Thai Stocks are cheap ?? Think Again.
April 9, 2012 Leave a comment
Since our last post in November last year the ECB has given away upwards of US$ 1 trillion to the insolvent European banks and the Fed has continued to support their alumni, and of course stocks have been on a wild ramp. This has made for easy gains and the linear progress of the Thai stock market, amongst others has meant there is little point in posting on this blog. It’s just too easy to trade such a one way street of liquid stupidity.
However the best is now over and we doubt the market will be able to go much higher any time soon…or not until the Fed goes full hog and announces QE3 later in the year.
For now it is time to take profits for those still long, and to practice a far more disciplined and selective approach to the local market. Keep in mind all, and we mean ALL the local idiot brokers got their predications for H1 2012 wrong. They ALL said it would be a difficult first half, and they were all wrong, albeit their views seemed quite sensible at the time. So don’t whatever you do go believing their bullshit now.
Thailand is at risk of a major pullback and we would be very surprised if a retest of the key 1000 level can be avoided between now and late summer (August).
As Q1 macro data starts coming in, what we (and plenty of others) expect is a return to reality, and by that we mean Europe and the US will start to look a tad less rosy than the lies (oops, sorry Government stats) might have one believe over the past several months.
Make no mistake, half of Europe is essentially insolvent. Spain is fucked, Italy is screwed the French are just assholes, and the Greeks are fools. The ECB’s 2 LTRO programs papered over the cracks, but this is over now, and what we will see in coming weeks and months is a sad state of affairs get progressively worse, which in turn will bite in to emerging market prospects for the months ahead.
We have taken profits on all our EM markets, Thailand included, and for the next few weeks at the very least prefer to sit back and return to a stock picking strategy rather than an across the board long only call. We suggest you do likewise, whilst keeping watch for signs of the next QE program out of the wild west.