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Brexit boosts capital flows to Thailand

BANGKOK: Fund managers are bullish on the Thai stock market, forecasting the SET index to peak at 1,500 points in the second half as Britain’s exit from the EU triggers capital inflows to emerging markets.


Bangkok Post

Friday 15 July 2016, 08:40AM

The SET index on Monday (July 11) rose by 0.88 per cent to close at 1,468.39 points. Photo: Bangkok Post
The SET index on Monday (July 11) rose by 0.88 per cent to close at 1,468.39 points. Photo: Bangkok Post

Diminishing odds of further rate hikes by the US Federal Reserve and improving Thai economic momentum will also bolster stock market sentiment, said Smith Banomyong, chief executive of SCB Asset Management.

The stock market will reap benefits from global fund managers’ asset reallocation after Britain's historic referendum, he said.

“Even though the price-to-earnings ratio of the Thai stock market at 16 times is considered relatively high compared with the past, it is not high in comparison with those of neighbouring countries and not expensive in comparison with listed companies' earnings growth,” Mr Smith said.

“Several listed companies have announced surprise earnings and prompted analysts to revise their earnings growth for 2016 and 2017.”

The SET index on Monday (July 11) rose by 0.88 per cent to close at 1,468.39 points in turnover of B59.6 billion, taking the gauge’s year-to-date gain to 14%.

Foreign investors have bought around B42 billion more than they have sold this year compared with 2013-15.

Mr Smith said there is a sign that Thai investors are moving their investment assets abroad back home. Since early 2015, Thai investors have repatriated B600-700 billion back to Thailand, with B400-500 billion put into fixed-income funds and the rest into riskier assets such as equities and property funds.

BBL Asset Management chief investment officer Peerapong Jirasevijinda said global investors’ search for yields and the historic low bond yields of advanced countries are also drivers for the stock market.

Coast Beach Club

The Federation of Thai Capital Market Organizations’ investor confidence index for the next three months jumped by 11.8% to 104.46 from 93.46 surveyed last month.

Confidence of foreign investors increased the most, rising 28.6% to 100 points from 77.78 last month. Retail investors’ confidence increased by 12.6% to 106.35 points, while that of institutional investors fell by 8.5% but is still in neutral territory at 100.

A figure below 80 points is bearish on the index, 80-120 is neutral and over 120 is bullish.

The Thai Investors Association said the 2016 AGM Assessment of Thai listed companies edged lower to 91.62 from last year’s 92.68 due largely to tougher evaluation criteria concerning penalties, information disclosure, recapitalisation, rights of attending shareholders' meetings and giving earnings performance.

The number of listed companies certified by the Private Sector Collective Action Coalition against Corruption has surged by 42 to 81 this year.


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