Thai Stock Index Has Soured,
But Analysts See Sweet Spots
BANGKOK, Thailand -- The tide has ebbed at the Stock Exchange of Thailand.
In 2003, strongly rising share prices turned Bangkok into the world's best-performing market, with the benchmark index more than doubling. But so far this year, the Thai stock market is among the world's weakest exchanges. The index rose slightly Wednesday but remains close to one-year lows and has slid about 17% since a mid-January peak.
The rapid reversal of fortunes has many investors wondering if the recent fall on the SET is a blip or means the market faces a broader decline.
Both foreign and domestic investors piled into Thai shares during the first half of 2003 to take a ride on the country's buoyant economic recovery. Inflation-adjusted gross domestic product jumped 6.7% last year, surging 7.8% during the fourth quarter, compared with a year earlier.
Fast economic growth helped lift average corporate earnings to their highest levels since the 1997-98 Asian financial crisis, leading to a positive rerating of the SET as investors bid up the overall exchange's average price/earnings ratio to 11 from eight times earnings.
For the Thai economy, the growth story looks set to continue. Bangkok analysts believe it can grow slightly faster this year than in 2003, with many Bangkok-based brokerages forecasting GDP expansion of about 7%. CLSA Asia Pacific predicts strong economic growth will boost earnings-per-share growth between 25% and 35% this year.
With all that good news, why is the SET in decline? A series of political crises, including the Thai government's handling of the bird-flu epidemic, spiraling violence in the country's predominantly Muslim southern region and mounting labor unrest against privatization policies have all contributed to eroding investor confidence, financial analysts say.
Merrill Lynch recently downgraded Thailand from its list of "outperforming" markets to "performing," and many big institutional investors have recently diverted funds from Thailand to other regional markets, including Taiwan, South Korea and the Philippines. Thailand is one of the few Asian stock markets this year in which foreigners are net sellers, shedding almost 30 billion baht, or about $760 million, of shares since Jan. 1.
One possible reason: A recent CLSA research report notes that while net cash flows for listed Thai companies were positive between 2000 and 2002, they turned negative to the tune of 26 billion baht last year, meaning many Thai companies are spending more money than they are generating. The report predicts net cash flows will slip deeper into the red this year, to 43 billion baht.
Some of that cash is going toward new investments. But some Bangkok-based analysts say many Thai companies are making cash calls now more to boost their balance sheets than to upgrade production capacity.
"There are concerns about the propensity of some listed companies to tap the market," says Sriyan Pietersz, head of research at J.P. Morgan Chase in Bangkok. "Many Thai companies have never seen multiples this high and it seems the temptation is to grab the cash." He notes listed Thai companies have raised about $1.2 billion through new stock issues on the SET so far this year.
Big stock issues, analysts say, threaten to dilute earnings per share, in turn pushing share prices and the SET index lower. Supavud Saicheua, managing director at Phatra Securities in Bangkok, says the Thai stock market is entering the fourth year of an upswing and said the SET has never risen for four consecutive years since its creation in 1975.
"Investors are saying all the good news is already priced into share prices and that it's difficult to see where the upside surprise could arise from," he says. "Statistically, it's hard to argue the SET will rise appreciably this year."
There are indications that foreign investors started to turn negative on the SET as early as last year. Recent Phatra Securities research shows foreign investors net sold nearly 30 billion baht of Thai shares between July and December, a period during which Thai investors drove the benchmark index up about 50%.
Last year, the Thai government eased regulations restricting how much state-run social security and provident funds are allowed to put into listed shares. "Local institutional investors are becoming bigger and more powerful in moving the market," Mr. Supavud says.
Because Thai state funds don't disclose specifics of their investment portfolios, Mr. Supavud says it is difficult to determine how much government-directed investment might have contributed to last year's big market gains.
Thai individual investors have been net sellers on the SET since mid-January, as bird flu and violence in the Muslim south hit business and consumer confidence. Moreover, the Thai government's decision to indefinitely postpone the share offering of a state-owned electricity-generating monopoly, which stood to be Thailand's largest initial public offering ever, has cast new doubts on the government's commitment to list other state-owned enterprises.
Prime Minister Thaksin Shinawatra has expressed concern about the SET's recent decline, and officials are scrambling to revive foreign interest in the market. Last week, Mr. Thaksin removed his finance minister and succeeded him with Somkid Jatusripitak, previously a deputy prime minister and one of Mr. Thaksin's chief economic advisers. Mr. Somkid, whose background is in marketing, has already promised to ease restrictions on day trading and margin trading, regulations passed only last year because of concerns such transactions were overheating the market.
So does the recent decline on the SET represent an opportunity for bargain-hunters? Some Bangkok-based analysts contend there are still a few bright spots.
Mr. Supavud thinks building-material shares remain a good bet because of the Thai government's plans to ramp up infrastructure spending later this year. In particular, he likes Siam Cement, the big cement producer that also has interests in pulp and paper and petrochemicals.
Vikas Kawatra, head of research at Kim Eng Securities in Bangkok, says Thai banking stocks still are undervalued. "With the second phase of economic recovery, banks will start to lend more and their earnings growth will outperform the market," he says, predicting Thai bank shares will rise between 40% and 50% this year. "Overall, we are still optimistic."
泰国经济有望在2004年蓬勃发展
近来，禽流感肆虐加之南部省份出现暴乱令泰国企业和投资者对该国经济增长前景的信心大挫。但即便如此，从最近的大多数宏观经济指标来看，泰国经济仍将在2004年迅猛发展。
泰国国内生产总值(GDP)去年增长6.7%，其中第四季度增幅超过7.8%，是自1997-98年亚洲金融危机以来季度增长最快的一次。泰国总理他信?秦那越(Thaksin Shinawatra)预计今年该国GDP将增长8%，这一预期同去年的经济增长趋势同相吻合，略高于非官方经纪公司平均预期的7%。
强劲的国内消费是引领近来泰国经济强劲反弹的主要因素。摩根大通公司(J.P. Morgan Chase & Co., JPM)驻曼谷的研究业务主管里扬?皮埃特兹(Sriyan Pietersz)说，私人投资终于开始现身，这是个好消息，因为私人投资过去一直滞后于经济的增长。
根据泰国国家经济和社会发展局(National Economic and Social Development Board)资料，2003年第四季度，私人投资较上年同期增长了近20%，主要出现在电子产品等以出口为主的行业。经济学家们指出，今年1月份的工厂开工率为74.6%，创下1997年后的最高纪录，接近80%这一大多数制造商增加资本支出所需达到的开工率水平。政府对此寄于了厚望，希望新增投资带动就业增长并提高工资水平，这对于维持国内的消费增长十分关键。
泰国政府还准备为经济发展锦上添花。他信计划实施一项380亿美元的基础建设支出计划，包括在未来5年内建设多条大型公路和铁路。据泰国财政部(Ministry of Finance)称，今年1月份，政府支出已经较上个月大幅增加了26%。
一些经济学家认为，私人投资复苏、财政支出大幅增加以及国内消费强劲等因素应该足以抵消泰国禽流感蔓延和南方穆斯林居民所在省份爆发暴乱所带来的风险。
摩根大通的皮埃特兹预计，即使最坏的情形发生，禽流感疫情对GDP的负面影响也只有0.6个百分点，而泰国政府今年的追加预算支出就高达1,300亿泰铢，合32.8亿美元，能够推动GDP增长近两个百分点。皮埃特兹说，政府的财政实力相当雄厚，足以抵制任何意外经济风险。他指出，去年第四季度，消费和所得税的增加带动政府收入较先前目标高出40%。
不过，经济前景也并非一片光明。1月份的消费者信心和企业信心均有下降。而与此同时，泰国证交所指数近来出现大幅回落，从1月份高点下跌20%左右，与去年增长125%的强劲势头不可同日而语。
曼谷的金融分析师们解释说，这是因为一些大户投资者认为泰国股市已经包涵了今年乐观的经济增长预期，现在市场开始消化一些潜在的下行风险。比如说，他信最近决定推迟对国有垄断发电厂进行首次公开募股(IPO)，原因是遭到工人反对。他信无限期地将这次有望成为泰国有史以来最大规模的IPO束之高阁，外国投资者因此对该国政府尽快实现私有化的承诺产生怀疑
