Mobius is bullish on Thai investments

Speaking at a seminar in Bangkok entitled “The Thai Economy: If It Can Recover”, Mr. Mobius said the dividend yield of Thai shares averaged 5.5 per cent, well above that of other emerging markets, which are about 4 per cent. To the same degree, the Baht remains 14-per-cent undervalued against the US dollar.

Mr. Mark Mobius is president of the Templeton Emerging Markets Fund, with a total size of US$20 billion (708 billion Baht), 10 per cent of which has been invested in Thai equities. The fund, managed by Mr. Mobius, had assets of $391.1 billion under management as of April 30, up from $371.6 billion in Marchy but down considerably from $591.1 billion in April 2008.

He further predicted a bright future for Thai stocks and said, “Thai stocks have a good chance to rise further because the new government has policies which are very positive toward businesses. The government is higher spending on infrastructure projects will increase public and private investments. Thailand is a very vibrant exporter of agricultural commodities and manufacturing products.”

“In addition to bank and energy stocks, Templeton prefers consumer related companies in Thailand as rising personal income increases sales at retailers and distributors,” said Mr. Mobius. He also said he likes shipping lines and electronics makers, declining to name any companies.

Currently, PTT and Siam Commercial Bank are among Thai shares accumulated by the fund, he said. The fund has quickly acquired Thai bank and energy stocks while avoiding the tourism sector, due to its low trading liquidity. His fund has bought into Thai banks because they have not felt any pinch from the US sub-prime complete collapse, and their financial position has remained strong since recovering from the Kingdom’s financial meltdown in 1997.

Despite political instability, Mr. Mobius said, “Thailand’s politics may appear quite chaotic and unstable. However, having been through many changes in government in Thailand, we find that it’s a good opportunity to buy inexpensive stocks whose prices have dropped on perceived political instability.”

Mr. Mobius said the recent political chaos in Thailand could happen anywhere 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 per cent this year to growth of 2-3 per cent next year.

Thailand is reserved as a top investment destination of the Templeton Emerging Markets Fund. Apart from shares in emerging markets, Mr. Mobius is firmly bullish on commodities. Commodity prices are increasing, but their peaks will not reach recent record highs. “The US economy will recover faster than many expect. Recessions don’t last long,” he said.

Given the US government’s massive cash-injection plan for addressing its economic problems, a future challenge will be halting such a huge money supply, he said