‘Take Profit’ on Thailand Stocks, Credit Suisse Says

By Chen Shiyin

April 13 (Bloomberg) -- Investors should “take profit” on Thailand’s stocks as anti-government protesters intensify their rallies against Prime Minister Abhisit Vejjajiva, Credit Suisse Group advised.

Gains in global markets in the past month offer investors a chance to sell their Thai holdings, including property stocks, Credit Suisse analyst Dan Fineman said in a report today, reiterating his “underweight” recommendation on the market. An election will be the best outcome for investors as this will give the government greater legitimacy, he added.

“A return to the dark days of the second half of 2008 is not inevitable but the risk of prolonged political tensions is high,” Fineman wrote. “We now suggest taking profit in key stocks and sectors we had previously liked.”

Thailand’s SET Index gained 10 percent in the past month, tracking a rally in global markets. The market will be closed until April 16 for the Songkran Festival holidays even as anti- government protesters defy a state of emergency and step up rallies that have blockaded key intersections in the capital of Bangkok.

Clashes in Bangkok today left 70 people injured as soldiers battled to restore order. Further turmoil would widen a national rift between the rural poor and urban elite that has spawned four administrations in three years since former premier Thaksin Shinawatra was ousted in a coup.

‘Darkest Days’ Ahead

“The current situation can lead to more serious violence,” CLSA Asia-Pacific Markets said in a report today. “The darkest days in our history are, sadly, likely to be ahead of us, as we see no swift solution to ongoing divisiveness.”

Investor Jim Rogers is more positive, saying that investors should consider buying shares if prices slump and the protests don’t destabilize the nation’s monarchy.

“If Thailand’s going to survive and if things collapse, then it’s probably a time to buy Thailand,” Rogers said in a Bloomberg Television interview. “They’ve got natural resources, they’ve got a disciplined labor force and it’s in the middle of Asia, which is the place to be. There are plenty of advantages to Thailand if you get the right price.”

Credit Suisse is turning “less enthusiastic” on Kasikornbank Pcl, the nation’s third-largest lender by assets, Fineman said in today’s report. The brokerage had already cut its rating on Thai banks to “market weight” from “overweight” last month, it added.

Risks to property developers are also increasing and investors face the prospect of becoming “stuck” in these “fairly illiquid” stocks, the analyst said, without identifying any companies.

“Fundamentally, the stocks remain attractive as valuations are still cheap and demand is surprising in its resilience, but the downside risks are growing,” he wrote.

Funds that need to be invested in Thailand should hold shares of telecommunications, consumer, media and coal companies, Credit Suisse added.

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net.