BKI trims stocks amid dim outlook

BKI trims stocks amid dim outlook

SET-listed Bangkok Insurance (BKI) is cutting back on its stock investment in the second half based on projected lacklustre markets in the face of austerity measures being implemented in the United States and Europe.

"Thailand's trade and investment will inevitably be hit in the second half because of unfavourable economic constraints outside," said chairman Chai Sophonpanich. "Almost all countries in Europe are now tightening their spending, with the Greek government in particular planning to sell its state-owned enterprises late in the year on top of budget cuts. China itself is also controlling bank lending for fear of an economic bubble."
Mr Chai, widely recognised in the insurance industry as an investment expert, said the Thai bourse was expected to feel the pinch late this year, with the SET Index possibly dropping by as many as 100 points.
He forecasts the SET Index to hover around 930 points at the end of the year, though most other analysts expects it to remain in four figures.
Having foreseen the bearish outlook, BKI has been selling securities for 3-4 months and plans to keep doing so over the next 1-2 months when the market should remain in good shape.
BKI's investment portfolio stood at 24.64 billion baht as of the end of June with a cost of 12.49 billion baht. Investments in both listed and non-listed securities made up 71% of its portfolio by market value and 43% by cost.
BKI reported a net profit of 1.23 billion baht for 2010 operations, a 31.2% rise year-on-year, thanks to strong investment gains. Net income from investment jumped 52.8% to 1,003.2 million baht while written premiums rose 20% to 10.55 billion baht.
It reported underwriting profit of 663.4 million baht last year, a 5.9% increase from the year before.
For the first six months of this year, the company reported net investment income of 694.4 million baht, a rise of 12.2%, while net underwriting profit was 550.7 million baht, up 11.4%.
Net profit for the period was 950.9 million baht, up 9.6% from the same period last year on total written premiums worth 5.39 billion baht, up 8.6%.
Despite the unfavourable investment outlook, BKI president Panus Thiravanitkul said the outlook for underwriting profit was still promising in the second half, spurred by growing exports and car sales, growing bank loans, good farm prices, the planned development of many infrastructure projects by the government, and more importantly, the easing political strife. After healthy first-half results, BKI is increasingly upbeat that the company's performance this year based on direct premiums would outstrip its growth target of 4%, said Mr Panus.
Shares of BKI closed yesterday on the Stock Exchange of Thailand at 263 baht, up two baht, in trade worth 6.22 million baht.