: Politcs and Fed giving the market an excuse to sell off

What has happened thus far?

Well as a positive the Senate had passed through the THB 2 trn borrowing bill however the Democrats and a group of 66 lawmakers filed a case to the constitutional court to invalidate the bill as they believe the loan bill contravenes Section 169 of the constitution as it would allow spending outside the normal budgetary system. The Constitutional Court in the meantime has ruled that the government’s effort to amend the selection process and the size of the Senate as unconstitutional and this has led to uncertainty over the fate of the incumbent administration and even though the court declined to dissolve the coalition parties that voted for the bill, because of the potential numerous breaches of articles of the Constitution throughout the legislative process there may be filings of criminal charges.

Then Pheu Thai Party has rejected the court’s ruling on the charter amendentment draft and will seek the impeachment of the court judges

And now other political rubbish came from Suthep vowing to root up the “Thaksin” system by 24 November (tomorrow!) and calls for 1 million protestors to join the rally tomorrow, now how exactly he’s going to do this we don’t know, but we admire his ambition.

AND the World Bank is cutting its for Thailand’s GDP this year on a sluggish 3rd quarter and weak export with a new figure expected next month, the bank has already dimmed its outlook on Thailand’s 2013 GDP from 4.5% down to a rise of 4%.

AND someone from the Fed mentioned that tapering may be on the cards at the next meeting however others in the Fed have then come out saying that the data were not strong enough to change market expectations that the Fed will taper stimulus early next year.

What may happen going forward?

So whats happening going forward? Well Pheu Thai is in a funk at the moment, was it Mr. T’s plan all along for this who knows, but it seems like their hands are tied with perceptions in Bangkok and provinces waning in regards to the party’s legitimacy which only damages its credibility and may hinder its ability to execute policy, would a house dissolution followed by an election next year be on hand? Perhaps…

Re the World Bank, we know 2013 is crap relative to 2012, why? Its already November! And 2012 was a remarkable year that had so many things going for it. The fact that we still have growth is impressive.

The Thai market has been taking a beating in the past week and in reality basically since May ’13, why? Well the economy has been pumped with the steroids of consumption policies in 2011-12 and the government’s plan to push through its own spending on infrastructure haven’t quite panned out; AND we have this political rubbish yet again; AND we have continued downgrades of the country growth; AND in all honesty the market still isn’t cheap, its fair at the very best.

So going forward, fund managers/investors locally are all praying that LTF’s will buoy the market in December other than that, unless the protesters disappear, there aren’t any catalysts left for the end of the year, its really time to just focus on 2014.

Jeremy Grantham thinks the bulls are going to push markets 30% higher

GMO’s Jeremy Grantham is out with his latest quarterly paper and as usual its a must read, he goes through his thoughts on the economy, what Yellen is likely to do during her time at the Fed, earnings vs valuations, timing bear markets and so forth. One point he does make is that he (along with several other market commentators) have taken the viewpoint that the US equity market is likely to rally strongly over the net 6-12 months, however he has his reservations and I’ll finish this post with his final comment. As always see the link below if you’d like to read the full letter.

Be prudent and you’ll probably forego gains. Be risky and you’ll probably make some more money, but you may be bushwhacked and, if you are, your excuses will look thin. Your call. We of course are making our call.

Source: GMO