(Closes Thai market in fifth paragraph.)
Nov. 9 (Bloomberg) -- Thai stocks are set to halt a two- year rally as “disastrous” flooding hurts the economy and curb corporate earnings, according to one of the nation’s top-ranked fund managers.
The benchmark SET Index, which closed yesterday at 983.44, may end this year below 1,000, said Prapas Tonpibulsak, chief investment officer at Krungsri Asset Management Ltd. That would be a drop of at least 4.8 percent for 2011, after gains of 41 percent in 2010 and 63 percent in 2009. Prapas previously had a year-end forecast of 1,200, before the flooding worsened.
Thailand’s worst floods in almost 70 years are threatening Bangkok’s central business district, potentially worsening the effect of a disaster that prompted the central bank to cut its 2011 economic growth forecast. Earnings of auto-parts makers and electronics companies, whose plants have been disrupted by the waters, will be most affected, Prapas said.
“Earnings will slow to single-digit growth in 2012 as the floods halted production and damped domestic consumption,” Prapas, who oversees about $3.1 billion of assets, said by phone today. “Thailand is experiencing a once-in-a-lifetime natural disaster with a vast impact on the economy.”
The SET Index lost 1.6 percent to 967.84 at the close in Bangkok. The MSCI Asia Pacific Index gained 0.9 percent. The Bank of Thailand lowered its 2011 growth forecast on Oct. 28 to 2.6 percent, from a previous prediction of 4.1 percent.
Prapas cut his 2011 earnings growth estimate for Thai companies to about 15 percent, from a previous forecast of as much as 25 percent. His Krungsri Dividend Stock Fund jumped 62 percent last year and was jointly ranked top among the nation’s equity funds in a survey by Morningstar Inc., a mutual-fund research company.
The fund has gained 0.5 percent this year, beating 88 percent of its peers, according to data compiled by Bloomberg.
Equity investors have so far shrugged off the impact of floods, with the benchmark SET Index climbing 8.2 percent in the past month through Nov. 8. Overseas investors, who bought a net 26 billion baht ($848 million) in the same period, have focused on the European debt crisis and an increase in government expenditure, Prapas said.
“The improving outlook for the European debt problem has helped attract funds into equities in the region, including Thailand,” he said. “The valuations of Thai shares are also attractive compared with other neighboring markets.”
Thailand’s main stock index trades at 10 times estimated earnings, according a data compiled by Bloomberg. That compares with the price-to-earnings ratio of 12.6 times in Singapore, 12.4 times in the Philippines, 13.4 times in Malaysia and 12.7 times in Indonesia.
Prapas recommended investors buy shares of retailers and building-material producers, which will benefit from increased government spending to repair roads and other infrastructure.
--Editors: Matthew Oakley, Allen Wan
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