This is a repost of the article found on CNX Translation forums.
6 months have gone since our last update, and its time again to update the long term charts of the Thai stock market.
first chart is the SET index between 1975 and January 2013. Following
other indices around the world, and despite my overvaluation view 6
months ago, the Thai stock market has continued its (unstoppable) rise
in the last 6 months, and now stands at about 1440, a rise of about 40%
since I started to become cautious.
PER is now around 18, mainly due to the stock market improvement. At
15, I started to be bearish, so at 18 it's extremely unusual for the
Thai stock market. So either earnings have to go up substantially,
either the stock market has to plunge, or a combination of the two.
price to book value slowly crept up to 2.4 which also starts to make
Thai stocks overvalued, especially compared to what you get in other
markets around the world. (European stocks have a P/B ratio around 1
conclude, I believe the Thai stock market is relatively overvalued both
historically, and compared to other stocks markets around the world.
The dividend yield is now around 3% which is is that more than can get
in a fixed deposit (Bangkok Bank now offers up to 2.65 % p.a for a 36
months fixed deposit), so why take the risk? There is also a lot of
optimism around the world, which IMHO is not warranted, so I would not
be surprised to see a massive correction in the Thai stock market within
the next year.