The government of Prime Minister Yingluck Shinawatra should make a "big U-turn" in its economic policies as they could make Thailand vulnerable to impacts from global economic volatility, said Paul Gambles, a regional financial expert.
Gambles, managing partner at MBMG International, a Bangkok-based financial advisory company, said that despite the country's current strong fiscal position, the Yingluck government's huge spending on infrastructure and car-purchase and rice subsidies would increase the debt-to-GDP ratio to 60 per cent in the next few years.
"Right now, we have kind of open-ended stimulus programmes and there is no reason to do this. We should not stimulate the economy at the moment. We should accept the fact that with the global economy slowing down, the Thai economy needs to come down a little bit," said Gambles in an exclusive interview to The Nation.
Gambles said he had been telling everybody that he was waiting to invest in Thai stocks when they plunge 30-40 per cent from current prices.
Martin Gray, portfolio manager at Miton-Optimal Multi Asset Management, said investors should bring down their expectations of returns from investments as there is no sign of good news - unemployment remains high, interest rates are low and continue to fall, and there is a disinflationary environment and sub-par economic growth.
"There is a danger at the moment. We have seen the rally of stocks and other risk assets over the past nine to 12 months. It's easy to state that now is a good time to invest, but I suspect with the volatility we have seen in the past few years, it might be a better time to sell rather than invest," he said.
Gray, who manages the Special Situations Fund for the UK asset-management company, was speaking in an exclusive interview to The Nation during his recent visit to Bangkok to give a special briefing to clients of MBMG International.
He said MitonOptimal was rather defensive in its investment policy at the moment, focusing on cash and investment-grade debts. It takes a long-term five-to-10-year view on Asia's equity markets, but not at the current valuations, he said.
Gray said investors could make money from cash. Asian currencies such as the Singapore dollar, the New Taiwan dollar and the South Korean won have all appreciated more than 100 per cent against the US dollar during the past three years and will continue to gain against the greenback.
Asia and Japan make up for 39 per cent of MitonOptimal's portfolio at present. It has built up from zero holdings of Asian-dominated assets in 2009 to 20 per cent now.
About 60 per cent of Japan's exports are now going to Asia, compared with about 25 per cent in 1985, while the US and European Union have become much less important to Japan.
"If we like Asia going forward, we should also like Japan. The yen will hold its value relatively well, if you are patient," he said.
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