FRIDAY, March 29, 2024
nationthailand

Infrastructure spree keeps regional stocks on growth path, say experts

Infrastructure spree keeps regional stocks on growth path, say experts

THAI and other Asian equities remain attractive as urbanisation and an infrastructure building spree drive economic growth in the region, fund managers say.

The capital outflows that have wobbled some stock markets should ease off, they say.
The Stock Exchange of Thailand (SET) Index has moved on from its lowest mark of the year at 1,593 points, although the benchmark had reached a high of 1,838 earlier this year, Chatkaew Groatong, vice president of the alternative investment department of Krungsri Asset Management, told the “Asia Investment Forum: The World’s Growth Engine” yesterday
However, she predicts more upside after the equity market’s recent rebound. Some foreign investors have resumed their buying of Thai stocks, despite foreigners having been overall net sellers this year.
The earlier spell of declines represented a minor correction caused by the strengthening of the US dollar, the rising trend of US rates and the trade tensions between the US and China, Chatkaew said.
Moreover, a better than expected earnings performance from the banking sector in the second quarter had surprised the market, she said.
Chatkaew said the fundamentals of the Thai economy remain strong as exports continue to expand thanks to a recovery in the global economy.
Also on the plus side, revenue from overseas tourists grew 16 per cent to Bt1 trillion in the first half of the year.
Growth in corporate earnings is expected to be modest this year at about 8 to 10 per cent, Chatkaew said. Share prices are fair in their reflection of earnings growth, with a price-earnings ratio (P/E) of 15-17 times, she said.
Pang Kin Weng, portfolio manager for multi-asset solutions at Schroders Investment Management, said that urbanisation and infrastructure investment have driven Asian economies. As more people live in urban areas, the trend creates many business opportunities, he said. More infrastructure investment across Asia will lead to higher demand for electricity and water supplies. That presents an investment opportunity in the shares of utility and oil companies, he said.
Suzanna Wong, executive director and head of intermediary distribution Asia at Vontobel Asset Management, said that her fund had invested about 55 per cent of the portfolio in China, particularly IT stocks. She said Internet companies would not be affected by the trade war between the US and China as they rely on the domestic market.
Other fund managers at the forum recommended investors move into the Japanese, Indian and Vietnamese markets.
 

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