FRIDAY, March 29, 2024
nationthailand

Citibank keen on stocks despite outflows

Citibank keen on stocks despite outflows

CITIBANK Thailand remains upbeat on the outlook for equities in Thailand and other emerging markets in Asia, despite capital outflows from the region driven by investors’ concerns over the pace of interest rate rises in the United States.

Don Charnsupharindr, the head of retail banking at Citibank Thailand, said yesterday that global stock market was highly volatile in the first quarter of this year, reflecting investors’ worries about an increase in US inflation, which could spur a more aggressive stance by the US Federal Reserve on its schedule for rate increases this year.
Investors are also concerned about the escalation in trade conflicts after the US imposed tariffs on steel and aluminium imports and announced additional measures against Chinese products.
Additionally, there has been a sell-off in US technology stocks on concerns over inadequate data protection and the likelihood of increased regulatory oversight.
These pressures have led to negative investment returns in the US equity market, although there have been marginal gains in the European markets. The Asian markets, excluding Japan, have increased just 1.4 per cent this year.
However, Don said that the fundamentals of the global economy were strong.
Citi analysts expect the global economy to grow 3.4 per cent in 2018, up from 3.3 per cent in 2017, with global inflation expected to edge up to 2.5 per cent from 2.4 per cent last year.
“We still love Europe and are overweight emerging Asia,” Don said at a press conference. 
He said that Citi’s analysts remain overweight global equities and underweight global bonds. 
Citi is bullish on the stock markets in mainland China, Taiwan, South Korea, Indonesia, India, Malaysia, and Thailand as the cyclical upturn in the world economy is likely to favour Asian economies, Don said. 
Nevertheless, Citi recommends that investors diversify their portfolios to cushion them from volatility in market conditions, he said.
Smith Banomyong, the chief executive officer of SCB Asset Management, shares the view on the comparative strength of Asian economies.
A growing demographic of young people in these countries will drive long-term GDP growth, which is forecast to reach 5.9 per cent in 2018, Smith said. 
Another positive is the high rate of adoption of information technology. Also, interest rates remain high, which suggests that Asian economies will continue to grow, as will their income streams, Smith said.
Smith said the current bout of capital outflows from emerging Asia would be short term, due to the strong fundamentals in the region’s economies. The two main risk factors are the trade tensions between the US and China and the scale of rate rises in the US, he said.
Citibank Thailand has joined with Siam Commercial Bank Asset Management Co (SCBAM) to highlight two funds on the Asian theme: SCB Asian Emerging Markets Fund THB Hedge and SCB Asia Pacific Income Plus Fund. Both funds invest in the securities of issuers or companies domiciled in, or exercising the predominant part of their activity in Asia, excluding Japan.
SCB Asian Emerging Markets THB Hedged focuses on investment in foreign mutual fund BGF Asian Growth Leaders Fund D2, with its US dollar share class. It is domiciled in Luxembourg and comes under the UCITS. The master fund is managed by BlackRock Global Funds, Smith said.
The fund invests at least 70 per cent of its total assets in the equities of companies domiciled in, or exercising the predominant part of their activity in emerging Asia. The fund places particular emphasis on sectors and companies that, in the opinion of the investment adviser, exhibit growth investment characteristics. By March 30, it had risen 4.98 per cent since its inception on August 29, 2017, Smith said.
The SCB Asia Pacific Income Plus Fund focuses on investment in only one foreign mutual fund, the JPMorgan Funds Asia Pacific Fund, with its unit class invested in US dollars. The master fund will be managed by JPMorgan Asset Management (Europe), Smith said.
At least 67 per cent of the fund’s assets will be invested in equity instruments, debt instruments, convertible securities and real estate investment trusts (REITs). The issuers are companies located in or incorporated mainly in the Asia-Pacific region, as well as the governments or any organisations in the Asia Pacific region, excluding Japan. It gained 4.34 per cent over the year to March 30, Smith said.
 

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