Time to accumulate, but what to buy?

Most of them believe the global financial crisis and Ushaped economic slump could last at least one to two years and that we have come only half way.

The Thai economy will next year suffer from a shortage of liquidity, though they feel the impact of the crisis this time will be much less than what was experienced in the wake of the 1997 financial crisis.

"It will fall rapidly but won't last too long. This time, the Ushape could be one to two years.

The problem is that we have just seen the spillover into the real sector," said Paiboon Nalinthrangkurn, managing director of Tisco Securities.

So how much further will Stock Exchange of Thailand shares dip? Most of the roundtable participants see a good opportunity for upside gain.

"We think we're looking at 380540 [SET Index target]. There's a chance of less than 400, as funds could sell further in December. The fall will be strong, but not as much as 30 per cent," said Sukit Udomsirikul, assistant managing director of Siam City Securities.

This view is shared by Paiboon, who said: "There's only a 10percent chance of downside risk. For the Thai stock market, 380 will be the low with only a 10percent downside risk, and the upside chance is 3050 per cent."

Vijchu Chantatab, vice president of the Equity Department at SCB Asset Management, also believes the SET will fall further, but by 10 to 15 per cent at the most.

Sukkawat Prasurtying, chief investment officer of Manulife Asset Management (Thailand), was the most pessimistic of the four, saying the global financial crisis would last another four quarters, but only a few more financial institutions would go insolvent. However, distressed assets, including creditcard loans, have yet to emerge.

"Foreign investors won't come back soon. The state of emergency and the coup have caused foreign investors to give negative marks to the Thai market. Our market is cheap, but it's also cheap elsewhere … I'm bearish," Sukkawat said.

When asked which stocks to buy, the experts took different approaches.

Sukit was clearly in favour of highdividend plays.

He said exportrelated stocks would be highly volatile due to falling demand for products such as seafood, canned food, processed food, plastic pellets and electrical circuits. The stocks that could be volatile due to domestic factors include those in the property, petrochemicals, auto and printing sectors.

He recommended energy and coal stocks, including Banpu, whose price is still less than book value and which offers a dividend of 6 to 7 per cent. Sukit also recommended Advanced Info Service, whose business is a fundamentally important sector, CP All, which has good cash flow and a strong business model, and Siam Cement, which has good risk management.

Vijchu warned investors to avoid commodity stocks and opt for dividend plays instead.

There are currently 30 to 40 stocks with doubledigit growth in their dividend yield. Though these companies' earnings are expected to drop by 20 to 30 per cent next year, their dividend yield is still expected to be between 7 and 8 per cent, which is high when compared to deposit rates, he said.

To evaluate stocks, Paiboon suggested that investors focus on priceperbook value rather than pricetoearnings ratio, as the latter will not reflect the real situation over the next six to 12 months. He added that earnings per share was also not a good indicator at present, with profits falling worldwide.

"Look at the sectors which have been largely underperforming. For example, oil stocks already reflect the lowest point of crude at US$50 [Bt1,750] a barrel. Energy won't fall much further," he said.

Sukkawat offered a different approach. He argued that selecting good stocks was not the smartest means of wealth management, saying asset allocation was the most important factor.

He also suggested investors avoid commodities.