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MARKET OVERVIEW Thaksin leaves a legacy Listed companies benefit from populist policies By KRISSANA PARNSOONTHORN Many listed companies’ performancesandreturnsoninvestment are largely tied to major government policies, adopted to drive the Thai economy over the past few years. TheThai economyhas enjoyed robust growth during the past five years, thanks to the implementation of ‘‘dual-track’’ policies by the Thai Rak Thai-led government. The economy came out of a four-year slump with 2.2% growth in 2001, rising to7%in2003, before declining to 6.2% and 4.5% in 2004 and 2005.
Of the market’s 27 sectors, health care services outperformed the others with a 75%five-year return, followed byproperty development with51.2%and construction materials with 50.2%. The worst-performing sectors were entertainment and recreation, which yielded a five-year TSR of only 7.5%, followed by electronic components, with 8.1% and professional services with 11.9%. Analysts agreed that the most important factor for health care’s five-year TSR was the universal 30-baht health-care programme. Supavud Saicheua, the managing director of Phatra Securities, said the 30- baht scheme was a good policy in general, which had boosted the entire sector. However, its implementation has been fraught with difficulties over the budget and private hospitals’ reluctance to take part. Mr Supavud added: ‘‘Thailand has many world-class hospitals and they are also benefiting from medical tourism. A lot of patients from the Middle East, Singapore and even Europe come here for treatment.’’ The property development sector — thesecond best performer—also received a big boost from the Thaksin Shinawatra administration . To bring the once-hard-hit sector out of a slump, the government floated a number of stimulus measures, including tax incentives, greater access to mortgages for homebuyers and theBaanUa-arthorn low-cost housing project. Record-low interest rates also spurred demand and the sector had begun to make a modest recovery by 2001. Dr Supavud said the government wanted to multiply the performance of the property sector in other industries. ‘‘The policy did work as sales in property-related sectorssuchas cement, steel and other construction materials, as well as in furniture and electrical appliances, rose as well,’’ he added. In 2005, the construction materials sectorwas the third best performer overall in terms of average five-year TSR. A government policy to increase the value of land owned by the Treasury across the country, also aided the recovery. The Treasury Department has gradually adjusted rents and now puts its land to better use. The departmental so launcheda massive project to build a civil service centre on ChaengWatthana Roadand mobilised funds to finance the project through the sale of asset-backed securities. The fifth best-performing sector, automotives, has benefited from the government’s ‘‘Detroit of Asia’’ drive, said Korawut Leenabanchong, chief investment officer of UOB Asset Management. Big-name carmakers including General Motors, Ford Motor, Toyota, Isuzu and Mitsubishi have already established or relocated substantial production bases to Thailand. ‘‘Together with rising car exports, local vehicle sales have risen strongly after the economic crisis. This means autoparts businesses such as chassis, car seats, tyres, and so on are getting better too,’’ he said. Sectors to watch were food and beverages, and agribusiness, Mr Korawut added. They are growing as commodity prices rise for produce such as rubber, palm and rice, while local consumption is also on the rise. ‘‘Even if they were affected by bird flu, they could come back and grow,’’ he said. Another sector popular with investors for many years is energy. PTT alone represents 12% of the SET’s total market capitalisation. Increasing global oil prices have supported the sector’sgrowthoverall, and energy stocks have historically paid high dividends. PTT share prices rose from an IPO price of 35 baht each in 2001 to above 200 baht within two years. In contrast, the poormarket performers had faced slow downs in export markets, like the US. The electronic components sector, in particular, was in a global downturn. Moreover, competition has been heating up from China in terms of costs. An analyst at Capital Nomura Securities said the banking sector’s performance was linked to economic expansion,adding that lending growth had been minimal over the past few years due to limited credit demand. ‘‘We have just come out of the crisis and companies needed time to adjust themselves. Some of them have just expandedtheir capacities after their productio nutilisations became almostfull,’’ he said. ‘‘However, the prospect in thecoming years is brighter.’’
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