Category Archives: Commentary

ThaiCapitalist Commentary

SCB Plc – The Inmates are taking over the Asylum!

The Inmates are taking over the Aslyum! SCB doubles the size of its investment banking team!

Ok maybe that is an unfair comment as Siam Commercial Bank is a fantastically well-run bank since Dr. Vichit Suraphongchai came on board to advise the bank and eventually become its CEO in 2007 and today is the most profitable bank in Thailand in terms of net profit despite its smaller asset base and is now in the top 5 on the Stock Exchange of Thailand in terms of market capitilisation. Even though several of my friends work there and I know that they are fantastic bankers that always have the clients best interests in mind, but… Continue reading SCB Plc – The Inmates are taking over the Asylum!

So what have we learned in the past 2,066 years ?

So what have we learned in the past 2,066 years ?

“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.”

Cicero – 55 BC

Evidently nothing.

Impact of Japan Earthquake on Thai Stocks

What would happen if there is an earthquake in Tokyo?

An earthquake destroys Tokyo, including the stock exchange and all records of transactions. Abroad, Japanese shares and the yen nose dive. Foreign exchanges collapse as Western insurance companies begin dumping stocks and bonds to cover Japanese claims. Japan starts to liquidate its overseas holding in order to finance the rebuilding of Tokyo. Withdrawal of Japanese money means the bond market collapse and US interest rates to soar. High rates raise US consumer and housing prices while depressing real estate development. Another global liquidity crisis happens….

BUT this is not the case!

What really will happen?

In a sentence, Japan will need to rebuild. There will be an increase in demand for steel and cement will increase (positive for SCC, SCCC, TSTH, MCS); Japan will temporarily have to adjust its source of energy and buy finished petroleum products and import thermal coal (positive for PTTCH, PTTAR, TOP, BANPU, IRPC); Japanese banks will have to concentrate on funding the recovery and not overseas expansion of Japanese corporations (positive for BBL, SCB).

From our point of view there is no real negative impact upon the Thai Equity market from the Tsunami, and while it is callous to say this, our holdings and portfolio will benefit from it.

Small And Mid Cap Investments In Thailand

Every large company used to be a small or medium size one. Investing in small and mid capitalisation equities has always been considered to be risky because of the “unknown” factors when compared to large capitalisation investments. Large cap companies refer to some of the largest, most well-known companies in the country, and small-cap and mid-cap companies often represent little known firms with revenues between THB 2 billion to THB 10 billion. There is an obvious risk-return paradigm between small, mid and large cap companies, generally small companies exhibit more volatility and are less liquid when compared to large cap companies yet have tremendous growth potential. Mid cap are a moderate alternative between large-caps that may find it difficult to increase shareholder value and the riskier small-caps.

Continue reading Small And Mid Cap Investments In Thailand