Thursday, January 24, 2008 

A View from New York

A foreign investment analyst has been to New York City to observe the backroom of the US financial markets. He has filed this report to Bangkok and the international clients. Here is his excerpts of his report: 

After nearly two weeks in the US, finishing off in NYC, I can say that the US situation looks bad (I know bad after living through three years of a 90% fall in the Thai stock market!!!!), it seems that sentiment will start to collapse, and lower interest rates will do little to bring that back.

After many meetings in the US discussing Thailand I can say it is hard to get investors interested, but I think you should be interested as I see a few turning points. After nearly three years as a bear I am turning more bullish.

First, Thailand has already been through 34 months of consensus earnings downgrades, this has brought forecasts closer to reality.

For the past few years Thailand has been the worst ranked PEG ratio markets in Asia, right now it is best. This is mainly due to more growth.

Second, I believe that the consumer will start to come back in 2008, and when they do that their power will be stronger than anticipated due to their greater access to credit.

Third, other markets will face earnings downgrades and de-ratings but Thailand is already near the bottom of this cycle so the fall should be less severe.

Fourth, I believe that we are making our way to a political compromise. I know it doesn't seem like it, but I always remind myself how good Thais are at coming up with last minute workarounds. We could be in the middle of that right now.

My point is that politics has been and still is bad, but isn't that in the price already? Yes, there could be a few more hits
to the market, but hopefully we can get through that.

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A political deal or no deal

The foreign analyst's view on #4 is interesting. Are we indeed making our way to a political compromise?

The impression that I have also got from my friends is that ousted prime minister Thaksin Shinawatra is busying cutting deals or trying to reach a political compromise. This would allow him to return home safely.

If a compromise has not been reached, the People Power Party would not have been allowed to form a coalition government. More importantly, Khunying Pojaman Shinawatra would not have dared to return home to face court cases without political and security clearances.

But I have not yet totally subscribed to this theory.

On second thought, hasn't Pojaman become a political captive? In a way, her situation is not so much different from that of Aung San Suu Kyi, the Nobel Prize laureate. Suu Kyi has been put under house arrest in Rangoon. Pojaman has surrendered her passport and can only move about in Thailand, a larger theatre of house arrest.

The funny thing about Thaksin's return is that his schedule keeps being delayed out. Chalerm Yoobamrung, who is poised to become interior minister, first revealed that Thaksin would return to Thailand in February 2008 -- or on St Valentine's Day to be precise.

Noppadol Pattama, Thaksin's lawyer, said Thaksin would return to Thailand in April so that he could celebrate the Songran Festival in Chiang Mai with this family and friends. Noppadol will be rewarded with the education portfolio.

Yesterday Khunying Pojaman asked the Criminal Court to delay the next hearing of the Rachadaphisek land deal for another three months so that she had time to prepare the document and rally witnesses to support her. She said her husband would return home in May and go through the hearing by that time.

If a political compromise has really been reached, why doesn't Thaksin return home after Samak Sundaravej, his nominee prime minister, has sworn in as Thailand's prime minister?

Why would he want to wait until May, which is almost four months from now?

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