Economics: 3) Top Stock Strategist says Avoid Thailand & Hold “0″

Top ranked stock market strategegist says Thailand's stock down but not out
Probably tired of being surprised by Thai politics-Top Ranked stock market strategist says Thai stock down but not out

 

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Comment by Terry/Tavivoot

The following article from Reuters tells plenty about Thailand in itself-which is to avoid Thailand and to give “0” weighting (meaning to have no Thai stock in the portfolio) to Thailand.

It is a grim picture of Thailand.

But the article also pointed out that the main reasons are first politics and second, because Thai investors are selling out of the Thai stock market.

So basically there is still hope.

And actually, the top rank strategist said that when Thai investors start buying in the stock market again-Thai stock will be a great place to buy into.

What all the above means in common language is that when Thais are confident enough in Thailand’s future and start pumping money into the stock market-that is the time to buy.

So when will Thai investors have confidence? Well that depends on one thing really-and that is the situation between Thaksin and Abisit.

 

Avoid Thailand, says Top Ranked Strategist

Buy Malaysia, Indonesia, avoid Thailand, says CLSA

Southeast Asia’s emerging markets — Malaysia, Indonesia and the Philippines — should offer investors some of the best returns this year, given their strong corporate earnings and low interest rates, CLSA’s equity strategist said in an interview yesterday.

 Investors should steer clear of Thailand and Taiwan, which are riddled with political uncertainty, Christopher Wood told Reuters. He has a “zero” weighting on Thailand for his relative return portfolio, even though the index is at a five-month high.

“I’ll get more bullish on Thailand if I see more local investors buying the market. Right now, all you see are locals selling,” he said. “But if local confidence comes back, then there’ll be a huge buying opportunity.”

Wood, who joined CLSA in 2002, was top-ranked Asian strategist in financial publication Institutional Investor’s annual survey in 2005 and ranked second last year.

Wood expects China’s booming stock market, which has more than trebled since the start of last year, to rise further, even though it trades at an expensive price-earnings ratio of about 50.

“A full-scale mania in China shares is inevitable unless the government becomes a lot more aggressive, more than what it’s been so far,” Wood said, referring to the Chinese central bank’s monetary tightening measures announced on Friday.

But Wood, in Singapore for a CLSA conference, said China should instead accelerate the listing of A-shares – off-limits to all but a few foreign institutional investors – and increase the supply of listed companies.

Wood prefers stocks that cater to domestic demand, such as consumer stocks, banks and real estate, but warned that commodity stocks could falter, if the US economy slows.

In other asset classes, Wood said investors are best off buying Singapore hotels , “the biggest no-brainer in Asian real estate” as average room rates are still lower than those of international hotels.

 He said investors should also buy the Singapore dollar amid a private banking boom in the city-state, adding these customers might use the Singapore dollar as a reference currency on their accounts, if they lose confidence in the US dollar.

“The Singapore dollar is a fantastic long-term currency story. It’s basically cheap,” Wood said. “It makes no sense for the government to try and artificially hold it down.”

Investors who want to hedge risk should “short” US securitised consumer and corporate debt, as this is cheap, Wood said.Asian stocks are not overvalued, despite their recent record-breaking rallies, but could face a downturn if credit spreads rise, Wood said.

“What’s overvalued to me is credit spreads, not stock markets,” he said. “To me, the risk in the world is credit spreads rising, in which case, there will be collateral damage in stock markets.”

His views contrast with some fund managers and strategists who have voiced concern that record-setting Asian markets, particularly China, Singapore, South Korea and Indonesia, have climbed far beyond their proper valuations. MSCI’s measure of Asia Pacific stocks excluding Japan has risen about 12% so far this year, compared with an 8.4% rise in the MSCI World index over the same period. — Reuters

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