Oct. 13--Krung Thai Asset Management (KTAM) has launched a new foreign investment fund focused on the global financial sector.

The 2-billion-baht KTAM World Financial Services Fund (KT-Finance), on sale from today until Oct 27, will invest at least 80 percent of its assets in the Fidelity Global Financial Services Fund managed by Fidelity International.

The Fidelity Global Financial Services Fund invests in equities of banks, non-life and life insurers, real estate and financial services companies worldwide. At the end of August, the fund had assets of 355 million with a 12-month loss of 12.3 percent but a 22.4 percent gain year-to-date. The fund's top-three holdings at the end of August were Deutsche Boerse, Franklin Resources and Mizrahi Tefahot Bank.

Somchai Boonnamsiri, the managing director of KTAM, said KT-Finance is an attractive option for investors looking to diversify their portfolios to the global financial sector.

Earnings have begun to recover strongly with the global economy's rebound, with momentum strongest in emerging markets, he said.

He cited research by UBS projecting return on equity (ROE) for global banks to rise to 11.4 percent at the end of 2009 from 8.9 percent at the end of 2008. ROE is projected to reach an average point of 14.6 percent in 2012.

The S&P 500 has risen by 50 percent since its lowest point in March this year but is still 48 percent lower than the highest point in 2007 (near its 1997 level), according to Bloomberg.

While Thai financials have also seen a sharp rebound in valuations, volatility remains and prospects may lag those of the global market, said Suthayut Chuaphanich, the KTAM equity investment department manager at KTAM.

He said the SET index, which closed yesterday at 751.86, should trade about 750 through the end of the year, but could rise to 800 depending on foreign fund flows.

Mr Suthayut said the major question for valuations going forward is whether private investment picks up even as public stimulus programmes -- a major driver of this year's economic rebound -- begin to taper off in 2010.

He projects the SET might edge down 10 percent this year. As stock prices of commodities and the cyclical sector have soared, so investment is expected to be expanded to private investment such as the financial sector and information and communication technologies.

KTAM has kept its year target for assets under management at 230 billion baht, up from 220 billion now.

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