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Published on December 18, 2007

Pichit Akrathit, president of MFC Asset Management, the fund manager of Vayupak, yesterday said the ruling would affect PTT's share price, which in turn would affect Vayupak's profitability.

Vayupak has invested in 11 stocks by purchasing them from the Finance Ministry, including PTT, which represents more than 30 per cent of Vayupak's total portfolio of Bt145.5 billion as of December 7.

However, Pichit insisted the lower value of PTT shares would have only a slight effect on the overall performance of the Vayupak Fund 1.

"The impact will affect assets of the Finance Ministry in the fund, but retail investors won't be much affected," he said.

He insisted the fund's dividend payments this year would not be different from last year. Supakorn Soontornkit, MFC's executive vice president, added that PTT profit growth should remain healthy.

On July 27, the net asset value (NAV) of Vayupak was Bt148.7 billion. The NAV fell to Bt145.55 billion on Deceber 7.

However, the Government Pension Fund (GPF), one of leading investors holding a large amount of PTT shares, said it had not been adversely affected by the ruling the court.

"The court's verdict is fair and did not come as a surprise," said GPF secretary-general Visit Tantisunthorn. "The good thing about the verdict is that uncertainty about the future of PTT has been removed."

He said PTT's share price had already been discounted before last Friday's verdict. Suspension of trade in PTT shares is the right move, because investors do not yet know the cost of the oil-gas pipeline business, he said, adding that foreign investors had largely influenced the ups and downs of PTT shares in the past.

Visit was confident the GPF's overall returns would reach 8-9 per cent this year, up from its forecast early this year of 5-6 per cent. Returns in the first nine months rose 8.6 per cent year on year. Visit said the GPF had benefited greatly from its strategy of overweighting energy stocks this year.

However, he said the GPF's investment strategy next year would shift from "overweigh" to "weigh" on energy stocks, due largely to an expectation of smaller chances for an upswing in crude-oil prices. The fund still maintains an essential interest in energy stocks but has switched to a slightly lesser focus on the sector.

The GPF will also look for investment opportunities in business and industry, because they are expected to benefit from a recovery in domestic consumption.

Visit said the fund still wanted to invest more in real estate.

"While buildings in prime areas may have already been owned by both the GPF and other investors, we're looking for grade-B buildings located close to mass-transit routes, such as along Ratchadaphisek Road," said Visit, adding that the GPF was willing to invest with partners in buying buildings.

With the US economy expected to slow down next year, the GPF will invest more in Asian markets, such as South Korea, Hong Kong, China and India. Investment in Asian stock markets may rise to 20-25 per cent of foreign investments, up from 15 per cent now, he said.

Overall returns of the GPF next year are expected to be 6-6.5 per cent.

As of November 26, the GPF's assets were worth Bt305.7 billion. Its investment in the domestic bond market represented 58 per cent of its portfolio, Thai equity 12 per cent, property 8 per cent, foreign bonds 6 per cent, foreign equity 9 per cent and alternative investment 7 per cent.

Wichit Chaitrong

 The Nation