By Viparat Jantraprap and Warapan Worasart
BANGKOK, Jan 16 (Reuters) - Thailand's fourth-largest asset management firm, National Asset Management (Nasset), expects a return of at least 25 percent on Thai stocks this year as the market benefits from an economic upswing and new listings.
President Pakakaew Boonliang told Reuters in an interview on Friday the stock market would be the best place to invest this year, although the market might be volatile and short-term investors could be disappointed.
"The investment theme for 2004 is the stock market. It's not a time to promote debt funds anymore," said Pakakaew, whose firm manages funds worth 30 billion baht ($770 million) and has a nine percent share of Thailand's mutual fund market.
Nasset's return on equity funds was 121 percent in 2003, outperforming both the SET index's 117 percent surge and the overall mutual fund industry's 119 percent gain.
Pakakaew said returns in 2004 would be smaller.
"We forecast listed firms will report earnings growth of 25 percent this year and the return on our equity fund should not be lower than that," she said, adding that the forecast was based on the 160 listed firms that Nasset saw as potential investments.
Pakakaew said the investment theme for Nasset this year would be the same as last year -- economy-linked and dividend stocks -- but that Nasset's weighting in initial public offering (IPO) stocks would be larger.
Nasset plans to launch a five billion baht open-ended fund called "Fundamental Plus" early next month to invest solely in stocks.
The exchange expects more than 50 firms to list in 2004, more than double last year's number. New listings include a record 70 billion baht IPO from the Electricity Generating Authority of Thailand (EGAT) expected in late April.
CONSTRUCTION HOT
Thailand is moving into an investment cycle and the construction market is shifting gears accordingly, fuelling an economy expected to grow seven to eight percent this year, analysts say.
Pakakaew said the new fund would invest in sectors benefitting from a boom in construction -- building material firms and contractors -- and sectors related to consumption and technology -- telecommunications, electronics and vehicles.
She also liked the bank sector, saying banks would see a better year because fewer non-performing loans would allow them to switch reserves for loan losses to profits.
Nasset expects bond market sentiment to be dampened by interest rate rises expected in the second half of this year, but a market collapse was unlikely because increases would be modest, Pakakaew added.
The fund firm cites two external risks to its scenario of moderate equity gains and volatile bond prices: terrorism and a devaluation of China's yuan currency, which could affect the baht and Thai stocks. ($1=38.97 baht)