Short-term bounce seen for small caps

Small- and mid-cap stocks are set to outperform the overall stock market’s growth in the second half because of cheap valuations, says a fund manager.

Such stocks present a good opportunity for long-term investment, according to Ratch Sodsatit, managing director of Asset Plus Fund Management.

Mr Ratch said the total return index (TRI) for the FTSE SET Mid/Small Cap Index has a return of 12.7% a year, well above the 6.71% annual return of the SET50’s TRI.

Asset Plus Fund Management expects all listed companies on the Stock Exchange of Thailand to achieve 9% earnings growth this year and 11% in 2018.

The firm plans to launch a new small- and mid-cap fund with an IPO during the July 17-Aug 1 period.

The local stock market is seen having limited growth in the second half, with private consumption coming in lower than expected, according to Asset Plus Fund Management. Government spending and exports, however, are tipped to expand in the second half.

Monrat Phadungsit, managing director of Land and Houses Fund Management, said GDP in the second half should expand at a better rate than in the first half. Given such a projection, investing in real estate investment trusts is advised because prices are down.

Global fixed-income funds are expected to provide a higher return than local fixedincome funds, due to the congregated returns of mixed asset classes. LH Fund will launch a global fixed-income fund with an IPO during July 17-25. The fund size is registered at 3 billion baht.

The Japanese stock market, meanwhile, still has high growth potential among global equity markets, said Navin Intrasombat, executive vice-president of Kasikorn Asset Management (K-Asset).

Business performance among Japanese listed firms is expected to continue to improve in this year’s second half as Japan’s government persists in injecting liquidity into the economy.

K-Asset is keeping an optimistic outlook for the Japanese stock market in the long run, with Japanese shares remaining cheaper than their European and US counterparts.

Global equities still have a positive outlook for Japan’s stock market, and global fixedincome funds will have a higher return than local debt instruments, Mr Navin said.