Learning to invest in Thai Stocks

bumper wrote:they all pay dividends..

Thailand Stocks Post Longest Gain in 16 Years as Overseas Investors Return
By Anuchit Nguyen - Aug 5, 2010 4:51 PM GMT+0700

Thailand’s stocks extended gains after entering a bull market this week, posting the longest winning streak in 16 years as accelerating economic and earnings growth lures overseas investors.

The SET Index rose for an 11th day, climbing 0.9 percent to 874.92 at the close, the highest level since May 23, 2008, and the longest stretch of gains since May 1994. The measure has climbed more than 20 percent since its May 25 low, an increase that analysts define as a bull market.

Thailand’s economy may expand as much as 8 percent this year, the fastest pace since 1995, as exports and spending gather strength, Finance Minister Korn Chatikavanij said yesterday. Companies including Sri Trang Agro-Industry Pcl and KCE Electronics Pcl this week reported earnings jumped on higher overseas demand.

“Foreign investors have begun to purchase Thai equities again on confidence in the economy,” Sopawadee Lertmanaschai, secretary general of the Government Pension Fund, which manages about $14 billion of assets, said in an interview today. “Most companies also reported very good earnings in the second quarter even as the country suffered a political crisis in the period.”

Banks led gains today on the outlook for the economy. Bangkok Bank Pcl, the biggest lender, climbed 1.5 percent to 139.5 baht, the most in two weeks, while Kasikornbank Pcl rose 2.9 percent to 106.5 baht, the highest in almost 14 years.

Second-Best Performer

The SET has gained 19 percent this year, the second-best performer among Asia’s 10 biggest markets, as surging exports limited the impact of the political turmoil. Clashes between troops and anti-government protesters in April and May claimed 89 lives in the nation’s worst political violence in 18 years.

Overseas investors bought a net 11 billion baht ($343 million) of Thai shares in the past eight trading sessions, the largest eight-day purchase in almost four months, according to data compiled by Bloomberg. Foreigners sold 58.7 billion baht of domestic stocks in May, a record monthly selloff.

“We are surprised by the rebound in exports and also the level in private investment and consumption as well,” Korn said in a speech in Bangkok late yesterday. “Even with the political crisis, we can expect 7 percent. If things hum along the way they are, perhaps 8 percent will be achievable.”

Thailand’s exports jumped 47.1 percent in June from a year earlier to a record $17.9 billion, the central bank said on July 30. Automakers Ford Motor Co., General Motors Co. and Mitsubishi Motors Corp. all announced plans to build factories in Thailand in the past month.

Sri Trang, KCE

Sri Trang, the nation’s largest publicly traded rubber producer, gained 2.8 percent to 22.2 baht after it said yesterday second-quarter profit jumped fourfold to 1.39 billion baht. KCE, the biggest publicly traded exporter of printed circuit board, climbed 3.6 percent to 10.1 baht, the highest close since March 2004. The company said this week net income in the quarter surged 33-fold to 161 million baht.

Thai government spokesman Panitan Wattanayagorn said this week that the government will allow peaceful protests that only last for a short period of time, signaling it may soon lift a state of emergency imposed in Bangkok about four months ago.

The emergency decree, in force in 10 of Thailand’s 76 provinces, gives authorities immunity and lets them close media outlets, freeze bank accounts and detain suspects for 30 days without charge. It also prohibits gatherings of five or more people.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

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Introduction: Value investing through smaller capitalized companies.

Posted by Aug 11, 2010 reprinted with permission

Introduction

Value investing in the concept of owning for medium term investment shares which appear undervalued, have high cash dividends while you await -and little or no financial leverage. It assumes the minimum risk maximum return way to new wealth creation.



Merrits to smaller company investing often leaves out the most compelling reasons. The case re-stated.

There are various news letters and magazines out there pointing out the merits around smaller cap and mid cap investing. Meaning, these pointing out the various investor advantages and risks associated, when considering investing in shares in smaller and medium sized listed companies. Especially so when investing into Emerging Asian markets.

What these articles never point out, is the huge market in-efficiency around these smaller cap stocks. Why are they so undervalued, as compared to larger companies? Why do these deliver above average dividend yields along with higher then market averages growth rates? Yet at the same time, many smaller cap companies here are true leaders in their respective important industries, this especially so in Thailand. So why such a p/e discount valuations attributed to smaller yet higher growth firms? Finally and not least, why have they been overall and for years, such good performance stars?

The real reason is because most all institutional investors must ignore these. They must do so (at their own peril), strictly and only because of company size! Market cap. is the magic word and all institutions have clear cut-offs, strictly based on market capitalization. Hence most of these smaller "jewels" are totally off the radar screens by the global and local institutions. This, along with the many day traders here in Thailand, has so over many years nurtured into an inefficiently priced stock market.

Where smaller growth stocks, with high dividends, can be owned at a fraction of the p/e ratio and this, as compared to larger cap stocks with their lower growth rates and dividend yields.

Only by also addressing these reasons, can one point-out why it makes sense for individuals to invest for the medium term in smaller cap's. Its the key/core concept which give rise to such superior returns. I am afraid the gnomes of larger cap's in news organization will not want to expose something which is not in their broader interest? And in fact points out to their own inherent weaknesses in getting to own the real growth companies in Asia. (This along with low financial leverage (debts), as compared to so many Western companies).

Hence an article, addressing these real reasons, would invariably be chopped up or smoothed over by large business news editors. I leave it up to readers to find me here and learn all about this very market-inefficiency to be explored here. Entrenched in market in-efficiencies which we the individual investors can explore.

As many are starting to know, its been a long road to investor success here and we can help you as well in getting going.

Best Regards,

www.thaistocks.com