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Baht/$ 34.05/10 (Bid/Ask)
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GOLD |
13,350
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MARKETS
CHIRATAS NIVATPUMIN & NUNTAWUN POLKUAMDEE
Market naysayers are mistaken, says Mr Ekamol of Seamico. |
Market prognostications of doom and gloom are overly pessimistic, considering the country's solid economic and corporate fundamentals, says Ekamol Kiriwat, the chairman of Seamico Securities.
''How is the economy? Look at our balance sheet. Things are much better than a decade ago. Foreign debt has dropped, exports have risen and per-capita income has grown,'' said Mr Ekamol.
''Macroeconomics is not the problem. We've weathered inflation quite well actually. You would normally expect the current account to swing into a deficit with the rise in oil prices, but our external accounts are quite strong, thanks to exports and high food prices. Our problems are more on a micro level.''
Mr Ekamol, a former secretary-general of the Securities and Exchange Commission and Democrat MP, said economic growth over the past several years had been quite stable.
But income disparity and distribution were a different story, as the fruits of growth were not evenly distributed across all segments of society.
''Inflation destroys wealth, and those dependent on fixed incomes, whether it be retirees or salaried workers, are worse off than before,'' Mr Ekamol said.
''On the other hand, high farm prices have definitely benefited farmers. In the provinces, it's clear that many are better off.''
Most economists expect economic growth this year to reach at least 5%, which would make Thailand one of the few countries in the world to post stronger growth this year than in 2007.
But consumer and market sentiments remain weak, despite the fact that exports are running at an all-time high. Political uncertainties, rising inflation and global market volatility are among the factors that have led consumers to delay new purchases and companies to stall investment plans.
The Stock Exchange of Thailand index, though, is off about 21% for the year to date, largely due to heavy foreign selling since the start of the year.
Mr Ekamol said the behaviour of foreign investors had changed considerably over the past several years.
Sophisticated hedge funds now used complicated trading strategies that looked not only at sectoral trends or price-to-earnings valuations, but included factors such as exchange-rate trends and interest-rate differentials across multiple markets, he said.
''A fund might see the baht on a downward trend, and will stay out of the market. Foreign funds aren't looking at just share prices, but at total returns,'' Mr Ekamol said.
A genuine upward move in the market will depend on Thai investors, not foreigners, he said. But despite numerous education and market campaigns to encourage Thais to diversify their holdings to the stock market, less than 1% of the population directly invests in the exchange.Mr Ekamol said that wealth management would become an increasingly important activity for brokers over the next several years, particularly as new Deposit Protection Agency phases out state coverage over bank deposits over the next several years.
''But deregulation for the brokerage industry means the era of fat profits is gone,'' Mr Ekamol said.
''Entry and exit into the market have become much easier. But frankly, liberalisation is not as scary as the changes in investor behaviour,'' he said.
With commission fees set to decline over the next several years, brokers such as Seamico is looking to expand to other fields, including proprietary trading, venture capital and the bond and derivatives markets to help lift revenues and expand its service offerings.
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