• 
• 

Published on February 11, 2008

"It's possible to raise the recommendation on the Thai stock market to 'overweight', but the internal situations and degree of impact from the US sub-prime mortgage woes need to be digested. The situation is expected to be clearer in the first half of the year, and it will point out investment direction in the second half," said JP Morgan Securities (Thailand) president Marco Sucharitkul.

He said foreign investors were waiting to see the new government's policies before considering whether to upgrade their investment weighting in the Thai market.

Foreign investors are satisfied with Prime Minister Samak Sundaravej's plan to roll out nine electric-train lines, but this will also depend on the ability of the Finance Ministry to raise the hefty budget to finance such projects, Marco said.

The US-based financial-services firm earlier downsized its investment in the Thai stock market after its political risk increased. It has placed a focus on India and Pakistan, which are expected to offer big returns to investors. JP Morgan Securities (Thailand) had a 2.85-per-cent share of the Thai stock market's total turnover last year and has a 2.78-per-cent share so far this year.

Marco said he would be promoted this week to head JP Morgan's Southeast Asian trading, covering Singapore, the Philippines, Indonesia and Thailand, since the Indonesian and Singaporean markets were now bigger than the Thai market. He previously supervised only the Thai market.

"JP Morgan will not leave Thailand, because the country is still attractive, but Thailand has a higher political risk after the change in government [following the September 19, 2006, coup]. Although the People Power Party now leads the government, the party's image mirrors the defunct Thai Rak Thai Party. Anyway, foreign investors don't care who is premier or which party is in the government, but rather consider the government's economic-stimulus policies," he said.

Marco also blamed the central bank's 30-per-cent reserve requirement for reducing foreign investors' appetite in the Thai stock market.

"If the US sub-prime mortgage crisis does not send a knock-on effect, it will be positive for the Thai stock market, and the Stock Exchange of Thailand (SET) Index is expected to hover around 950-980 points by the end of this year," he said.

Foreign investors' selling pressure in the Thai stock market as seen last month will dwindle, because that was a selling spree by hedge funds, which do not specialise in Asian markets. They have sold Thai shares with a net position of about Bt20 billion so far this year.

Foreign investors who have snapped up Thai shares this month are European long-term funds.

Siriporn Chanjindamanee

The Nation