EQUITIES
Thai stocks remain volatile
- By: NUNTAWUN POLKUAMDEE
- Published: 15/01/2009 at 12:00 AM
- Newspaper section: Business
Thai stocks are expected to remain volatile for the next one to two years, as uncertainties remain regarding the global economic outlook and domestic politics, according to local brokers.
Montree Sornpaisarn, chief executive of Kim Eng Securities, said investors should remain cautious about the market for the near future.
"But now is the right time to begin accumulating stocks, as prices have fallen sharply in recent months. Although no one can say yet whether further declines are possible, or whether the market has already passed its lowest point," he said.
The Stock Exchange of Thailand index closed yesterday at 439.51 points, up 5.7, in trade worth 10.22 billion baht. The index, which lost nearly half its value last year, fell to a low of nearly 380 points in late October.
Mr Montree, speaking yesterday at a conference on risk management, said investors considering investment risk should first consider how company growth and performance will be affected by the global crisis.
Sectors such as tourism and exports have clearly been affected by the crisis, and will likely underperform other industries for the near future.
Financial risk was a second factor - investors should look at debt leverage ratios, cash flow and other key ratios for signs that a company may be gasping.
Mr Montree noted that during the 1997 crisis, debt to equity ratios stood at five times, compared with 1.5:1 now.
In contrast, Lehman Brothers, the investment bank that collapsed last September, had a debt-to-equity level as high as 30 times.
The third major risk investors should consider deals with management and corporate governance, followed by trading liquidity as investors should consider whether they can sell their securities when or if necessary.
Market timing was another risk for investors, Mr Montree said. For investors seeking to avoid the risk of buying at the peak of a cycle or selling at the lows, cost averaging and investing on a regular basis was the best strategy.
Mr Montree said while political volatility had eased considerably, it remained unknown whether the stimulus package would revive consumption and demand.
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