Not Time To Invest In Thai Stocks, Says Financial Adviser

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INTERVIEW

Not time to invest in Thai stocks, says financial adviser

PICHAYA CHANGSORN

THE NATION

BANGKOK: -- The government of Prime Minister Yingluck Shinawatra should make a "big U-turn" in its economic policies as they could make Thailand vulnerable to impacts from global economic volatility, said Paul Gambles, a regional financial expert.

Gambles, managing partner at MBMG International, a Bangkok-based financial advisory company, said that despite the country's current strong fiscal position, the Yingluck government's huge spending on infrastructure and car-purchase and rice subsidies would increase the debt-to-GDP ratio to 60 per cent in the next few years.

"Right now, we have kind of open-ended stimulus programmes and there is no reason to do this. We should not stimulate the economy at the moment. We should accept the fact that with the global economy slowing down, the Thai economy needs to come down a little bit," said Gambles in an exclusive interview to The Nation.

Gambles said he had been telling everybody that he was waiting to invest in Thai stocks when they plunge 30-40 per cent from current prices.

Martin Gray, portfolio manager at Miton-Optimal Multi Asset Management, said investors should bring down their expectations of returns from investments as there is no sign of good news - unemployment remains high, interest rates are low and continue to fall, and there is a disinflationary environment and sub-par economic growth.

"There is a danger at the moment. We have seen the rally of stocks and other risk assets over the past nine to 12 months. It's easy to state that now is a good time to invest, but I suspect with the volatility we have seen in the past few years, it might be a better time to sell rather than invest," he said.

Gray, who manages the Special Situations Fund for the UK asset-management company, was speaking in an exclusive interview to The Nation during his recent visit to Bangkok to give a special briefing to clients of MBMG International.

He said MitonOptimal was rather defensive in its investment policy at the moment, focusing on cash and investment-grade debts. It takes a long-term five-to-10-year view on Asia's equity markets, but not at the current valuations, he said.

Gray said investors could make money from cash. Asian currencies such as the Singapore dollar, the New Taiwan dollar and the South Korean won have all appreciated more than 100 per cent against the US dollar during the past three years and will continue to gain against the greenback.

Asia and Japan make up for 39 per cent of MitonOptimal's portfolio at present. It has built up from zero holdings of Asian-dominated assets in 2009 to 20 per cent now.

About 60 per cent of Japan's exports are now going to Asia, compared with about 25 per cent in 1985, while the US and European Union have become much less important to Japan.

"If we like Asia going forward, we should also like Japan. The yen will hold its value relatively well, if you are patient," he said.

-- The Nation 2012-11-08

[koolbreez]

What a bunch of bull cocky.

[rgs2001uk]

"If we like Asia going forward, we should also like Japan

Says it all really.

[Suradit69]

What a bunch of bull cocky.

... a regional financial expert.

...an exclusive interview to The Nation

Looking at one of their funds, it cost 5% up front to get in and 1.75% per annum.

So far this year that fund lost 0.9%, although last year they did manage to gain 0.56%. The year before that was somewhat better, but even so, in three years the only ones making any money on your investment would be the "regional financial experts."

The markets have been difficult for everyone, but paying experts to manage your losses for you seems like a special form of masochism.

[davejones]

What a bunch of bull cocky.

... a regional financial expert.

...an exclusive interview to The Nation

Looking at one of their funds, it cost 5% up front to get in and 1.75% per annum.

So far this year that fund lost 0.9%, although last year they did manage to gain 0.56%. The year before that was somewhat better, but even so, in three years the only ones making any money on your investment would be the "regional financial experts."

The markets have been difficult for everyone, but paying experts to manage your losses for you seems like a special form of masochism.

I always find it funny that the so-called experts manage to lose money because they have no real idea of what's going on. I do agree though that now is not a great time to invest in Thai stocks. They have tripled in value in recent years and the risk is now much greater than the potential reward. They might still rise further, but the further they rise, the riskier they get. Common sense really. The whole market can't keep continually rising at a hugely greater pace than GDP. It just doesn't make sense. Whenever this happens there is usually a big correction/crash that follows.

[khunken]

While there is an element of truth in the comments about the Thai economy, when a so-called investment advisor says invest in this sector, that currency or the other economy, rule number one is reject the 'advice'.

My rule number two is diversify for lower potential gains along with lower risk.

[Michael Caine]

BestInvest.co.uk. 2011 UK Manager of the Year and best cautious portfolio.

[JSixpack]

Wait around for a 30-40% drop?

[Rancid]

Let's clear something up right here and now, financial advisors/experts don't have to be right, they make money from kickbacks from their advice, win or lose. This is based on the mathermatical algorithm, theory of ignorance. This is due to the fact that people that actually pay financial advisors only do so as they are even more ignorant. Ignorance does not equate to stupidity, ignorance is simply a lack of knowledge, knowlege that can be accumulated if not lazy and having maintained a few functioning neurones.

Years ago I was financially illiterate, in fact out right ignorant. It was then that I was offerred a job as a financial planner based on that resume. Seems my ignorance was ideal as I was also basically cohent during the daylight hours and thus willing to follow the script, sucker the client and eat the commisions. I declined.

This bloke though at least got something right, Thailand is running up an aweful large debt (Taksin should know better but maybe too many mouths too feed), however the market should have some legs yet, at least until the whole world wide Ponzi debt hoax collapses.

[fletchsmile]

I know Paul quite well, and MBMG are one of the few Financial Advisor companies I would look at in Thailand. I respect his opinions and they are often well researched and well thought out, even though i currently disagree with their view on equities and have done over the last few years. Only more time will see how it fits with their longer 5-10 year time frames.

I'd say most of the people commenting negatively about him, probably don't know him very well or if at all.

I think they've been too bearish on equities for the last few years. Martin Gray and Miton Asset Management have close ties to MBMG and likewise have been overly bearish and cautious in my view. While in poor years for equities their funds do quite well, in good years they have often under performed.

I manage a portfolio of funds for my mum back in the west, and Miton's Strategic Portfolio is one I hold for her, given its cautious stance. This year it has missed out on some good rallies. Last year it did offer protection against falls though. This has been the story of the last few years. So if you think equities are heading for a fall it might be worth considering. If you think the worst is behind us then obviously it's not the place to be.

For someone living in Thailand, they would have been much better off in most equity Thai funds over the last few years than Martin Gray and Miton's range. Aberdeen Growth leaves the MAM stable in the starting blocks when it comes to performance, providing you can tolerate volatile years like 2008.

Even though I often seem to disagree with his view on equities, I always like to read his point of view. None of us gets it right all the time, and there is usually interesting research in there even if you disagree with the conclusion or have a different perspective.

BTW The statement about SGD is wrong, SGD has appreciated only about 13% vs USD. I suspect it's an inaccurate quote by the Nation.

Edited November 9, 2012 by fletchsmile

[rgs2001uk]

^^^^^, if it was an interview with say Hugh Young of Aberdeen I would have taken note.

Its a results orientated business, I am afraid for me there are better alternatives out there.

[Naam]

BTW The statement about SGD is wrong, SGD has appreciated only about 13% vs USD. I suspect it's an inaccurate quote by the Nation.

that's correct Fletch. Korean Won and Taiwan Dollar by far not as good as SGD:

KRW vs USD +6.38%

TWD vs USD +9.37%

using a basket containing SGD, KRW and TWD then the average is slightly below 10% to which the Nation journ@nlist added a zero to arrive at 100% (although the "more than" does not apply)

[yoshiwara]

I don't think his perspective is unreasonable.

[fletchsmile]

I don't think his perspective is unreasonable.

Possibly. Their stance though has meant that they have missed good gains in the last few years. If they turn out correct they will have missed out perhaps a little less, but still missed out. If they turn out incorrect then double whammy. I'm very happy to have been invested in Thailand for the last few years, and even the last decade or so. Timing the Thai market is always difficult, so best to take a long term view.

Gambles said he had been telling everybody that he was waiting to invest in Thai stocks when they plunge 30-40 per cent from current prices.

In the context of 26% gains on the SET this year (excluding dividends) or 40% on Aberdeen Growth fund this year, that means just waiting to go back to the start of the year! Now if wrong, that's been costly and if right just back to square 1.

Edit: Miton Strategic Portfolio accumulation units by contrast (which don't pay a div) are up 1% this year so not as if the money has been put to better use elsewhere.

Asia and Japan make up for 39 per cent of MitonOptimal's portfolio at present. It has built up from zero holdings of Asian-dominated assets in 2009 to 20 per cent now.

SET is up almost 190% from 1 January 2009 (SET was at 450-ish compared to just under 1300 now). That's one hell of a rally to miss out on. Again excluding dividends. Aberdeen Growth which doesn't pay dividends is up 240% since 1 Jan 2009.

Dividends included, Paul and Miton have largely missed an opportunity to treble their money in that time frame by overlooking Thailand. Of course it would be nice for them if there was a pull back.

Edited November 11, 2012 by fletchsmile

[Naam]

let's not forget Paul's one-and-a-half year long rambling (recently renewed) about the "biggest basket case the AUD"

[JSixpack]

I don't think his perspective is unreasonable.

Possibly. Their stance though has meant that they have missed good gains in the last few years. If they turn out correct they will have missed out perhaps a little less, but still missed out. If they turn out incorrect then double whammy. I'm very happy to have been invested in Thailand for the last few years, and even the last decade or so. Timing the Thai market is always difficult, so best to take a long term view.

Gambles said he had been telling everybody that he was waiting to invest in Thai stocks when they plunge 30-40 per cent from current prices.

In the context of 26% gains on the SET this year (excluding dividends) or 40% on Aberdeen Growth fund this year, that means just waiting to go back to the start of the year! Now if wrong, that's been costly and if right just back to square 1.

Edit: Miton Strategic Portfolio accumulation units by contrast (which don't pay a div) are up 1% this year so not as if the money has been put to better use elsewhere.

Asia and Japan make up for 39 per cent of MitonOptimal's portfolio at present. It has built up from zero holdings of Asian-dominated assets in 2009 to 20 per cent now.

SET is up almost 190% from 1 January 2009 (SET was at 450-ish compared to just under 1300 now). That's one hell of a rally to miss out on. Again excluding dividends. Aberdeen Growth which doesn't pay dividends is up 240% since 1 Jan 2009.

Dividends included, Paul and Miton have largely missed an opportunity to treble their money in that time frame by overlooking Thailand. Of course it would be nice for them if there was a pull back.

Good post, very true.

The SET doesn't seem to want to decline 30-40% anytime soon, but who knows.