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Published on March 13, 2008

According to Phatra Securities' Thai Market Wrap (March 11), Singapore seems to be pretty bullish on the Thai market without any concerns about political risk, while Hong Kong expressed caution about Thai politics.

In Singapore, investors believe risk and reward look good over the next three to four months. They see that global risk is much higher and use that as an excuse to buy inThailand, as many have predicted an upside to growth in gross domestic product.

To Singaporean investors, high inflation in Thailand is acceptable as it is "global inflation". Most of them think that at least we do have a democratic government instead of a military one. Phatra said that only one or two clients were worried about Thai politics, especially in the long term.

On the contrary, investors in Hong Kong are cautious about Thai politics. They are not sure about future clashes between pro-Thaksin Shinawatra and 'elite' factions.

The greatest concern among investors in Hong Kong is rising inflation in Thailand, about which they are sceptical. However, Phatra Securities' managing director Supavud Saicheua has suggested that the Bank of Thailand is expected to cut 75 basis points off its policy signal interest rate this year (50 in May and 25 in August).

Another concern in Hong Kong is the sustainable growth of exports given the strong baht and global slowdown. January export growth was 33 per cent, but Phatra Securities believes exports will definitely slow down in the second half.

Phatra forecasts GDP growth of 4.8 per cent this year, on a par with 2007, but the contribution would be 40 per cent from exports and 60 per cent from the domestic market - a complete reversal of last year.

Phatra is very bullish on the economy, believing the government will do anything to boost growth as soon as possible. Last week, special tax measures were announced.

 The difference in opinions on the Thai market might come from differences of historic background between Hong Kong and Singapore, though both are considered the region's financial centres.

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