|
EmergingPortfolio.com
Fund Research tracks
equity and bond fund flows, cross border capital flows, country
and sector allocations, and company holdings data from its
universe of 5,000 international, emerging markets and US funds
with more than $2.5 trillion in assets, including both offshore
and US-registered funds. The data is used by top emerging markets
and international analysts, strategists and portfolio managers.
The firm also provides investment management clients with qualitative
analysis on international markets.
For free product samples and additional information, click
here.
Contact: Dwight Ingalsbe email: ingalsbe@epfr.com
Will
Larger Listings Bring Excitement Back to Thai Stock Market?
by
Jonathan Hopfner
BANGKOK
(KWR) Thai Prime Minister Thaksin Shinawatra’s trademark
optimism was on full display on the first day of the Focus Thailand
2004 investment conference Sept. 20, with the leader telling an
audience of local and foreign fund managers and executives that
the country remained firmly on the growth track.
Despite internal difficulties such as and avian influenza, the persistent violence
in Thailand’s south, and global uncertainty over oil prices, Shinawatra
said, “'macro-figures for last year and this year have continued to be
highly positive” for Thailand.
The prime minister predicted growth of up to 7 percent this year, noting that
exports were rising and the nation’s foreign exchange reserves swelling,
prompting Standard & Poors to recently reward Thailand with a long-term
sovereign credit rating upgrade.
But Shinawatra was less sanguine about the fate of the Stock Exchange of Thailand
(SET), which despite the country’s impressive economic performance has
disappointed investors this year after emerging as Asia’s best-performing
market in 2003.
The market shed some 16 percent of its value in the first quarter of 2004 after
registering growth of 116 percent last year, hovering recently at around 650
points since breaking the 800-point level in January.
Shinawatra’s most recent reference to the decidedly lackluster market
was a pledge in his weekly address Sept. 18 to launch an investigation into
trading practices on the SET, soon after Ekkayuth Anchanabutr, a wealthy businessman
and one-time fugitive prone to launching impromptu attacks on the current government,
accused senior officials from the prime minister’s Thai Rak Thai party
of manipulating securities prices.
Unfortunately, transparency and credibility – or the perceived lack thereof
-- may not be the only factor causing some investors to overlook the SET. After
years of delays, the government has still failed to bring some of the country’s
most appealing corporations to market.
While there are ample protestations to the contrary – Shinawatra told
a Sept. 9 luncheon staged by the Thai-Japanese chamber of commerce that he
was “determined” to press ahead with the much-discussed privatization
of several state-owned enterprises in the “near future” – the
government’s privatization drive has stalled and further progress seems
a distant, and politically tricky, possibility.
Since the Airports Authority of Thailand made its debut on the SET in March
in a $439 million IPO that was 20 times oversubscribed, many local and foreign
investors have eagerly awaited the listing of other government monopolies,
such as the Electricity Generating Authority of Thailand (EGAT).
More than a few observers see state-owned firms as questionable buys. Many
are inefficient and chronically overstaffed, and it is difficult to predict
how they would fare in a more competitive market. But not even the most jaded
commentators question the fact that with their varied sources of revenue, official
connections, and commanding grip on much of the country’s infrastructure
and resources, such enterprises present a tempting investment opportunity.
And it is opportunities like this that the SET sorely needs. With the vast
majority of recent listings dominated by undersized manufacturers and producers,
industry players such as Marc Fuchs, country manager for Credit Suisse First
Boston Securities, have noted that many long-term investors still see the Thai
market as “quite small.”
Even the government seems to be admitting that in terms of generating interest
in the SET, bigger is better, with Minister of Finance Somkid Jatusripitak
telling the Focus Thailand 2004 conference Sept. 22 that many foreign investors
felt the relatively tiny size of most listed local companies limited investment
opportunities in the country.
Jatusripitak said the planned debut of sizeable holding company Thai Beverage
would mark a turning point for the SET, but the shortage of large corporations
coming to the market means the pressure to sell off chunks of state-owned firms
is mounting, and key not only to the SET’s future, but the government’s
credibility.
Since plans to partially privatize EGAT in May in what would have been the
largest initial public offering in Thailand’s history were scuttled by
widespread labor resistance, the government’s privatization drive has
produced little but promises. Provincial electricity and water monopolies are
slated for listing next year while 2006 will apparently see the market debuts
of the port and transport authorities.
And though regulators are unlikely to complete a legal framework for a newly
liberalized telecom market for months or even years – making it nearly
impossible to apply a market value to the state telecom providers – Minister
of Information and Communications Surapong Suebwonglee has insisted the TOT
and the Communications Authority of Thailand (CAT) will both be listed no later
than the second half 2005.
But the deadlines for share sales in many state-owned firms have been broken
many times in the past, and some analysts see the government’s position
now as weaker than it was when the privatization balloon was initially floated.
Mass protests by employees against the planned listing of EGAT have inspired
similar sentiments in their counterparts at other state-owned firms, who after
watching the government back away from the EGAT IPO are unlikely to allow even
minute portions of their companies to be sold off without a fight.
In addition, the recent victory of an opposition party candidate in the election
for Bangkok governor was a very visible indication that Shinawatra’s
Thai Rak Thai party may not enjoy the virtual monopoly on power it thought
it did. The party’s earlier predictions that it would take 400 out of
500 parliamentary seats in next January’s election have been quietly
dropped, though its rural support base remains strong.
A weak showing in the elections could stifle any efforts by the prime minister
and his team to forge ahead with the politically sensitive privatization initiative.
While Shinawatra’s critics are no doubt viewing the apparent rejection
of Thai Rak Thai in Bangkok as an indication that the upcoming polls will see
the ruling party become a shadow of its formal self, potential and current
investors in the SET will be hoping for a very different outcome.
|
![[ Clients ]](../../../clients/aha.gif){kind=link}