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Foreign investors upbeat on Asean markets
Publication Date : 03-09-2012
Foreign investors are upbeat on Thailand and Asean capital markets, and expect soon some attractive IPO and PO stocks. Jason Cox, managing director and co-head of Asia Pacific Global Capital Markets, Merrill Lynch (Asia Pacific), a subsidiary of Bank of America Corporation, speaks to The Nation's Wichit Chaitrong.
Let me talk about initial public offering (IPO) and public offering (PO) stocks in Thailand and Asean. Is it going to be exciting this year and next year?
You have already seen the demand for IPOs in Thailand and Asean markets. Of the three top IPOs done year to date, two of those are from this part of the world.
The biggest IPO was Facebook. The second and third-largest are palm-oil firm Felda and hospital operator IHH , both in Malaysia .
However, in Thailand, one the best-performing IPOs globally year to date is Tesco's Thai Property fund, the third-largest IPO in Asean.
So, there is a lot of the focus on this part of the world while the rest of the world remains extremely volatile. As investors are searching for growth, the Thai market continues to offer stability and growth opportunities.
What about Myanmar, which is opening its economy?
It's something people watch closely and would like to have access to. One of the interesting aspects of investing in Thailand is its geographical positioning within Asean. Thailand is in the neighbourhood of four key markets - Laos, Cambodia, Vietnam and Myanmar. I do think that people see there is an opportunity. Thai companies have a long history in the capital market, winning a significant amount of trust from investors. Investing through Thai companies or firms listing on the Singapore exchange for those opportunities in those new frontier markets, it is interesting for investors.
Do you think Myanmar will launch privatisation of its energy and telecom sectors, or other sectors?
If you look at the growth of Asia in the last 15 years, certainly, privatisation has been a big part of the growth strategy for many companies. But it is still early days in Myanmar. The other way to invest in Myanmar is to invest in Thai companies, Thai energy companies or others that are exposed to Myanmar or Thai companies that already have a presence there. Investing through Thai companies is something you can do now for those opportunities and profitability that may come in the future.
Do you get deals from the Thailand Focus 2012 conference?
I think there are a lot of investors interested in Thailand right now. And certainly there are deals in the pipeline, both IPO as well as public offerings. And there is demand for that from international investors.
How can Thai corporations or Asean firms make profits while Europe and US are still facing economic woes?
Thailand's position within Asean; the benefit of sitting in those key growth markets; intra-regional trade with those markets - Cambodia, Laos, Myanmar and Vietnam - as well as the rest of Asean is significant for Thailand.
Those markets are the next phase of growth for Asia so, I think, globally that is an opportunity. Additionally, on the Thai domestic scene, we think there are opportunities for growth, which are infrastructure spending and development upcountry.
Should Thai firms invest in real estate in Europe or the US in order to take advantage of falling prices?
There are opportunities globally, opportunities for firms and countries. There are opportunities for firms and countries coming from a position of strengthen to take advantage of the volatility that we see in Europe and US. This is already happening, M&A [merger and acquisitions] are now both ways across the globe.
How do you view Thai macro-economic policies? What are the threats for the Thai economy?
I think if you look at the number of participants in Thailand Focus 2012 [referring to last week's conference], the number of participants were double the number you had the year before. There is a huge amount of focus on Thailand. The stability is good and the progress that has been made is a good thing. On the capital market side, definitely there is a positive view right now on the opportunity that Thailand represents.
Do you expect more IPOs in Thailand this year?
There are lots of opportunities in Thailand. There are several IPOs that are in the pipeline. Additionally, a lot of capital is being raised through public offerings in Thailand. Some have been announced, some are in progress.
But there is demand that we see that in the secondary market in terms of foreign investor participation.
We have seen the performance of Tesco post IPO - up 30 per cent since the IPO. So there is real support, and we see that one of the reasons that Asean is a focus of people is not only growth, the intra-region trade but there is domestic support from retail investors and domestic institutions as was also the case in Malaysia .
You have healthy domestic demand, which is something that comforts foreign investors - knowing domestic demand and support also exist in the market. If you look at Hong Kong and even the US markets where retail investor participation has gone down. Asean stands out in terms of having domestic demand and domestic support for the equity market.