Twitchy market holding its own
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THE Thai stock market is still of interest as there are many inexpensive securities to invest in, despite sentiment being dampened by such external factors as the global economic slowdown and the effects of a likely rise in the US short-term interest rate
Speaking at a seminar on how to invest in the stock market amidst negative factors, hosted by the Association of Investment Management Companies and the Association of Thai Securities Companies, the executives said that when the stock market plummeted it was a good time to buy.
The Stock Exchange of Thailand is inevitably pressured by such external factors as the global slowdown, the monetary-easing policies of the European Union and Japan, a probable hike in the US Federal Funds rate, and a slow recovery of China’s economy, all of which feature alongside the downward trend of the Thai economy.
These factors have combined to cause a sharp fall in the SET Index to below 1,450 points, compared with 1,600 in February.
“When the SET Index reached 1,600 points, we felt that was hot. Now, with the index moving around 1,400-1,500 points, it could be considered as not expensive when compared with the historical statistic of a price/earnings ratio. Now P/E ratio is about 14 times,” said Peerapong Jirasevijinda, managing director of BBL Asset Management.
While the SET Index is not only an indicator of whether the market is cheap or expensive, good stock selection skills can help investors survive, he stressed.
Montree Sornpaisarn, chief executive officer of Maybank Kim Eng Securities (Thailand), said he was optimistic about the Thai stock market.
Though Greece is facing severe financial problems and China has bubble issues, the local bourse market still has good news on top of the bad news, he said.
At least, the overall economic trend in the second half is better than in the first half, and this year’s economic situation is better than last year’s, he said, adding that bad news in any case affected stock markets all over the world.
“Don’t be too afraid,” said the CEO, stressing that although capital-market prospects were far from bright at present, at least there was no evidence of any bubbles developing in the economy.
Even in the property sector, there is still no sign of a bubble as the sector has an average debt-to-equity ratio of only 1.3 times, which is much lower than the levels of 2.1 times and 5.6 times in the pre-financial and the post-financial crisis periods of 1997, respectively, he added.
Win Udomrachtavanich, chief executive officer of One Asset Management, said that once the SET Index was lower than 1,500 points, it looked interesting, while large listed companies were found to have fewer debts.
“I believe the Thai stock market still has many inexpensive stocks, but there is a lack of investment sentiment,” he said.
Although it is most likely that the US will hike its Federal Funds rate by the end of this year, ML Thongmakut Thongyai, chief executive officer of SCB Securities, said this factor would affect the Thai stock market, but only in the short term – after which the SET Index will swing back.
