Aberdeen remains overweight on SET despite declines
Foreign investors across the world have been selling stocks on concerns over the possible cessation of the US quantitative-easing programme, according to Aberdeen Asset Management, which maintains its overweighting of the Stock Exchange of Thailand given
Adithep Vanabriksha, chief investment officer at Aberdeen, said the changing investor settlement had boosted the yield of 10-year risk-free US Treasury bonds to 2.18 per cent from below 2.0 per cent.
Amid investment reallocation from equities to bonds, stock markets across the world fell, Adithep said. He added, however, that the SET overreacted despite nearly unchanged economic fundamentals and earnings growth of Thai listed corporates.
“It’s difficult to forecast capital movement. Foreign investors’ recent stock sales occurred for several reasons, given their different investment styles. However, Aberdeen did not sell Thai stocks recently. Its groups’ current investment in Thai stocks totals US$7 billion [Bt215 billion]. Aberdeen continues to be overweight in Thai stocks,” he said.
Aberdeen’s Asia fund weights about 6 per cent of its total investment portfolio in the SET. Stocks in its portfolio are expected to see earnings growth of 10-11 per cent with 3-per-cent dividend yield and price-to-earnings ratio of about 13 times.
Adithep based his optimism on the fact that recent drops in the SET Index were due to its too-sharp rises previously and high speculation.
For the next three to five years, Aberdeen retains its positive view of the SET on expectations of a growing Thai economy and listed companies’ earnings growth.
If the economy expands 4-5 per cent per year along with annual growth of listed companies’ earnings of 10-15 per cent, the Thai bourse can be expected to follow at the same level, Adithep said.
“It could be difficult to hope for sharp rises in stocks every year like they did earlier. In the short term, we believe market volatility remains. However, now could be an opportunity for medium-to-long-term investors to invest in stocks, many of which have become attractive again,” he said.
During the session yesterday, the SET Index plunged to 1,415 and then rebounded to 1,449.12.
At midday, the market closed at 1,433.57, up by 6.15 points or 0.43 per cent.
The SET Index yesterday closed at 1,437.7 points, up by 10.28 points or 0.72 per cent, with 9.456 billion shares in trading volume worth Bt48.925 billion.
