Bloomberg: Thailand, China Stocks Are Cheap, Merrill Tells Wealthy Clients (23 July 2008)

Thailand, China Stocks Are Cheap, Merrill Tells Wealthy Clients

By Anuchit Nguyen

July 23 (Bloomberg) -- Thailand and China offer the most attractive stock selections in Asian markets after prices fell, making them cheap as earnings growth accelerates, Merrill Lynch & Co. told its wealthy clients.

The nations have the lowest valuations among 11 Asian markets, followed by the Philippines, Stephen Corry, investment strategist for Merrill Lynch Global Wealth Management in the Asia Pacific region, said in an interview today. Australia is most expensive.

``Thailand will benefit from rising exports of rice, tuna and other agricultural commodities,'' said Corry. ``The good news about China is that consumer prices may have peaked and started coming down.''

Thai shares trade at about 9.8 times profit forecast for 2008, and Chinese stocks at about 12.3 times, Corry said. The countries' indexes may have started to rebound after slumping to their lowest in more than a year last week as falling oil prices ease concern inflation may accelerate. Thailand's SET Index has climbed 4.2 percent this week, headed for the biggest gain in six months, while China's CSI 300 Index has climbed 3.2 percent.

Thailand's exports gained 27.4 percent from a year earlier to a record $16.3 billion, the commerce ministry said yesterday. The Southeast Asian nation, the world's biggest exporter of rice and rubber, is benefiting as surging commodity prices help counter slower demand from the U.S., the nation's largest single export market.

China's Inflation

China's inflation eased to 7.1 percent in June from 7.7 percent in May as food-price gains eased. The central bank is weighing the threat from inflation against the risk of an economic slump as global growth slows, as inflation remains above the 4.8 percent target for the year.

Australia's stocks are the most ``unattractive'' in Asia because the country's currency is ``overvalued'' and its current account deficit is widening, Corry said.

``The risk is that the Aussie dollar is hugely overvalued against the dollar,'' Corry said. ``If the prices of commodities such as coal and iron ore come off, Australia's current account deficit will go much higher.''

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

Last Updated: July 23, 2008 02:52 EDT