UOB Asset Management (UOBAM) projects that the Stock Exchange of Thailand (SET) index will surpass 1,440 points during the second half of the year, advising investors to take a strong position in global bonds amidst market fluctuations.
According to deputy chief investment officer Vannachan Ungthavorn, the anticipated rise in the Thai stock market to around 1,443 points is supported by global trends of interest rate reductions, growth in Thailand’s tourism sector, economic stimuli, and increased government spending.
She noted that developed countries are likely to lower their interest rates in the latter half of the year, and there is a possibility that the Bank of Thailand’s Monetary Policy Committee may cut the policy rate by 0.25 percentage points in December.
Recommended investments in Thai stocks include those related to tourism and sectors likely to benefit from heightened government expenditure and economic stimulation, such as retail and utilities.
However, Ms. Vannachan pointed out that the Thai economy must tackle structural issues, particularly in the industrial sector, which is facing stiff competition from nations with greater competitiveness.
“As the global economy decelerates and trade barriers increase, Thailand’s industrial sector must adapt to stimulate business growth, which will require time,” she remarked.
She also highlighted that households and small businesses are currently burdened with debt, which is dampening their purchasing power. Financial institutions are beginning to feel the repercussions of rising non-performing loans, leading to stricter lending standards and more challenging financial conditions for households and small- and medium-sized enterprises (SMEs).
UOBAM foresees a slowdown in the US economy, but not to the extent of a recession. Ms. Vannachan stated, “If the Federal Reserve cuts interest rates this year, it will enhance liquidity in the capital market.”
The global economy is anticipated to experience a soft landing. Therefore, effective risk management amid uncertainty is crucial. UOBAM encourages investors to carefully choose their investment assets and diversify their risks accordingly.
“Investors are advised to decrease cash holdings and increase their investments in global corporate debt instruments, especially those rated as investment grade, as they are expected to yield attractive returns during a period of declining interest rates,” she explained.
Additionally, greater caution is recommended when investing in Asian stocks, particularly those in China. “Although the Chinese market appears appealing, it has already absorbed positive influences, and recovery is still facing hurdles,” she cautioned.
UOBAM’s deputy chief marketing officer, Kulachat Chandavimol, stated that key factors to monitor in the second half include tight monetary policy, inflation, and geopolitical risks, especially in the US, Europe, and the Middle East, all of which could adversely affect investment sentiment.
