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Published on April 29, 2008

Siriporn Chanjindamanee,

Anoma Srisukkasem

The Nation

The Thai stock market is now back on the radar screens of "short-term" foreign investors, said JP Morgan Securities (Thailand) managing director and senior country officer Vorapak Tanyawong yesterday.

As the country's 18th largest broker by trading volume with a market share of 3.04 per cent, the firm is now overweight in local stocks, given a robust economic outlook driven by the government's infrastructure mega-projects and a projected 14-per-cent jump in earnings for listed companies this year.

Foreign investors are traditionally a major influence on the local bourse. They exited shortly after fears of a fallout as the US sub-prime mortgage and credit crunch peaked earlier this year.

"After Songkran, our foreign customers appear to have a better grip on the Thai market. Higher capital inflows have been recorded, particularly from short-term investors," Vorapak said.

"We have a positive view for Thai stocks over the next three to six months and we are overweight in banking, property and some energy stocks including PTTEP and Banpu."

JP Morgan hosted a roadshow joined by 60 fund managers from 43 outfits that run a combined US$100 billion (Bt3.16 trillion) in cash for investment.

Vorapak defined short-term foreign investors as those who employ a 12-month time frame when investing.

In contrast, the short term locally is often defined by a few days, if not a few hours.

Vorapak said 20 Thai listed companies and Deputy Prime Minister and Finance Minister Surapong Suebwonglee also attended the roadshow to present their outlook to overseas investors.

Surapong assured them there was little possibility of another coup and the country had resumed its path to democratic rule.

"We expected a higher number of foreign investors would return to Thai stocks as they are interested in buying into a market that offers solid growth," Vorapak said.

"Foreign investors are still suffering from a liquidity crunch that arose from the sub-prime crisis. But JP Morgan predicts that US growth could improve in the third and fourth quarters."

The firm expects to grow about 30 per cent per year on average between now and 2010 on the back of an upturn in debt-instrument business such as bonds, he said.

The business contributes 50 per cent to its revenue. Brokerage and investment banking generate 20 per cent each and other businesses make up for the rest.

Meanwhile, foreign investors have bought Bt30 billion in Thai bonds so far this year as they consider them to be a good channel to earn profits, said assistant central bank governor Suchada Kirakul.

After the central bank lifted highly unpopular capital controls, foreign investment inflows have topped Bt20billion.

The central bank did not find the inflows to be speculative as most of bonds carry a maturity period that was anything but short.

The Kingdom also obtained net foreign direct investment and some portfolio investments.

The Bank of Thailand is not concerned about an expected widening in interest rate spreads if the US Federal Fund decides to further lower its fed fund rate later this week.

Suchada said speculative inflows could have declined because investors have learned to avoid taking excessive risks after the sub-rime debacle.