MAI beats SET for the year
Listed small- and medium-sized companies have fared relatively well over the past year, with the MAI index down 10.78% over the first eight months of the year compared with a 21% decline for the Stock Exchange of Thailand.
Chanitr Charnchainarong, the president of the Market for Alternative Investment, said the market capitalisation of the exchange was 33.45 billion baht, down 12.57% from the end of 2007.
Valuations have fallen to a price-to-earnings ratio of 12.28 times compared with 19.3 times at the end of 2007.
But corporate fundamentals have improved. Listed MAI companies reported first-half profits of 879 million baht, up 70% from the same period last year, with revenues of 22.5 billion, up 11%.
On average, the 48 companies on the MAI posted net profit growth of 70%.
''This shows that small- and medium-sized companies have the ability to adjust to change. Most companies that faced net losses last year have been able to turn to profit,'' he said.
Interim dividends for first-half operations totalled 349 million baht, up from 261 million the same period last year.
But Mr Chanitr acknowledged that market sentiment remained poor. ''Investors aren't looking at fundamentals, but rather the political mess,'' he said.
Sukit Udomsirikul, a senior analyst at SCIB Securities, said political risk was clearly increasing, resulting in higher market risk and volatility.
He recommended investors focus on lower-risk assets such as bonds and avoid the equity market for the short-term.
Bond prices were set to rebound as the markets expect the Monetary Policy Committee may only raise rates once for the rest of the year due to the slowing economy and falling oil prices. The MPC is expected to raise short-term rates, now 3.5%, by a quarter-point when it meets today.
SCIB Securities currently recommends investors reduce their equities weightings to 40% from 50%, and they should increase bonds to 40% from 30%. Remaining funds should be allocated to alternative investments such as derivatives and commodities.
Pichai Lertsupongkit, an executive vice-president at Thanachart Securities, said economic growth was expected to decline in the second half, while politics could be further shaken by a dissolution of Parliament by the end of the year.
On the other hand, inflation has likely peaked for the year, he added. The National Economic and Social Development Board this week announced second quarter growth of 5.3%, down from 6.1% year-on-year in the first quarter.