Manulife Asset Management, the leading Canadian asset management firm, is neutral on the Thai stock market while underweighting Asean bourses, noting that currency is a risk for the region due to capital outflows.
Asian and Asean bourses including the Thai stock market have risen for more than two years, and now regional currencies have begun to depreciate. This has prompted foreign funds to shift to other markets such as the US, where the economy has started to recover, according to Manulife Asset Management. PATIPAT JANTHONG
Linda Csellak, head of Asia-Pacific equities at Manulife Asset Management (Asia), said Asean and other Asian bourses including the Thai stock market have risen for more than two years, and now regional currencies have begun to depreciate. This has prompted foreign funds to shift to other markets such as the US, where the economy has started to recover.
The Hong Kong economy has good prospects, as interest rates are low and should remain so for the foreseeable future, with increasing tourist arrivals and unemployment still manageable at 3.3%, she said, adding that growth of Hong Kong holdings is mainly driven by China.
Ms Csellak is also upbeat on South Korea, believing its consumer and technology sectors still hold positive structural potential. The new government there, led by President Park Geun-hye, has indicated a more positive stance towards small and medium-sized enterprises will be part of her attempts to spur the country's economic growth.
East Asia and Australia are now deemed overweight by the firm.
She said the Thai market makes up only 5% of the MGF-Asian Small Cap Equity Fund, investing in five Thai stocks.
However, Thai shares remain interesting as listed companies have realised profit growth, said Ms Csellak.
"Now Asean markets are seeing heavy selling, as they have been overweight for two years, so currencies weaken as fund outflows continue," she said.
Ms Csellak said MGF-Asian Small Cap Equity Fund had a return of 17% from January-May, while the MSCI Small Cap ex-Japan benchmark was 13.5%.
Thai investors should consider asset allocations to these high-growth areas for profits.
Manulife (Thailand) has already opened a feeder fund to invest in MGF-Asian Small Cap Equity Fund as a master fund.