Foreign investors have been amazingly patient
Foreign investors have put about US$5bn in the Thai market over the last three
years (while locals were selling all along), believing that Thailand is the
cheapest market in the region. Since the start of 2006 foreign investors put
US$2.9bn prior to Tuesday 19 December 2006 when they took out US$628m.
They have been very patient after facing one disappointment after another, for
example:
 mega projects that never materialized,
 the CTX bribery scandal,
 2005 mass resignation of the National Counter Corruption Commission,
 imposition of a state of emergency in Southern provinces,
 diesel subsidies,
 earnings downgrades for 26 months,
 street protests,
 EGAT listing cancellation,
 sale of SHIN shares to Temasek,
 parliament dissolution,
 an invalidated election,
 a coup,
 potential dissolution of the two leading political parties,
 and now attempts at exchange controls.
Thai long-term returns have been miserable
For those who consider themselves long-term investors looking at returns
(excluding dividends) over long periods of time may make more sense. Below
we show the SET Index performance since when we have data (1982). Sad to
say that if an investor put their money in this booming emerging market 24 years
ago they would have only had a 7.4% annualized geometric return. This
compares to a long-term average return the US market of 9-10%. And of course
the volatility of the SET Index is nearly double the US, so from a risk return trade
off, Thailand was not the place to be.
Figure 8. Long-term returns in Thailand look abysmal
SET Index % Average annual return (Geometric)
24-yr return 124 7.4
20-yr return 208 6.2
15-yr return 703 (0.1)
10-yr return 836 (1.9)
5-yr return 304 17.8
3-yr return 735 (2.2)
The table below shows the same calculation for growth in Thai nominal GDP.
What is interesting is that the 24-year return is higher at 9.5% and much more
stable over different time periods.
Figure 9. But long-term growth in GDP has been relatively strong across time
Thai Nominal GDP (Btbn) Avg annual return (Geometric)
24-yr return 842 9.5
20-yr return 1,133 9.8
15-yr return 2,507 7.5
10-yr return 4,611 4.9
5-yr return 5,134 7.6
3-yr return 5,917 7.8
The chart below highlights the situation graphically. What it shows is of course a
much more stable GDP growth rate over a long period of time. This is to be
expected and is similar to most economies. The interesting point is that the
stock market return was higher only over the last five year period, otherwise it
was always beaten by the overall economy.
This tells us that an investor, if they had the choice, would have been much
better off investing in the broader economy than in the narrow stock market. Of
course most foreign fund managers do not have this choice, but Thai
businessmen and investors do. Hence wealth has been steadily created in
Thailand, but it just hasnt come through to the stock market (minority investors
can invest). Not a pretty long-term picture.
But that patience is likely wearing thin
For the past three years the Thai market is now DOWN 12% (only down 2% if we
use 20 Dec 2006 closing price) vs. Asia ex-Japan index, which is UP 79% over
that period. How much patience will foreign investors display when Thailand
accounts for such a small part of their investable universe? We think it is
running out.
จากคุณ :
David 
- [
25 ธ.ค. 49 10:46:39
]
Foreign investors have been amazingly patient
