Up-Dated > Bear 2014 Thai analysts, proves Mark Mobius & Morgan Stanley bull, wrong

When the emerging market guru, Mark Mobius speak, people usually listen. When Morgan Stanley, with the globe biggest investment fund under management speaks, people usually listen. And when it comes to the Thai stock market, both, Mark Mobius and Morgan Stanley are bullish, making statements that basically, says, the Thai coup gives hope for a stabilized Thailand after months and years of political turbulence.

However, to many social-responsible investors, putting money into Thailand under a “Very Repressive” dictatorship rule, is not acceptable.  And investors such as Mark Mobius and Morgan Stanley, is not helping Thailand’s development, but is hurting Thailand’s long-term prospect.

In fact, many investor have pointed out, precisely that the Thai junta head, Prayuth, using how the Thai stock market went up, after the coup, to justify the coup.

“Look at the Thai stock market, it is happy with the coup,” local press reports of Prayuth’s words, days after Mark Mobius and Morgan Stanley, published their “Bullish” sentiment on the Thai stock market, that verged very closely, on “Approval” of Prayuth’s coup.

But how much interest have foreigners actually shown in the Thai stock market, with the likes of Mark Mobius and Morgan Stanley backing the Thai stock market.

Well, many investors are not convinced. Those that are not convinced in the Thai stock market, are also many globally well know names, that points to Thailand’s medium and long-term fundamental socio-demographic-politics divide, that the coup will likely not solve, and thus, a peaceful protest movement and a non-peaceful resistance movement, occurring, is a threat, that can occur any time, that the coup will not be able to solve. Un-rest, many analyst say, is right around the corner, ready to pop up, because the deep rooted fundamental problems, are there.

(Up-Dated) The Thai stock market surged some 5% to 10% since those bullish Mobius and Morgan Stanley, but many investors were perplexed, as most of the buying are foreigners, as local retail & local institution, sold into the foreign buying wave. Currently, many investors are saying the buying opportunity, from a cheap Thai stock, is moderating off, leaving Thai stock some-what expensive. Economic wise, tourism, industrial production and retail sales are still being hit by Thailand’s deep-rooted problems, even after the coup, and many big names foreign investors, continues to be bearish on Thailand.

(Uo-Dated) The Thai stock market is heading to the end of the year, on a cautious note so far, with the year, making moderate gain, from a cheap base, but hovering around 1,600 index level for months and months going no where. Earlier, the bullish sentiment from Mark Mobius & Morgan Stanley, was expected to propell Thailand’s stock market into the 1,700 index level for the year, to even CNBC, the market cable news, asked, when Thailand’s index was around 1,600, months ago, was it time to jump into the Thai stock market, and ride the wave up-ward, if one had missed the wave to the 1,600 index level. Of note, is that Thailand’s 2014 GDP, contines to tank, and many economist, are predicting an economic recovery, from the current GDP growth of about 1%, in the middle of 2015.

(Up-Dated) Barron Emerging Market reports: (source)

By Shuli Ren

“As expected, the Bank of Thailand kept its benchmark rate on hold at 2% today, amid signs that the worst phase of the political crisis in Thailand is over. Thailand’s military launched a coup on May 22. The Bank of Thailand reduced its growth forecast for 2014, from March’s 2.7% to 1.5%, but expects Thailand to turn for the better in the second half this year and grow above 5% next. A better economy reduces the pressure on the bank to further cut interest rates this year, according to Capital Economics analyst Krystal Tan. “Fiscal spending already looks to be getting back on track,… [and] the army takeover has unlocked fiscal spending and eased pressure on the BoT to further loosen monetary policy to support the economy.” added Tan. Barclays second the view, saying “the current rate cut cycle is over.”

“The “above 5%” 2015 growth forecast is perhaps too immature, countered Nomura Securities, which re-iterated their more bearish 2014 and 2015 growth forecasts of 1.1% and 3.3%: We think the MPC is banking too much on the political outlook which, as demonstrated over the past several months, is difficult to predict, and in our view, is still quite precarious. We remain sceptical that the short-term impact of the junta‟s measures will be limited, which seems to be consistent with the BOT‟s new 2014 growth forecast.”

But most stock market participants know, investors can do anything, but the last thing an experience hand with a stock market do, is “Argue with the Market.”

So what is the Thai stock market saying?

Welll, about after the coup, the Thai stock market have shoot up, from about 1650 to 1750 index level. That is about 100 points move in about a month and represents some 5% to 6% gain. And what did foreign investors do? Well, during this month, on hefty volume, foreigners were a “Net Buy” of the Thai stock market by about US$100 million.

So basically, Mark Mobius and Morgan Stanley words, helped drive the Thai stock market up 100 points with a foreigner “Net Buy” of about US$100 million.

Looking at the Thai stock market action, the best that can be said about the Thai stock market is, “The market, to foreign investors, is mostly on a trading hold pattern, with a little bit of nibbling buy.”

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