Thai Analyst Advises Investors to Hold Bank Stocks In Short Term Only.

Byline: Darana Chudasri

Aug. 2--Investors should adopt a short-term holding strategy on bank stocks, according to Tom Paiboon Nalinthrangkurn, first vice-president and research head at Tisco Securities.

"At least for the next two years, investors should change their way of looking at stocks in the banking sector and their related investment strategy. Today, these stocks are no longer blue chips since they don't pay dividends and their future prospects look discouraging," he said.

In the past, it was common for many investors to buy bank stocks and hold them for the long term in return for annual dividends. In some cases, the stocks became legacies passed on to children or grandchildren.

The banking sector is now faced with economic uncertainties, lacklustre credit growth, re-entries of non-performing loans, narrow interest-rate spreads, as well as delay of asset transfers to the Thai Asset Management Corporation (TAMC). In the near term, bank stocks have no key factors supporting price recovery.

Among the negative factors, the current precarious level of the remaining non-performing loans is most critical.

Excluding loans already fully provisioned for bad debts and those already transferred to private-sector asset-management corporations, the remaining non-performing loans still account for about 30 percent of the system's total lending portfolio.