February 2010
Market review
The SET Index fell in line with most regional markets in January, owing to waning investor risk appetite, although it outperformed the broader MSCI Asia ex-Japan Index. December data showed robust and broad-based gains from both domestic and external demand: industrial production posted record growth, while the spike in exports and imports reflected a rebound in economic activity; consumer confidence also improved for the second straight month.
But rising food and commodity prices pushed inflation higher. The Bank of Thailand kept the benchmark interest rate unchanged at 1.25%, in line with expectations. Elsewhere, Moody’s upgraded the credit outlook for the nation’s banking system to stable from negative.
Portfolio Review
There were no major changes to the portfolio in January.
Corporate results were largely solid: Siam Cement’s full-year earnings rebounded on the back of a recovery in volumes and margins; Thai Stanley’s fiscal third-quarter profits were boosted by improved operating performance, while Phatra Securities’ headline full-year profits doubled from a low base in 2008. Kasikornbank and Siam Commercial Bank posted better-thanexpected full-year operating results, buoyed by robust fee income, while loans growth, fees and investment gains underpinned Tisco Financial Group’s full-year earnings. Meanwhile, PT Exploration and Production’s profits fell by less than expected, despite lower product prices and expenses related to the Montara oil spill. In corporate news, Central Pattana is spending 2.1 billion baht to renovate its Ladprao mall.
Outlook
Policymakers have raised the nation’s core inflation forecast on expectations of higher
commodity prices and the central bank’s indication that it may rein in monetary stimulus measures this year, in view of the recovery. But the economy remains vulnerable to internal and external risk factors, such as volatile fuel prices, a strengthening baht, simmering domestic politics and the global trade environment. Nevertheless, our holdings have robust balance sheets, which should help them to stay resilient amid an uncertain economic backdrop.
Source: Monthly Factsheet Aberdeen Asset Managers Limited