Templeton May Add Thai Stocks on Losses, Mobius Says

By Chen Shiyin and Susan Li

Sept. 4 (Bloomberg) -- Templeton Asset Management Ltd. will buy more stocks in Thailand if anti-government protests that prompted a state of emergency cause prices to plunge further, Executive Chairman Mark Mobius said.

The firm is ``sitting tight'' on its investments in Thailand, which include the nation's two largest banks, Mobius said in an interview on Bloomberg Television in Singapore. The decline in the benchmark SET Index to a 20-month low yesterday has ``discounted'' the turmoil, so any further losses will present an opportunity, he said.

``Now is a good time to be looking at Thailand,'' where shares have slumped 24 percent this year, said Mobius, who oversees about $40 billion in emerging markets equities. ``If they move down by 20 percent, it would be very attractive.''

The SET index advanced 0.8 percent today, snapping a three- day slump sparked by clashes between anti-government demonstrators, who want to topple Prime Minister Samak Sundaravej, and his supporters. The gauge is valued at about 9.2 times estimated earnings, the cheapest among Asian stock markets.

Thailand isn't a buying opportunity yet because violence there will continue, Credit Suisse Group said yesterday. Investors should avoid Thai stocks as the nation may become ``ungovernable,'' hurting economic expansion and profit growth, analysts Dan Fineman and Cem Karacadag said.

Uncertainty in Thailand

``Unless things stabilize, it can be tough to attract new money'' to markets like Thailand, said Pankaj Kumar, who manages about $460 million as chief investment officer at Kurnia Insurans Bhd. in Petaling Jaya, outside Kuala Lumpur. ``What you don't want is uncertainty. That creates fear.''

Political turmoil means Thailand's stock market will continue to face ``rough weather'' in the short term, Mobius said. Samak, whose People Power Party won 233 of 480 parliamentary seats in an election last year, said today he doesn't intend to resign and will not dissolve the parliament.

Thailand plans to hold a national referendum on how to end a standoff between the government and protestors who have occupied the prime minister's office for nine days, Culture Minister Somsak Kiatsuranont told reporters today after a special Cabinet meeting.

Kasikornbank

Templeton has been buying shares of Thai banks including Kasikornbank Pcl and Bangkok Bank Pcl, Mobius said. Kasikornbank, the nation's second-largest market value, has dropped 20 percent this year. Bangkok Bank, the largest, has declined 5.9 percent.

The company also favors shares of Thai exporters, which will benefit from the weakness in the currency, Mobius added, declining to name the companies. The Thai baht has weakened 13 percent against the dollar this year, the second-most among Asian currencies after South Korea's won.

Templeton's funds are adding to their holdings amid the slump in emerging markets on the expectation that share prices will rebound in 2009, Mobius said. Investors have about six months to wait for a recovery in the bear market, he said. The MSCI Emerging Markets index has dropped 27 percent this year, led by Chinese stocks.

``We're half-way through the bear market,'' Mobius said. ``By the beginning of next year, we'll see some recovery.''

Turkey, South Africa

Mobius's Templeton Emerging Markets Fund has dropped 26 percent this year, in line with the MSCI Emerging Markets index. The fund is adding to its holdings in Turkey and South Africa because of ``better valuations'' and as growth continues at a ``good pace,'' Mobius said.

``We're finding so many companies now with price-earnings ratios of single digit, and some companies are also paying good dividends,'' Mobius said. ``We're finding lots of opportunities.''

Energy followed by banking are the leading industries for Templeton's investments, said Mobius, who favors companies that produce commodities needed in China. Among metals, he recommends palladium, given that the price gap between palladium and platinum is ``too high.''

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Susan Li in Hong Kong at sli31@bloomberg.net