Reflections, as this year comes to a close.
Bangkok Airways reported insider buying of late (yet again) is a positive SET sign. As this is a very well connected wealthy family with broad Thai business interests and so proprietary information. I do not believe they would be buying this heavily in their own shares if they were concerned about a major global or a domestic instability in the brewing.
This morning it has been reported oil will drop to the low $40's by Morgan Stanley, USA. If so, its not the huge windfall positive of past years; yet surely much lower global oil prices are a real positive for USA, China, India and Thailand besides many other developing countries. Its a real negative for producers, not least Russia, which however big does not make up a-whole-hell-of-allot on the global economic GDP scale.
Not least, bears like it or not, we note how as the year is coming to an end, the US economy is presently doing rather much better economically then the so many prognosed...as unemployment keeps dropping, wage growth has resumed, inflation is very and remains tame, productivity is up etc..even deficits are falling and the Dow has had one of its best years in a long time. US$ strength has surprised many.
To contrast this, the Thai stock market has as well had a formidable run this year, up some 20% on the major indice with our returns here likely far better, not least lead by still well ahead DEMCO. Compare this to the around a 12.5% rise of major US stock indices.
What does concerns me a bit of late is how the SET seems to have a hard time passing 1600. It knocked on the door 3 times and “the devil” did not leave it through, so far. The SET index graph seems to be forming a “rounding top” which is not a healthy sign, technically speaking. It is almost as its running out of gas? Months ago I wrote how all bull markets have sharp sell offs, only to then resume the uptrend and crawl the wall of worry. But is this now turning into a rounding top (?) which is more concerning.
The Thai economy will barely deliver 1% GDP growth this year which is below expectation and tourism & exports growth seems to be stagnant. What are the reason? Many of us can only wonder, some with a good guess. On the other hand we know so called Quant and Trigger funds have increasingly a short term volatile effect. Also brokers so called "proprietary trading funds" are acting more and more like predatory brutes buying and selling like beasts with the added conflict of interests, on generating broker trading commissions. I am therefore just not sure if the “rounding top” concern is overly meaningful?
For sure it was wise to be 2014 SET bullish, to date. The question now is has something suddenly changed? Too fast dropping oil prices, just like too rapidly increasing Dollar exchange rates is a source of concern as it will create some instability, but we can’t know where/how/when? Russia default is one of my key concerns as indicated before but we all know there are other concerns as well. Thailand as well is in some new uncharted water on many fronts. But is the whole world not often in such dire positions. Many of us ponder on the negatives but fail to appreciate the new positives....and more then a few have been hiding it out in gold to their own peril for some time. These think we are missing the so dire state the world is in now, but what are they in turn missing? I dare to ask.
I here have never advocated buying shares on margin or over exposure in warrants, I also think investors should have some cash on hand (!) not least due to the significant advance in a number of our winning stocks this year. DEMCO, CHO, WHA, PPM, EFC,PYLON, MAJOR, GCAP, CITY, PTG just to name a few while surely having missed many other good ones,….by mid year 2014 we where up just about 40% in the running 6 month model portfolio even while by back then DEMCO barely passed 10.30 OF course there has also been some so far included losers as always, like CRANE, QTC, PHOL, TTCL.
All in all, members whom were broadly on board a year ago did substantially well this year! Not least because during the most dire times in January to April 2014, I strongly advocated to hang in there -and buy more! Vs. other seasoned pro’s here which walked away at the worst time.
What is the conclusion? Only you can decide but my own take is to hang in there while having had ample chance to raise some cash not least through owning property funds. Realize these may also get hit some if there is a broad market sell-off, but at least you get paid well, while you wait the rebound.
Remember I here always take the longer term investor perspective and if my 6 model does not perform too well on the next half-year anniversary, well I have the luxury to extend if for another half year. :) Season Greetings.
email: paulren@thaistocks.com
PS. The picture below is of Sugar Palm Condo., living room/unit, I favorably mentioned to buy some 3 years ago -when back then we had nice stock market gains, taken. This now completed Phuket high quality Condo building is the only one which has direct access to Phuket's biggest "Suan Luan" public park -with great views on the park and lakes. 2 Bedroom, 90 sqm2, fully furnished, very large common pool. The unit is on the second to the top floor (10), and has some ocean views a well. Only minutes away from "Ocean Central Festival", the island's largest shopping center and major road to beaches. By far the best unit in the building, worth around 75,000 Baht per sqm2, rental around 35,000 Baht per month. Rented until May of 2016. http://www.sugarpalmcondo.com/
