Thai asset managers sticking to planned fund launches recent market slump

Supaporn Leenabanchong, chief equity investment officer at Krungsri Asset Management, said the company would not scale down the number of foreign investment funds (FIFs) to be launched this year.

She said that some bourses remained attractive, including those in Europe, thanks to the European Union’s ongoing quantitative-easing (QE) programme.

The next FIF to be launched by the company is geared for those seeking to save for their retirement, she said.

However, she declined to disclose details, saying that the launch process was ongoing. 

“A potential delay in the Fed [US Federal Reserve] interest-rate hike means that equity investment will remain attractive,” she said.

The domestic investment outlook is still sound, she added. 

“The outlook has improved following the sales of Thai shares after the bomb blast and the global panic sell-off triggered by the mainland [China]. The SET Index had dropped to around 1,300 points before bouncing up, turning the price-to-earnings [P/E] ratio to around 14.4 times,” Supaporn explained.

Somchai Amornthum, executive vice president of the research department at Krungthai Asset Management (KTAM), said the turmoil in China meant the company now expected the US to hike its policy rate in December instead of September.

“The one-off bomb blast in the capital will affect the tourism sector, but only in the short term, and if the police manage to capture the culprit then the level of confidence could also improve,” he said.

“The global market sell-off is also noticeable, but this is the norm for the market and it has not changed our long-term view, while a delayed US rate hike should improve things on the equity front, where the US economy is doing well – and QE is still ongoing in the EU,” he added. 

Thidasiri Srisamith, first senior vice president of investment management at Kasikorn Asset Management, said her firm would launch another two or three domestic and foreign equity funds this year as planned, and that the drop in the SET Index meant that Thai equities were now more interesting in terms of valuation.

 

SET forecasts revised

She does not expect any hard landing for China’s economy, which is a view supported by Somchai, who said the Chinese government had many tools which could be used to stimulate its economy. 

Supaporn explained that China had already taken measures to enhance its economic fundamentals by lowering the main interest rate and the reserve requirement ratio of its commercial banks, which should make its stock markets look better in the short term.

Japanese equities, meanwhile, have recovered along with the rest of the region, while investment in the EU, especially in Germany, is something that her company is keeping an eye on as the weakening of the euro means that the export performance of the euro zone should increase, which should provide its listed companies with more profits, she said.

“The SET Index has dropped considerably already, and the stimulus package along with the prospect of increased government spending on mega-projects should be able to stimulate the economy. We [Krungsri Asset Management] are, therefore, now at neutral for Thai equities, and the attractiveness in Europe means that we are now accumulative on European equities,” she added.

Somchai commented that the calmer waters in Greece would increase confidence in the EU, while he also expected the Thai government’s stimulus package to help cushion the economy, where the expected increased spending on mega-projects in the fourth quarter would be the growth engine that should allow gross domestic product to expand by 2.7 per cent this year.

He said KTAM now expected the SET Index to reach 1,440 points by the end of the year, with a P/E of 15 times and an earnings per share of Bt94.

The index target has been changed from 1,580 points, the company’s forecast before the bomb blast and global equity-market panic.

Supaporn said Krungsri Asset Management now expected the SET Index to end the year at 1,442 basis points,with a P/E ratio of 15.5 times and earnings per share of Bt93.

Its SET target was 1,615 at the beginning of the year.

Thidasiri said Kasikorn Asset Management now expected the main stock index to be trading around 1,400-1450 by the end of year, from the previously expected level of around 1,600 points, while the P/E ratio should be around 15 times with an earnings per share of Bt95.

The company’s P/E forecast for next year is for a ratio of 13 times.