Baht's strength presents investment opportunities

The baht's appreciation has been a subject of heated debate among the political, business and academic communities. In the past 12 months, the Thai unit has advanced 5 per cent against the US dollar, posting the strongest gain among Asian peers.

This is troubling news for Thai exporters, as margins could be squeezed if their prices were set in a foreign currency. But for Thai investors, the currency gain could be a great opportunity.

For investors earning income in baht, the relative strength of the unit means they can buy foreign assets at lower prices.

As the saying goes, don't put all your eggs in one basket. Investors should take this opportunity to diversify their investment portfolio overseas to reduce country-concentration risk. Besides, there are foreign stock markets that offer better value and greater upside potential than the Stock Exchange of Thailand, in my view.

The SET is now trading at 14 times price to earnings, a 12-per-cent premium to the MSCI Asia-Pacific ex-Japan index. China, with a P/E ratio of less than 9, is trading at a 30-per-cent discount to Asian peers and a 40-per-cent discount to Thailand. With this deep P/E discount, the Chinese market is likely to catch up as investor confidence and economic outlook continue to improve this year.

With the benefit from the baht's higher value, global diversification is something Thai investors should seriously consider, as it not only reduces portfolio risk but is also a great way to enhance investment returns.

Komsorn Prakobphol is a |senior investment strategist at Tisco Wealth. He can be reached at www.tiscowealth.com or |komsorn@tisco.co.th.