Investors should buy Thai stocks after the benchmark index fell the most in 15 months, as an improving political outlook and better earnings prospects outweigh inflation concerns, Credit Suisse Group AG said.
The SET Index lost 4.3 percent yesterday, the steepest decline since October 2009, as nationalist protestors said they will rally “indefinitely” in Bangkok. The gauge has tumbled 9 percent since reaching a 14-year high on Jan. 6, joining regional neighbors from India to Indonesia in slumping from recent peaks on concern consumer price gains will accelerate.
Thailand has suffered primarily due to a sell-off of South and Southeast Asian markets in general and investors have not properly distinguished between markets,” analysts Dan Fineman and Siriporn Sothikul wrote in a report today. “Politics should be a positive catalyst this year, rather than a reason to cut holdings, and the early indications on earnings are bullish.”
Benchmark indexes in India, Indonesia, the Philippines and China are among emerging markets that have retreated more than 10 percent from their recent highs as concern grew that faster inflation will spur higher borrowing costs and curb consumer spending. The SET index dropped 0.7 percent to 956.94 at 10:39 a.m., a fourth day of declines and heading for the lowest close since Sept. 24.
“We believe the inflation outlook in Thailand is less worrisome than in neighboring markets,” the analysts said, adding they remain “overweight” on the country’s equities. The “best bottom-fishing opportunities” are in property, banks and tourism-related stocks, they wrote.
Inflation Rate
The Bank of Thailand raised its benchmark rate for the fourth time in seven months to 2.25 percent this month and signaled it will boost borrowing costs further as inflation risks heighten. Thailand’s inflation rate may range from 2.5 percent to 4.5 percent this year, central bank Assistant Governor Paiboon Kittisrikangwan said Jan. 21.
Higher-than-expected profit of banks have also gotten the earnings season off to “a good start”, according to Credit Suisse’s report.
Kasikornbank Pcl, the nation’s third-biggest lender, and Siam Commercial Bank Pcl, the fourth largest, last week announced fourth-quarter net income that exceeded analysts’ estimates.
Nationalist protesters will rally “indefinitely” starting today near Prime Minister Abhisit Vejjajiva’s Bangkok office to pressure him into taking stronger action in a border dispute with neighboring Cambodia.
The People’s Alliance for Democracy, which mobilized tens of thousands of people when it seized Bangkok’s airport for eight days in 2008, is demanding Abhisit revokes a border agreement with Cambodia that they say cedes territory to a neighbor.
“We still see a good chance for elections as early as April-May and expect the government to surprise the market with its margin of victory,” Credit Suisse said.
-- Editors: Richard Frost, Reinie Booysen
To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
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