Indian equity, farm funds from Kasset, Ktam soon

Kasikorn Asset Management (KAsset) will launch an equity fund this month seeking higher returns in India, while Krung Thai Asset Management (KTAM) will offer a fund to ride the boom in the agriculture sector.

KAsset managing director Patchara Samalapa yesterday said the company would offer the K India Equity Fund (K-INDIA) as an alternative for investors able to tolerate high investment risk on expectation of good returns in India's fast-growing stock market.

The Bt1.5-billion fund will invest mainly in UTI India Fund - 1986 shares, under management of the fourth-largest Indian fund company, UTI International. The UTI India Fund, with assets under management of US$64.65 million (Bt1.95 billion), invests in multi-capitalised stocks.

Now is a good time to invest in India, as stock prices have fallen by about 7-8 per cent this year after the country's interest-rate hikes to combat high inflation, Patchara said.

India's rates are likely to peak after rises of another 70-75 basis points, which could lessen the inflation risk. The country's economy is expected to continue to grow in the next five years, he added.

Analysts have projected the Indian stock market's corporate earnings will grow about 15-20 per cent this year and next.

There is room for the rupee to appreciate 7-8 per cent more in the next two years, as the Indian currency is now weaker than it should be, they said. The unit strengthened by about 10 per cent from 2009 to 46 per US dollar last year.

"Last year, the company invested in India's debt instruments as another choice for investors who can handle moderate risk. We continue to invest in India, as we believe it can provide good returns. The Indian stock market has an attractive price-to-earnings ratio and fast growth," Patchara said.

The K-India Equity Fund has a policy to pay dividends up to four times a year. At least 75 per cent of its overseas investment will be hedged against the foreign-exchange rate.

Minimum investment is set at Bt5,000 and the fund's initial public offering is scheduled during May 12-31.

Meanwhile, to gain from rising agricultural prices, KTAM has joined with Citibank to offer the KTAM World Agriculture Fund (KT-AGRI) from May 12 to 25.

BLACKROCK WORLD

The fund will invest at least 80 per cent of its net asset value in the master fund, the $3.56-trillion BlackRock World Agriculture Fund, managed by BlackRock. The master fund invests at least 70 per cent of its NAV in the securities of worldwide companies engaged in agriculture and agricultural-related products and services.

The KTAM World Agriculture Fund will invest in agriculture stocks worldwide, which can provide inflation protection and a valuable diversification tool, said KTAM chief executive officer Somchai Boonnamsiri.

The growing world population, especially in emerging markets with more purchasing power and higher demand, will drive substantive growth in the agriculture sector, he said.

Vijay Sivaraman, retail banking director of Citibank NA, said a key driver behind the global rally in equity and commodity prices continued to be the high level of liquidity injected by central banks in the Group of 10 economies.

The ongoing global recovery with strong emerging-market growth, a weak US dollar and the prospect of higher demand for commodities for inflation protection are all medium-term positives for commodity prices, he said.

However, a downside risk is the withdrawal of monetary stimulus in the developed world, especially in the United States, he added.