ExpatOilWorker Posted January 12, 2014 Share Posted January 12, 2014 The market cap of Thai stocks was 105% of GDP in 2013, which is as high as it was prior to the 1997 Asian Crises. Signs that SET is over valued and will fall further? http://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS Link to comment Share on other sites More sharing options...
SheungWan Posted January 12, 2014 Share Posted January 12, 2014 I would have thought how Monday pans out requires a little more attention for the moment re the SET. Link to comment Share on other sites More sharing options...
Halfaboy Posted January 12, 2014 Share Posted January 12, 2014 Just for my own interest. Can somebody explain me in a few words what the relation is between market capitalisation and the GDP ? Furthermore why 105 seems to be high and what would be an acceptable figure. Thanks.... Link to comment Share on other sites More sharing options...
ExpatOilWorker Posted January 12, 2014 Author Share Posted January 12, 2014 Just for my own interest. Can somebody explain me in a few words what the relation is between market capitalisation and the GDP ? Furthermore why 105 seems to be high and what would be an acceptable figure. Thanks.... It is the total value of a countries stock market as a percentage of GDP. As an example Germany is 43%. HK is of course 420%, but for unique reasons. Both Malaysia and Thailand are alarming high (over-valued). Thailand was as low as 15% in 1998, but have generally been around 40-60%. Link to comment Share on other sites More sharing options...
Naam Posted January 12, 2014 Share Posted January 12, 2014 Just for my own interest. Can somebody explain me in a few words what the relation is between market capitalisation and the GDP ? Furthermore why 105 seems to be high and what would be an acceptable figure. Thanks.... It is the total value of a countries stock market as a percentage of GDP. As an example Germany is 43%. HK is of course 420%, but for unique reasons. Both Malaysia and Thailand are alarming high (over-valued). Thailand was as low as 15% in 1998, but have generally been around 40-60%. what makes you think that any given market capitalisation / GDP ratio is significant, respectively can be used to judge an economic situation? look at Venezuela. a country with an economy in shambles inspite of all its oil wealth where the above-mentioned ratio is 6.6 and compare that with Thailand's 105. 1 Link to comment Share on other sites More sharing options...
Naam Posted January 12, 2014 Share Posted January 12, 2014 specified hereafter is a list of countries which i consider semi-bankrupt or in dire economic straits as far as debt service is concerned. lean back, study the list and think. Argentina ..........7.2 Greece............17.9 Iceland.............20.8 Italy..................23.8 Pakistan..........19.4 Paraguay...........3.8 Ukraine............11.7 do you think these countries are better off than Canada..........110.7 Chile..............116.1 Korea............104.5 Luxembourg...127.5 Malaysia........156.2 Norway............50.6 Singapore......150.8 Sweden.........107.0 Switzerland....171.0 Thailand........104.7 i rest my case! Link to comment Share on other sites More sharing options...
rakman Posted January 12, 2014 Share Posted January 12, 2014 Just for my own interest. Can somebody explain me in a few words what the relation is between market capitalisation and the GDP ? Furthermore why 105 seems to be high and what would be an acceptable figure. Thanks.... As pointed by Warren Buffett, the percentage of total market cap (TMC) relative to the US GNP is “probably the best single measure of where valuations stand at any given moment.” As people probably notice, the stock market is often driven my emotional forces rather than "economic rationality". As with anything in the market place, the price of a stock is what people are willing to pay for it. Now many things are grossly overvalued, twitter, tesla for example. It used to be that a company's stock value was close to the "book" value, but those days seem to be long gone. As one stock trader noted in the Dot.com era, People would call wanting to desperately get some "java" stock. He'd ask if the client knew what java was, and the client would usually say "No, but I got to get some". Such is the emotional aspect of the stock market. If the ratio is high, people have more money than brains. If the ratio is low, it could very well be that people are scared. 2 Link to comment Share on other sites More sharing options...
Naam Posted January 13, 2014 Share Posted January 13, 2014 If the ratio is high, people have more money than brains. fact is that during the last five years many of these "brainless" people have doubled or tripled their net worth Link to comment Share on other sites More sharing options...
ExpatOilWorker Posted January 13, 2014 Author Share Posted January 13, 2014 If the ratio is high, people have more money than brains.fact is that during the last five years many of these "brainless" people have doubled or tripled their net worth That is true, but it is also true that many people got wealthy in Thailand during the Asian Tiger years, but few had a chair left to sit on after the 1997 Asian crises. Thailand Market Cap to GDP is 105% now. In my view that it on the high side and in the country's current situation, it is more likely to fall than rise. Link to comment Share on other sites More sharing options...
ExpatOilWorker Posted January 13, 2014 Author Share Posted January 13, 2014 specified hereafter is a list of countries which i consider semi-bankrupt or in dire economic straits as far as debt service is concerned. lean back, study the list and think. Argentina ..........7.2 Greece............17.9 Iceland.............20.8 Italy..................23.8 Pakistan..........19.4 Paraguay...........3.8 Ukraine............11.7 do you think these countries are better off than Canada..........110.7 Chile..............116.1 Korea............104.5 Luxembourg...127.5 Malaysia........156.2 Norway............50.6 Singapore......150.8 Sweden.........107.0 Switzerland....171.0 Thailand........104.7 i rest my case! Argentina is actually a good example. It was 101.4% during the good times in 2002 and look how far it has fallen during bad times. 1 Link to comment Share on other sites More sharing options...
Naam Posted January 13, 2014 Share Posted January 13, 2014 If the ratio is high, people have more money than brains.fact is that during the last five years many of these "brainless" people have doubled or tripled their net worth That is true, but it is also true that many people got wealthy in Thailand during the Asian Tiger years, but few had a chair left to sit on after the 1997 Asian crises. Thailand Market Cap to GDP is 105% now. In my view that it on the high side and in the country's current situation, it is more likely to fall than rise. so your view is that the economies of Switzerland, Singapore, Canada and Sweden are worse off than Thailand and the bankrupt economies of Pakistan, Paraguay and Iceland will fare better? Link to comment Share on other sites More sharing options...
Naam Posted January 13, 2014 Share Posted January 13, 2014 specified hereafter is a list of countries which i consider semi-bankrupt or in dire economic straits as far as debt service is concerned. lean back, study the list and think. Argentina ..........7.2 Greece............17.9 Iceland.............20.8 Italy..................23.8 Pakistan..........19.4 Paraguay...........3.8 Ukraine............11.7 do you think these countries are better off than Canada..........110.7 Chile..............116.1 Korea............104.5 Luxembourg...127.5 Malaysia........156.2 Norway............50.6 Singapore......150.8 Sweden.........107.0 Switzerland....171.0 Thailand........104.7 i rest my case! Argentina is actually a good example. It was 101.4% during the good times in 2002 and look how far it has fallen during bad times. there were no good times in Argentina in 2002! Domingo Cavallo was jetting back and forth between Buenos Aires and Washington trying to secure additional IMF bailout cash. he failed and Argentina declared the biggest default in history on dec 26, 2002 inmidst of a standing ovation of its members of parliament. international investors were screwed and lost an average of 70% and inspite of the fact that the country "saved" by fraud an estimated $80-90 billions its finances are so tight that Argentine bonds pay today double digit yields. even a short maturity (june 2016) like Argentina XS0501195480 yields 13,55% p.a. Wall Street Journal (yesterday Jan 12, 2014) Argentina's Crumbling Economyhttp://online.wsj.com/public/page/reader-comments.html?baseDocId=SB10001424052702303848104579310811794109126&headline=Argentina%27s%20Crumbling%20Economy 1 Link to comment Share on other sites More sharing options...
steveromagnino Posted January 13, 2014 Share Posted January 13, 2014 the problem with this measure is obviously things are very different now compared to say the mid 90s - for instance a number of state owned enterprises are now publically listed (at least in part); there are new entrants to the stock market from the previous family business; there are new businesses. For USA, this is less of an issue, because the market fundamentals of who is listed and who isn't doesn't change as much - whereas Thailand look at the biggest firms the two largest by market cap were (for the most part ignoring the roll up of various smaller entities) IPOed in about 2003/4. Banks, telcos and energy make up a large proportion of the market cap, and these are all industries undergoing deregulation and substantial change. I really cannot see the relationship, other than that in good times, firms are more likely to enter the stock market and affect the market cap of the stock market in that country. So it's one of those correlation is not causation type cases. 1 Link to comment Share on other sites More sharing options...
rakman Posted January 18, 2014 Share Posted January 18, 2014 If the ratio is high, people have more money than brains. fact is that during the last five years many of these "brainless" people have doubled or tripled their net worth No, these are the smart ones who got in early. The brainless will join as the bubble peaks. Link to comment Share on other sites More sharing options...
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