TISCO Asset Management has suggested that local investors sell Thai stocks and move their investment into overseas equities - and those in Japan, mainland China and Taiwan, in particular - to get higher returns.
Saharat Chudsuwan, Tisco’s first senior vice president and head of marketing and wealth advisory, mutual and private fund business, said at a press briefing yesterday that the return on investment in overseas stocks was 15-20 per cent on average, while some markets such as China provided an even higher return.
The Stock Exchange of Thailand generates a return of no more than 10 per cent because of a number of downside factors, especially the economic slowdown caused by the political unrest, which has resulted in many investors lacking the confidence to put their money into the market, he said.
He sees Japanese stocks as interesting, because the government’s “Abenomics” policy has resulted in improved economic data, including the inflation rate, which has risen from below 1 per cent to 1.5 per cent.
The yen’s depreciation is positive for the Tokyo Stock Exchange, as it will support demand for Japanese goods overseas, he said, adding that Tisco predicts the earnings of companies listed on the TSE will rise by 12 per cent this year, with an upside of 27 per cent.
The trend of Asian currency depreciation as a result of quantitative-easing tapering will benefit products from Asia in terms of their competitiveness.
Meanwhile, economic reform in China will not only support its economy but also benefit the valuation of Chinese stocks, which helps the price/earnings (P/E) ratio of equities and their continued trading at a high level, Saharat said.
Currently, the P/E ratios for the Chinese and South Korean stock markets are 29 per cent lower than the average price for Asian bourses.
The executive said the US stock markets had become less interesting, because they already reflected the economic recovery that had begun to gather momentum last year.
US stock prices have steadily increased, resulting in an average P/E that is too high. Investors should therefore put their money in the US stock markets when prices have corrected by at least 10 per cent, he suggested.
As to the Thai stock market, benchmark movement is expected to be limited. Tisco predicts the SET Index by the end of the year will reach 1,418 points, with a P/E of 13.5 times.
The local bourse is currently not offering value for investment, he said. Based on a SET Index of 1,300 points, the return is expected to be 9 per cent.
Saharat said gold was no longer a safe haven for investment, because if the global economy stages a recovery, investors will move to the stock markets because of the better returns available.
Tisco urges investors to reduce their investment in gold and buy stocks instead.
He added that the bond market was not interesting at present. Even though bond yields have improved, they are still regarded as being at a lower level than normal.