Thai Pension Fund Buying Stocks After Bear Market Plunge; The benchmark SET Index (SET) has fallen for 10 days, the longest losing streak since 1998

August 28, 2013 Leave a comment

Thai Pension Fund Buying Stocks After Bear Market Plunge

Thailand’s Government Pension Fund is boosting holdings of local equities after a bear market in the benchmark index sent valuations to the lowest levels in more than a year. “This is a great buying opportunity,” Yingyong Nilasena, chief investment officer of the fund, which manages about $19 billion of assets, said by phone from Bangkok. “We have increased positions in some stocks recently. We plan to buy some more.” Yingyong declined to name specific companies.The benchmark SET Index (SET) has fallen for 10 days, the longest losing streak since 1998. The gauge has declined more than 20 percent from this year’s high as data this month showed the nation entered a recession in the second quarter, while foreign investors sold more than $1 billion of local shares. The SET measure is valued at 11.4 times estimated profit for the next 12 months, the lowest level since July 2012, according to data compiled by Bloomberg.

“Overseas investors are too pessimistic about Thailand,” Yingyong said. “Many large-cap stocks are very attractive compared with their earnings outlook.”

The SET dropped 1.8 percent to 1,271.10 at 10:40 a.m. in Bangkok, heading for its lowest close since Sept. 13. Advanced Info Service Pcl (ADVANC) and CP All Pcl (CPALL) were the biggest drags on the gauge, with both stocks losing more than 3 percent.

Capital Outflows

Foreign investors sold about $1.2 billion of Thai stocks and about the same amount of local bonds this month amid speculation that the U.S. Federal Reserve will reduce monetary stimulus this year. Outflows from Indonesian shares totaled $464 million, while investors withdrew $219 million from Philippine equities.

The three Southeast Asian markets led a four-year rally in global shares through May as growing local economies sent corporate profits to record highs and Fed stimulus spurred international investors to seek riskier assets.

The central bank won’t hesitate to contain excessive moves in markets if necessary, Bank of Thailand Governor Prasarn Trairatvorakul told a conference in Bangkok today. Outflows are “not an issue at all,” he said.

The baht weakened 0.3 percent to 32.28 per dollar, while yields on 10-year government debt rose three basis points to 4.33 percent, the highest level since November 2009, according to data compiled by Bloomberg.

Southeast Asia’s second-biggest economy will probably post a current-account deficit of $550 million in July, according to a Bloomberg survey of economists.

Yingyong said the slowdown will have a “limited impact” on the earnings of the companies the fund is buying.

The pension fund, which manages retirement savings for about 1.2 million state employees, had 12.1 percent of its assets in local equities and 2.7 percent in emerging markets as of June 30, according to data on its website.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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