BBL unit banks on quick end to turmoil, launches fund

The initial public offering will be made from September 8 to 17. The minimum purchase is Bt1,000.

Vorawan Tarapoom, BBL Asset Management managing director, told reporters at a press briefing yesterday that even though the fund could invest in both equity and debt instruments, it would focus on investing in stocks to generate returns as targeted. Stocks would be big market caps.

She said that after taking the global economy and local politics into account, the threeyear duration was seen as appropriate. She said it was uncertain whether the target could be reached within one to two years, while four to five years was too long for investors.

"The local political conflict is reaching its climax and will finish within one week. All things must go on regardless of what is the end of the story. However, if the problem still drags on or violence breaks out, it will not be good for the whole country. I believe that foreign investors would [in those circumstances] return to the Thai stock market within three years," said Vorawan.

She reckoned that about Bt40 billion of foreign investment remained in Thai shares and that those investors were patient about the situation.

The foreign investment value is based on the accumulated net buy of foreign investors since 2003 minus their net sales of Bt100 billion since the beginning of this year.

The 25percent target is possible when calculated roughly from dividend yield at about 8 per cent from some big marketcap stocks each year, she said.

Vorawan added that the problem of high inflation had been checked after the rate in August dropped to 6.4 per cent, from 9.2 per cent in July. This was mainly due to the government's six measures to alleviate the cost of living for six months, and the falling oil price. But investors must be prudent, she warned.

Onehalf of the local brokers this week recommended that investors should pile up Thai stocks, she said.

BBL Asset Management assistant managing director Wasin Wattanaworakijkul said the fund featured auto redemption when net asset value per unit was greater than Bt12.7 within 36 months and its NAV/unit was at least Bt12.50 or the fund's 36month maturity, whichever comes first.

From the track record of the Thai stock market since 1976, the bourse has offered positive returns 20 times and negative returns 10 times when looking at threeyear cycles.

The stock market is cheap with price to earnings at around nine to 10 times and an average dividend yield of 4.5 per cent, based on the SET Index at 670700 points, Wasin said.

Other positive factors are the solid growth in listed companies' earnings and the falling oil price, he added.

However, risk factors surrounding the stock market are the US subprime woes and credit crunch, the slowdown in the economies of the region, local political tension and inflationary pressure.