Let the good time's ride. But start accumulating high yield solid funds with profits taken.

PaulRen's picture

Stay on track but watch for a potential fall out in US or China stocks as these are nearing a bubble.

A good place to park some funds with profits taken are the increasingly prolific Thai property and infrastructure funds.  Today the SET is listing THIF (10 Baht per unit) which is reportedly the highest market cap. property fund to date*. See more on all this below, but first a review on the current global macro concern.

* For THIF, see www.tivarati.com/stock/153025/

The SET looks bullish but there are some clouds on the horizon. Namely how will emerging markets like Thailand react if there is a big sell off due to temporary retrenched liquidity which some economist are predicting in the 3 Q.

Regarding the US.  I would agree that until end of this year its likely the biggest destabilizing global risk we now have this year?  US markets have rocketed-up, mostly on liquidity so and could easily correct 1000 to 2000 points at some point but then where is the big money going to go in a world of such a long period around low interest/inflation levels?  We here must ask would this destabilize the SET? Would such a short term jolt remove or enhance emerging market exposure by western funds? Thailand is back on the growth track with meaningful reforms and so remains bullish.  Short of a huge global destabilizer I see the SET higher into early 2015 and am willing to risk a short term set back induced by a likely US/China jolt.

 Most shrewd investors  and institutions are already  aware of the more  prominent economist  explained US liquidity  crunch looming into the 3  Q. The the likelihood post  some paint to announce a  continuation of Q.easing.    So one has to assume this  has been factored in somewhat...i.e. its not "an unknown, unknown".  

"High liquidity driven", goes along with super low interest rates we have -and this for years already...and then likely to continue into next year!  Most market pro's claim "all markets are in the end liquidity driven".  Big cap's have higher p/e's even while lower growth rates, 'cause they are liquidity driven.  Fact is,  US companies do have lots of cash, are profitable, more productive, better margins and the "new normal" of lower growth rates is only one part of the equation. The other part is not least: persistently low interest rates and inflation (the 2 I’s).

The 2 I’s, as stated here often, commands higher p/e ratio's! That is what we are seeing now.  This is not just a fleeting liquidity momentum or gogo sentiment argument, it can be proven in finance 101.  P/e's are presently high in the US and elswhere, but when is the last time interest % rates where so low and the world's rich so rich, with much more wealth to invest?  Cash on hand pays near nothing. Was it ever like this before?  

Traveling in Australia during May 2014 I saw how again and again expensive real estate there is and yet the building quality often lower then in Thailand.  Gold is sleeping, oil is tame...commodities's are stale...real estate all over is expensive and over chased, all due to the 2 lows.  (Marc Faber?, whom predicted year after year for long how inflation must be around the corner).  US people money do not invest much abroad -and now even less with enhancing FACTA.  So USA is tilted inwards and likely to remain so.

One way for some of us to express concern on this, is to take some profits here and there over the next many weeks/months…selling on any further SET rallies.   With cash accumulate good core property/infrastructure funds, with ad declare/objective medium term investors into 2015.  As the US Fed once again announced a Qeasing plan due to continued US economic stagnation, interest rate pressure will once again be tamed and so the well chose property/infra structure etc. funds could do well along with high yield and less market volatility during any US induced set back.  In time I see these funds an excellent place to park cash (taken profits from Thai stocks) to hold well into next year.  Many pay quarterly dividends and I will soon review them here more.

Still the core investor theme remains focused into select Thai stocks as the market is and remains looking better.

Earnings wise for companies like DEMCO, EAC and WHA and others. (don't want to remake the laundry list here as its shown in the model).  Each member has to decide for him/herself how much to park capital in the short list of 6-7% yielding high quality property funds. See below.

Such high yielding funds are sold in units and many pay Q dividends. They represent a diversification of stable high income properties’, warehouse, factories, BTS, LOTUS and or in the future energy producing etc..holdings. They are secure in that their dividend is high and very stable.  Their unit prices will fluctuate in case of a sharp market downturn  but this is likely is less then shares and they bounce quickly back due to their invisible hand of high dividend paying.   

At some point interest rates will start to rise again and so these funds could see some slight drag on them as they must compete with other funds which may well pay higher yields. But this is some time off and my take is for now it’s a great place to accumulate buy with profits taken on a more buoyant SET.

Best Regards,



Pictures here are from my trip to Australia.  Just below is one I was taught how to do in the digital photo course I took in Byron Bay.  My camera is a Fuji Film X-M1 which I think is the best around for the price. 

Here below is an interesting discussion with a member which seems to know allot about the high income less volatile property funds. The brokers do very little analysis on these instead want their clients to trade, not create and then preserve new wealth.  I bring to all your attention because if the SET zig zags higher we should consider these alternatives then just holding lowest yielding cash.  I will be visiting WHA by month end and will ask them more about their attractive WHAPF 7% infrastructure/logistics fund and how that will pair with the new REIT fund they plan to launch by year end.

It is my understanding that just about all property/infrastructure funds can be bought and their dividend received by foreign individual investors. You do not have to buy NVDR's with such funds. What you own is units in the funds, not shares.

Some of these funds pay their dividend quarterly, most will pay directly via e-dividend to your Thai Bank account, just like all stocks.  But some may not -and so send you the dividend check per registered mail as they are not set up for e-dividend. Its up to each member to check with their marketing officer about this and feel free to comment here. I will have more to say after some meetings next week. 

"Hello Paul,

"Thanks for your reply. You do an good job and I like your effort to advice the Investors to the World of Value Investing what is in my view the only Way to create Wealth in the Long Run.

"As an Investor in the Thai Stock market for more than 15 Years and an Resident here as well( I move to Thailand from Germany when I become 40 Years , mostly for Tax Reasons as I was tired to share half of my Profits ) I know how the average Investor see the Thai market mostly as an legal Casino.

"I stay here in Pattaya with an local Broker from 10am to 5pm  (KTZMICO) follow the Markets Daily, see how most of the Traders loose their Money with Penny Stocks  and have some Clients on an Private base who follow my Advise mostly for an Income Investing.

"The PF Fund Sector is very tough as there some Diamonds with huge and save Dividends together with real Trash Funds that is sold to the uneducated Investors decorated with an shiny Yield that will suspended or decreased  an couple of Quarters later  after the Guarantee from the Property Company who sold the Building or the Leasehold Right at an overpriced Value via the IPO.

"An Prime Example is for instance the lately Listed CPTGf Fund who Invested only in an leasehold of CPTower where the main Tenants(80%) are also from the CP Group after 25 year the building goes freshly Renovated back to the CP Group and the chance for an Rent Increase is with both parties act most likely against the Fund Owners very low. So at the End the Value of the Right is Zero..

"Also Goldpf or TGrowth, M II, or SiRIP( where Sansiri, the Owner of the Building rent shortly before the IPO40% of the Space for 2 Years. So the older and at that Time half empty Building look attractive for the IPO)

"On the Other Hand there's Great Investments like TFUND, KPNPF with an nice Dividend. MONTRI and BKKCP are also holding Freehold Assets in good Locations and they  are an nice Income Source for an Diversified Portfolio. 

TLGF is an bit Pricey at the Moment and it makes sense to put it on the Watchlist if the Price come down closer to the NAV in an Correction. CPNRF is an good Leasehold Fund but way Overpriced as it is the only one that get an coverage from some Brokers.

"I make for every PF Fund my own Research and visit the Buildings and the Places as well for get an Impression. The IPO Prospectus also show most of Times which Fund "have a skeleton in the closet". 

"Income Investors I think that BTSGIF and TFUND, MONTRI, KPNPF and of course WHAPF (with good Assets in an upcoming Location) are relative safe bets that come with an quarterly or Semi annual Dividend. For the REITS we must see how the Legislation will finally come out , but I am afraid that the allowed Gearing level (rumor around 50% +) is in favor  only for the  ever Dominant Listed  Banks and Property Developers at  the SET and not so for the Investors.

"I think there's an good chance that the whole Sector will become more attractive, as the trading volume in the whole sector improves. And to be honest, the volume surge significant over the last Years, there was a Time if I was" nearly Alone in the Sector" and you can bring the PF Fund Index down with an forced selling of an view Thousand units.

"We must to wait and see. Until then there is an hidden Gem  as an PF /Trust on the Singapore Exchange, Religare Healthcare(RF1U) with an yield from over 9% and an low Gearing of 8% who invest in an very good Portfolio of Hospitals in India, an pure Growth Market. For me an great Long Term invest. Take an look to their Presentation on the Website. Maybe it is something for your Members as well.

"BTW there was an visit from KTZMICO at the listed Company  TMILL..very nice long Term Growth Story.. with an good Managment who tell that their Focus is ion Growth the Company first and hope tat the Share price will follow then. But  as the earnings are O.k the Stock moves sadly nowhere.

Best regards,

Christian Kallaehne