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Aberdeen sees opportunities in Thai equities

Aberdeen Asset Management Co remains positive on Thai stocks this year, provided the political situation does not deteriorate further. Thailand offers better value in equities than other parts of Asia, backed by high dividend yields. Its companies are in good shape, with strong cash flow and balance sheets, the firm says.

The economy is slowing, but this was expected given past consumer incentives and government spending.

After a technical recession in the middle of last year, the third quarter saw slight expansion. However, since then domestic spending decisions have been deferred because of the political conflict. The fourth quarter likely saw activity slowing again.

While personal consumption has fallen, reflecting a rise in household debts and a fall in confidence, areas such as tourism, agriculture and exports, despite China's slowdown, testify to the diversity and resilience of the economy, Aberdeen says.

Last year exports fell 0.2 per cent, but the firm is forecasting a 5-per-cent rebound this year, with the weak baht helping. Thailand's finances generally look quite sound and the country has not suffered any contagion effects to date, despite the battering that emerging markets have faced since the US Federal Reserve's tapering programme began.

Chief investment officer Adithep Vanabriksha said yesterday that his company believed stocks were fairly valued, with the SET Index at a price-to-earnings ratio of 11.8 times, according to Bloomberg consensus estimates.

"External risks remain in the shape of a still-sluggish global recovery and Federal Reserve tapering of its asset purchase programme, yet we see a lot of such uncertainty now built into prices after a flight to developing markets. Foreign ownership of both equities and bonds has fallen sharply," he said.


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