Posted June 7, 2014 5:14 pm by with 0 comments

Thailand’s stock market has largely risen since the military coup on the hope the new military government can bring some much needed political stability to the country. Nevertheless, FE Trustnet recently asked whether the political coup in Thailand could spell trouble for Asian equity funds – especially the following funds that have the most exposure to Thailand:

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Source: FE Analytics

Jason Pidcock, manager of the Newton Asian Income Fund, told FE Trustnet that he thinks the Thai stock market can continue to rally, in spite of political difficulties.He commented:

“I believe there is more to go and we’re at the beginning of a powerful bull market. It looks cheap, yields are good, international investors are mostly underweight or shunning the market entirely and I believe this year’s very low economic growth is priced in.”

“2015 should see a pick-up in growth – perhaps surprisingly so. The politics of the country are messy but it looks like we’re beyond the halfway stage in this process. I expect the military-led government to act quickly in giving the go-ahead on a number of infrastructure projects and calming business and consumer sentiment.”

“Before long, Thailand should regain lost tourist earnings and is well placed to capture a good proportion of Chinese tourists. Domestic investors seem to sense the worst has passed.”

Meanwhile, Matthews Asia’s Robert Harvey (the Matthews Asia Small Companies Fund has position in Thailand) commented that the coup didn’t come as a surprise to most investors in the region – a reason the stock market has not had a violent reaction.

Over the short-term, he expects to see Thai valuations decline, primarily because of a drop in tourism revenue which accounts for 10% of the country’s GDP. However, he plans to stick with investments in Thailand because he thinks underlying fundamentals will win out over the medium term.

To read the whole article, Is Thailand a major threat to Asian equity funds?, go to the website of FE Trustnet.

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