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Published on March 7, 2008

Timing is everything. And it is all the more crucial in an industry governed by the uncertain ebb and flow of intertwining global economies, where a deal or no deal is sometimes determined in a nanosecond on a trader's screen.

So it is all the more impressive when the 11-year-old K-Value Fund beat 223 other equity funds last year in returns at 47.43 per cent.

Kasikorn Asset Management (K-Asset) senior vice president Sopana Janeborvorn praised her team for their prescient investment timing. Last year, K-Asset rode the right waves in three sectors - petrochemicals, energy and media - whose returns surpassed the Stock Exchange of Thailand (SET) Index's average return of 26 per cent, at 64 per cent, 59 per cent and 29 per cent, respectively, said Sopana.

The skyrocketing oil price, which touched US$100 (Bt3,200) a barrel before eventually crossing the stratosphere in January, has been a boon for energy stocks. But despite the volatility, the fund offloaded some shares just before they became too hot, in time to generate a dividend of 15.24 per cent for unit holders as of the end of last year. As of the end of this past January, energy stocks still made up as much as 41 per cent of K-Value's portfolio. This is in light of geopolitical tensions in Pakistan, Venezuela, Algeria and Kenya, plus potential sanctions against Iran. Oil prices still have some upside to go.

But a new key theme for this year, at least for the equity market, will be a renaissance in domestic consumption, said Sopana.

"It is not that energy is no longer attractive, but with numerous government mega-projects and stimulus packages in the pipeline, banks will benefit the most from revived consumer confidence," she said.

Elsewhere, last year's media stocks have seen ad money pouring into their laps after the demise of ITV. This year the money will continue to be directed towards commercial channels, given that consumers have started to loosen their purse strings.

But when uncertain global and local economic climates meet overheated stocks, volatility becomes high. The Beta - which measures the volatility or systematic risks of a stock in relation to the market as a whole - for K-Value reaches 1.3, or about 30-per-cent more volatile than the market - although on average, the figure is closer to 1.14, said Sopana.

Still, Sopana believes a brighter future will await the Thai equity market once the main clouds of uncertainty - namely, the 30-per-cent capital reserve and Foreign Business Act - are gone.

"Thailand as a market has become interesting once again," said Sopana, who has no doubt secured a few bargain buys in the events leading up to the SET slipping to 700 last year. China, with a 7-per-cent inflation rate and likely revaluation of the yuan, has become expensive, she said.

"Ditto Vietnam."

Sopana believes K-Asset's active approach will keep K-Value in good stead in the face of a US economic slowdown. If the Bank of Thailand decides not to cut interest rates, it could mean more liquidity.

Ki Nan Tsui

The Nation