Thai stocks take on golden glow

Ki Nan Tsui

The Nation

Calling someone a "laggard" may not be that complimentary, but for Theeranat Rujimethapass, Tisco Asset Management's head of mutual and private funds, the word spells "g-o-l-d-e-n".

With nobody knowing when the sub-prime/dollar/food/commodities crisis will hit bottom, fund managers have been scouring the globe for new products in the hope that at least one proves a blockbuster.

In more sophisticated markets like Hong Kong, there's even a Five Elements Fund - yes, investing in assets related to metal, wood, fire, water and earth.

Despite a torrent of investment choices, the outlook for one of the most elemental asset classes in our portfolio remains positive for last year's regional laggard - Thai equities.

While stock prices in the region doubled last year, Thailand's market turned sour as the result of the political mumbo-jumbo. And our stocks are catching up now.

A case in point is the Tisco Equity Dividend Fund, which, despite its past life as the Thai Orchid 4 closed-end fund, has been busy catching up since it was resurrected from its post-1997 closed-fund death.

The makeover has brought it back to become a three-year, consistent return Lipper Leader. Since its inception, the fund has actually racked up 23.15 per cent growth compared to the SET Index's 31.41-per-cent slide.

While regional and global equities soared and dived en masse, Thai stocks were less volatile. "And with the current price-earnings ratio as low as 12, there should be at least a 10-per-cent upside," Theeranat said.

Many brokerages have lately heralded the resilience of Thai stocks to the global credit crunch and slow GDP growth, particularly in OECD countries. One firm has even forecast 24-per-cent earnings growth for

this year. So far, the SET Index has outperformed the Asia ex-Japan index by at least 10 percentage points.

The investment strategy for the Tisco Equity Dividend Fund does not differ so much from most other similar funds, save for its low NAV of Bt2.46 as of Tuesday, compared to Kasikorn Asset Management's K-Value NAV of Bt5.86. K-Value was last year's leader in its category. It is typical for a long-living fund to have a lower NAV.

With exports dormant due to the strong baht and lost competitive edge to newcomers like Vietnam, "domestic plays" flourish on research reports and newspaper pages.

The story usually goes like this - banks, particularly big ones with low LDR rate, which have just reported favourable first-quarter results, continue to attract foreign money. Urbanisation, coupled with benefits from government tax incentives, has led to a boom in not just property prices, but residential developers' stocks.

All this is rather old news. Most fund managers worth their fees have already figured that out.

What makes this Tisco fund stand out is that it trades for laggards. While the SET retreated 2.36 per cent last month, the fund was cushioned at a 0.43-per-cent drop.

Theeranat said that while energy stocks were all the rage last year,

he did not overweigh the sector

and went for some banks and developers earlier. "We deliberately keep stocks to 20 to 25 at one time," he said.

But not all laggards are created equal. While the media sector, particularly content providers, and agribusiness are hot at this moment, Theeranat eschewed them for liquidity purposes.

A little change in an investment portfolio goes a long way.