FUND VIEW-Top Thai fund shuns defensives, likes energy, banks

* Energy, banks and property seen as best bets

* Going underweight now on defensive plays like utilities

* Says Thai index may hit 660 but fair value more like 600

BANGKOK, July 30 - The state of the global economy and political problems make it hard to say when Thailand will pull out of recession, but the country's top fund manager sees long-term value in energy, bank and property shares.

Kasikorn Asset Management Co (KAsset), a unit of Kasikornbank <KBAN.BK> with 460 billion baht ($13.5 billion) under management, has gone underweight on utilities and consumer-oriented stock as it sees confidence returning to the economy, prompting a shift to riskier sectors.

"In the current environment, sectors like energy, banks and property are still a safe bet," Executive Chairman Rapee Sucharitakul told Reuters in an interview.

Consumer confidence turned higher in June -- after a four-month decline to its lowest in more than seven years -- helped by government spending plans aimed at reviving the economy.

Banks are a proxy for growth in almost all sectors because they will gain from an increase in lending, while the energy sector had to be included because it accounts for as much as 30-40 percent of the Thai stock market, Rapee said.

Property stands out as a slew of support measures, notably subsidies for home buyers, have boosted demand.

"Our preference towards them is, therefore, to overweight the sectors but manage stock selection based on which stock we think will report strong earnings and beat market expectations," Rapee said.

KAsset has beat its rivals, including fund arms of Siam Commercial Bank <SCB.BK> and top lender Bangkok Bank <BBL.BK>, boosting its assets under management by 32 percent in the first half of 2009 from 352 billion baht at the end of 2008.

Average growth in the industry was just 11 percent, Rapee said.

He acknowledged that it would be hard to achieve the same kind of growth in the second half as money could be diverted into alternatives such as government savings bonds with attractive coupons and high-grade corporate bonds.

PTT <PTT.BK>, Thailand's largest energy firm, is offering 30 billion baht of bonds in July and 80 billion baht of government savings bonds were snapped up earlier this month.

KIMCHI BONDS

The Thai stock market <.SETI> has surged 37 percent since the start of 2009, but Rapee said it remained fragile.

"The market could leap up to 660 at some point this year but in the near term we expect the index to trade in a range of 570-620," Rapee said.

"We see the fair value for the SET at 600 and anything in excess of that is driven by liquidity, not fundamentals," Rapee said.

At midsession on Thursday, the index stood at 612.17.

KAsset is known among Thais for its popular South Korean government bond funds and plans to roll out more such funds this year because demand is strong at a time of low interest rates in Thailand on banks' fixed-deposit accounts, Rapee said.

These "Kimchi bond funds" are hedged against exchange rate risk, and the return of about 2.5 to 3 percent looked good to depositors who get less than 2 percent from their banks, Rapee said. ($1=34.01 Baht)