Be prudent in overseas investment : brokers

They still had room to allocate about US$15 billion (Bt530 billion) - half of the Bank of Thailand's approved annual ceiling of $30 billion - to offshore securities.

Suchai Sutasthamkul, managing director of Phillip Securities, said investors should seize this opportunity to study bargains abroad while the global market has been hit hard by the US financial crisis.

Some foreign stock prices, however, were attractive enough although most companies' financial statements would be in trouble.

"If we select the stocks carefully, the investment will have low risk rather than like in the past," Suchai added.

Supakorn Soontornkit, executive vice president of MFC Asset Management, said investors could hold a few foreign stocks and spend most of their money on US Treasury bills, which carry relatively low risk and promise a return of 2 per cent.

"The investment abroad will help diversify the risk and there are many sectors such as the consumer sector, which we do not have," he said.

Investors should consider not only stock prices but also foreignexchange risk, he said. They could suffer a forex loss greater than the return on investment.

Their United States investment portfolio should not be hedged, as they would enjoy a foreignexchange gain, he said in expectation that the baht would depreciate against the dollar.

Holding shortterm Korean government bonds denominated in won would be less risky than those in US dollars, he said. The Korean government could issue domestic bonds to repay debt while the widening trade deficit puts pressure on its international reserves, resulting in rising longterm risk.

Foreign investment funds (FIF) would decline this year, particularly those in shortterm bonds in Australia, New Zealand and Korea, he added.

Alisara Mahasandana, director of the Bank of Thailand's Exchange Control and Credits Department, said the relaxed investment rules for foreign securities has widened opportunities for local investors to park their funds in various financial instruments and diversify their portfolio.

Global market capitalisation was $33 trillion while the domestic market's capitalisation accounted for only 0.3 per cent of that.

"Investors, however, should realise that there is risk from investing and should not put all of their eggs in any single country," he said.

Thai investment in foreign securities has increased dramatically after the central bank eased some regulations in July 2007, encouraged by the favourable market conditions at that time.

As of last September, investment in foreign assets amounted to $15 billion, up sharply from $4 billion in July last year. About 70 per cent was from FIFs and the rest from other institutional investors.

The bourse will continue to be sluggish in the first half of next year but it would pick up in the second half, with the index projected to climb up to 400500 points, he said.

But the negative factors for the Kingdom's economy - the world's economy and domestic politics - would remain, he said.

"The market recovery will start in the second quarter and become apparent in the third quarter," he added.