Sunday, April 26, 2009

Phuket may gain from bullish view on Thai markets

PHUKET: Renowned investment guru Mark Mobius remains upbeat about the Thai stock market, due to its "undervalued prices and high dividend yields".

Speaking on Friday at a seminar in Bangkok entitled "The Thai Economy: If It Can Recover", Mobius said the dividend yield on Thai shares currently averages about 5.5%, well above that of other emerging markets, which are at about 4%.

As well, Mobius sees the Thai baht as a whopping 14% undervalued against the US dollar.

Mobius is president of the Templeton Emerging Markets Fund, an impressive 10% of which is currently invested in Thai equities. The fund, managed by Mobius, had $391.1 billion under management as of March 31, up from $371.6 billion in February.

PTT and Siam Commercial Bank are among Thai shares accumulated by the fund, he said.

The fund has snapped up Thai bank and energy stocks while avoiding the tourism sector, due to the latter's current low trading liquidity. But if markets are generally heraldic and do 'price in' the condition of a nation's medium term economic outlook, then perhaps the outlook for Thai tourism, and that of Phuket in particular, is better than currently perceived locally.

Mobius said the recent political chaos in Thailand could happen anywhere in the world and was not an issue for him.

"Thailand's overall politics remain peaceful," he said.

Regarding Thailand's gross domestic product, he said it would rebound from a contraction of 3-4% this year to growth of 2-3% next year.

"And the US economy will recover faster than many expect. Recessions don't last long," he said.

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