Selectively BUY

Hi,

Written on Aug 28, 2013

I know you might get bored with the bearish stuffs espoused day in day out. Recalling first time I told you to aggressively sell was when the SET at high of 1648 on May 22 (in my “Due for a Pullback” note). Second time was over the first half of this month when the index was at high of 1460 and said clearly that the SET could reach 12xx levels before the Fed’s meeting in Sept. Now, it comes, with the Thai bourses down more than 20% from this year’s high. Therefore, I urge you to be a stock buyer rather than a seller at the moment. Surprise!? Yes bottom hasn’t been found yet and the SET could sink lower to 1200-1230 levels, but I truly love this environment, in the wake of fear and horror. It’s the time to selectively buy stocks not to panic sell follow the herd. No hurry. Gently buy.

For futures, for those who have been the Short Gunners since the onset of this month, I suggest gradually closing partial positions to the downside of the SET, maybe till the range of 1230-1260. Importantly, Energy + Petro sectors here account for ¼ of the Thai market. So what? As crude oil this morning surged 3% to settle at USD109.66 a barrel on concern the US will take military action against Syria, marked the highest close for a most-active contract since Feb 24, 2012, it might help sustain the market to some extent.

BOT -- Capital outflows are manageable  

Given the country’s large international reserves (USD172 billion, 2.9 times of the countries short-term debt), Thailand will have enough liquidity to provide foreign investors when they need to move their capital out of the country, unlike 1997, when short-term foreign debt was USD47.7 billion while the country’s foreign reserves totaled USD38.7 billion. I think Thailand’s economic fundamentals were still sound despite a current-account deficit in the first half of the year. “The deficit was due mainly to gold imports. If those were excluded, the current account would have remained in a surplus,” BOT deputy governor Pongpen added.