Return from Thai market behind foreign inflow, says Aberdeen

Aberdeen Asset Management believes foreign capital is continually flowing into the Thai bond and stock markets because of the attractive returns and the strong fundamentals of the Thai economy.

Pongtharin Sapayanon, head of fixed income, said companies listed on the Stock Exchange of Thailand still showed impressive net profits and paid high dividends while the price-to-earnings (P/E) ratio was reasonable compared with the region.

He said the returns from the bond market this year would be similar to last year at 3.3 per cent, adding that the proportion of foreign investors in the Thai bond market had increased to 16 per cent.

Aberdeen estimates gross domestic product will grow this year at 5 per cent while inflation is 3.5 per cent. However, the domestic economy is under pressure because of a lower trade surplus.

The regulators should have policies to sustain the economy.

The company expects the Bank of Thailand to raise the repurchase rate |by 25 basis points in the second half of this year.

AAM investment manager Ratanawan Saengkitikomol said the P/E ratio of the SET was expected to reach 11.7 this year and 10.6 in 2014, while dividend yield will be 3.6 per cent in 2013 and 4.1 per cent next year. Attractive factors are persuading foreign funds to invest in the Thai stock market, she added.

"External factors such as [those in] the US, the European Union or China will still be closely monitored because if there are unexpected incidents, Thai stocks could be volatile as well," she said.

Pongtharin added that the company had adjusted the investment policy of the Aberdeen Value Fund (ABV) in line with the actual situation by increasing the investments in bonds to 65 per cent from 35 per cent and reducing investments in stocks to 35 per cent from 65 per cent.

Ratanawan said the ABV had given returns at 15.25 per cent per annum during the past three years. The fund is suitable for start-up investors who are interested in the stock market. Moreover, the fund is able to shift to invest in other instruments offering attractive returns such as property funds, infrastructure funds and real estate investment trusts.