asia-invest.info

Today Bank of Thailand raised its key interest rate by 0.25% to 3.50%. This decision was already expected by economists after inflation reached 8.9% last month.

After raising fuel prices consumer confidence dropped in Thailand and Finance Minister Surapong Suebwonglee already acknowledged that Thailand may not reach its GDP growth target of 6% since higher oil and food prices are a major threat to growth. In the first quarter of 2008 the economy still grew at a rate of 6%.

The stock market continued to fall among concerns of higher interest rates and more protests against Prime Minister Samak Sundaravej government.

In May 2008 Mark Mobius, Templeton Asset Management Ltd.’s top manager for emerging market equities, recommended to invest into Thailands stock market. On May 26th, an article on Bloomberg.com titled Mobius Expects Thai Stocks to Extend Gains on Tax Cuts, Exports painted a bright picture of the Thai stock market. On the same day the SET index closed at 856,80 points. Today, less than one month later, the Thai stock market dropped again, leaving the SET index at 742,46 another loss of 23.28 points compared to the day before. A loss of more than 13% in less than one month does not really encourage investors!

While today Finance Minister Surapong Suebwonglee speaks at a seminar on Thai stock market at the Grand Hyatt Erawan Hotel in Bangkok, investors might have to ask themselves several questions.

How will Bank of Thailand’s Monetary Policy Committee decide, when it meet to discuss interest rates on July 16th and August 27th? How will any decision influence GDP growth and inflation? A year on year GDP growth of 6% was still in favour of stock investors while the inflation rate of 7.6% in May 2008 already raised fears about the future.

What will happen when anti-government marches planned for tomorrow will surround Prime Minister Samak Sundaravej’s office and do not leave until he resigns from office? Will Thailand’s police be able to handle the protesters or will protest turn violent and might the army take action again?

In 2006 Prime Minister Thaksin Shinawatra was ousted in a military coup and on May 29st, 2008 The Economist reported that protest and coup rumours return. A wellknown investor recommend once to buy stocks, when the streets are full of blood. Hopefully the street protests will not turn violent, but it seems that brave investors should start to buy Thai stocks, mutual funds or simple index certificates.

Those who invested on January 10th, 2007 into SET certificates at 622.27 could earn more than 45% until October 31st, 2007, when the SET index closed at 907.28 points. As a matter of fact the situation in not clear at all. But if the market falls below 700 points, it is time to start with investments and to accumulate even if the markets continues to drop!

Since the beginning of 2008 most of the Asian governments had to cut their fuel subsidies because skyrocketing crude oil prices threatened their budget balance.  As a result inflation rates increased to their highest level in may 2008. The central banks of India, Indonesia and the Philippines already raised their key interest rates this June and Malaysia and Thailand are expected to follow at their next central bank meetings.

At the moment the GDP is still growing at a respectable level but recent data already shows a remarkable decline in consumer confidence. With high inflation and further possible rate increases investors will have to find better places to invest their money than in the stock market.

^a) since 31.12.2007

¹⁾ On June 5th, 2008 Bank Indonesia raised its key interest rate by 25 basis points to 8.5%.

²⁾ On June 4th, 2008 the Reserve Bank of India raised its key interest rate by 25 basis points to 8%.

³⁾ On May 26th 2008 Bank Negara Malaysia kept its key interest rate unchanged (no change since April 2006)

⁴⁾ On June 5th, 2008 Bangko Sentral ng Pilipinas raised its key interest rate by 25 basis points to 5.25%.

⁵⁾ On May 21st, 2008 Bank of Thailand kept its interest rate unchanged (no change since August 2007)

Today the University of the Thai Chamber of Commerce announced the Thai consumer confidence index for May 2008.

The consumer confidence index dropped to 78.8 from 79.9 in April 2008. This is the second consecutive drop of the index. Index values are between 0 and 200 with a result of 100 neutral, above 100 positive and a reading below 100 is negative.

Global record oil prices and the recent anti-government protests had a negative impact on consumer confidence after the index increased every month from 75.5 in October 2007 to 80.7 in March 2008 

On June 21st and 22nd, 2008 the SMART Investment & International Property Expo will take place at the Hong Kong Convention & Exhibition Centre, Hongkong. It is one of the biggest and longest established expo of its kind and showcases attractive investment opportunities from the real estate and financial sectors.

Private investors may focus on the following presentations:

Phuket - Post Election Opportunities: What investors should look for in a property related investment
Graham Bibby, Chairman Richmond Group

The Philippines - the hottest market in South-East Asia
Rick Santos, Managing Director CB Richard Ellis

Updates legal matters for property investment in Thailand (Top 10 Tips)
Desmond Hughes, Partner Belmont Limcharoen

Malaysia My Second Home (MM2H)
Lorraine Kijvanit, Country Manager Promotevest (MM2H) Sdn Bhd

Prospects of investing in the luxury condominium market in Malaysia
Chee Meng Tang, CEO Henry Butcher Marketing Sdn Bhd

China Property Market Overview 2008
Sherman Lai, Deputy Chairman Centaline

You can get a free pass to the expo and seminars.

In Bangkok the Government announced that the gross domestic product (GDP) increased by 6% to Baht 2,297.8 billion in the first quarter of 2008 compared to the first quarter of 2007. The growth was mainly driven by domestic demand. In the fourth quarter of 2007 the economy expanded by 5.6% in Thailand.

Prime Minister Samak Sundaravej promised to spur economic growth by spending on infrastructure investment. Consumer confidence climbed after the new government was formed this February and minimum rate wage was raised.

Trade balance at current market prices registered a surplus of Baht 95.1 billion.

On August 25th, 2008 the Office of the National Economic and Social Development Board will release the data for GDP in the second quarter of 2008.