Over the six months ended 31 August 2015, Thai equities dropped sharply. The SET Index fell by 19.2% on a sterling-adjusted basis. Aberdeen New Thai’s net asset value was similarly affected, falling 20.0% while the share price declined by 20.4% on a total return basis, to reach 357.6p. The baht’s depreciation against the pound during the period amplified the impact of the sell-off.
At the stock level, Sammakorn was the top detractor, despite its small position in the portfolio. The property developer came under considerable pressure from both the general sell-off and softness in the broader property sector, where new launches and bookings have eased considerably. This also weighed on LPN Development’s performance over the period. Not holding convenience store operator CP ALL weighed further on relative returns as it was one of the SET Index’s standout performers. However, the Investment Manager remains uncomfortable with the company’s governance.
Elsewhere, Hana Microelectronics’ share price declined following a good run. Electronics orders from the US have softened; however, it should benefit from the depreciating baht. Meanwhile, weak commodity prices, particularly for oil and coal, hurt portfolio holdings Banpu and PTT Exploration & Production. BEC World faced pressure from a stagnant advertising market and start-up costs associated with digital TV. However, it remains one of the dominant players in the broadcasting industry, with the economies of scale to generate high-quality content.
Conversely, not holding Bank of Ayudhya, PTT, and True Corporation (previously TelecomAsia) all supported relative performance as their share prices tumbled over the period. Insurance holdings Bangkok Insurance and Muang Thai Insurance were resilient, benefiting from their steady, dependable business models and the positive outlook for the underpenetrated insurance market. Bumrungrad Hospital has been one of the index’s best performing stocks since the start of the year, on the back of excellent results, so the overweight position proved favourable. Eastern Water Resources and Electricity Generating also contributed as they held up relatively well amid the sell-off. Meanwhile, holding Dynasty Ceramic aided performance, as margins improved on the back of lower energy costs.
ANW : Weak markets drag down Aberdeen New Thai