Doug Barnett's latest market update

After a macro discussion, he then also goes into a little detail on his 4 largest holdings.

Global equity markets ended in different directions. The US and European stock markets closed positively, supported by the improvement in global economic data, particularly in the US economy and the announcement of the Federal Open Market Committee (FOMC)’s US$10-billion tapering plan starting in January 2014, on signs of an improved labor market. US and European stock markets were up 2.7% and 2.4% on average, respectively. Asian stock markets were down 1.2% on average.

The Thai stock market was the worst performer in Asia, down 7.1%, pressured by political issues which led to delays on government spending and investment projects, combined with US “tapering”.

Our fund made a significant loss in December, in line with the market. All of our six heavily-weighted sectors showed losses, all of which we believe have strong fundamentals and have potential for truly impressive earnings growth over the next 12 months.

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A few investors have sent us some interesting economic analyses, essentially saying that the Thai economy is in big trouble and that foreign investors should get out now. We will run through a few of these arguments to present our counterpoints and give you our take on the current situation.

David Scott, a Thailand-based newsletter writer, concluded in his 20 December 2013 “A Strategist’s Diary”, that:

1)     Thailand is in a huge property bubble,

2)     Thai consumer is tapped out,

3)     Thai government and Thai corporates are over levered,

4)     Average listed stock is pricey, and

5)     The baht is in for a big devaluation.

Let’s look at these points one by one.

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