It may be time to buy Thai equities - provided you are prepared to wait until the millennium for the payback, Goldman Sachs says The country, which has done to death many predictions of imminent recovery made over the past year, had made sufficient strides towards reform for investors to start moving back in, the US investment bank said. 'We are raising our weighting on Thailand to market weight from underweight in our regional portfolio,' Goldman said in its latest strategy update. 'We believe there is now a firm foundation on which to base a two to three-year recovery in the finance system and economy, versus a five to seven-year recovery if Thailand dragged out reforms.' The bank cited action on seven fronts as underpinning its change of stance. Fifty-six of the 58 suspended finance companies had been closed for good, and there were signs that the finance system and corporate sector were starting to be recapitalised, it said. There was a more responsive attitude toward reform and IMF advice from the Bank of Thailand officials and corporate heads, and a possibility that a private 'bad bank' may be established with foreign assistance. Asset sales had started and, finally, there was increased interest in the country from institutional investors and foreign direct investors, it said. 'Most of the bad news appears to have been discounted by investors, with most . . . underweight or zero. The market is trading at a market cap to GDP of just 17 per cent, one of the lowest in our global universe,' it said. Immediate prospects were poor, with banks' asset quality deteriorating and little or no earnings growth seen at companies over the next one or two years, as the economy continued to slow. The period could also see a 'messy and drawn out' restructuring of the remaining finance companies. Investors were advised to accumulate large-cap, liquid stocks. Goldman named Phatra Thanakit, Bangkok Bank, Siam Cement, Thai Airways International and Advanced Info Service as the best picks. The leading SET Index finished the year yesterday at 372.69 points, down 55.17 per cent over the 12 months.
