FUND VIEW-BBL Asset raises holding in Thai equities

* Raised equities holding to nearly 90 pct vs 60 pct in April

* Overweight bank, energy; also likes transport, telecoms

* Thai market a bit expensive, but sees more upside

BANGKOK, Sept 22 - BBL Asset Management, Thailand's third-largest fund firm, said on Tuesday it had gradually raised its holding in Thai equities to nearly 90 percent in the past few months to reflect an improved economic outlook and foreign fund flows.

The fund unit of top lender Bangkok Bank <BBL.BK> expected further gains in the Thai market to be limited, but some stocks in the commodity and property sectors offered good returns, Managing Director Voravan Tarapoom told reporters.

"We have gradually increased our holding in Thai stocks in recent months. But ask if we are completely bullish on the Thai stock market, I don't think so," said Voravan, who helps manage about 168 billion baht ($5 billion) of assets.

BBL Asset reduced its holding in equities to 60 percent to hold more cash when the Thai market was hit by political violence in April.

Foreign investors have bought a net $1.5 billion of Thai shares so far this year, helping push the index up 61 percent, the third best performer in Southeast Asia after Vietnam <.VNI>, up 84.7 percent, and Jakarta <.JKSE>, up 81 percent.

On Tuesday, the main Thai index <.SETI> rose 1.57 percent to close at a 14-month high of 724.37.

"Compared with some regional markets, Thailand is a bit expensive now. But we have seen the index hit a high of 800 points before. We can expect some upside and selectively buy in some stocks," Voravan said.

The Thai market was trading at a price to 2009 earnings of 12.5 times, versus South Korea's 12.25 times and Indonesia's 12.7 times, according to Reuters data.

BBL Asset, 75 percent owned by Bangkok Bank, is overweight in Thai banks and energy companies on expectations the sectors will benefit from the economic recovery, Voravan said.

It also likes transportation, communications, commodities such as steel, and contractors, she said.

Its top five holdings are top energy firm PTT <PTT.BK>, Bangkok Bank, PTT Exploration and Production <PTTE.BK>, top convenience store operator CP ALL <CPALL.BK> and top mobile phone operator Advanced Info Service <ADVA.BK>, according to the fund firm's website.

Asked about concerns about domestic politics, Voravan said: "Politics is still a major factor. If there is no major event, we think the market should move further, although the upside might not be as strong as earlier this year."

"It doesn't matter who will be the government. If the country's economy can progress further, the Thai market shouldn't go lower than this."

So far this year, the net asset value of the firm's equities funds has risen about 40 percent, but it has still underperformed the overall market, Voravan said. ($1=33.62 Baht)