Exploring investment opportunities in a Year of Optimism and Caution

Firstly, inflation is expected to continue its downward trend this year. Secondly, with the decline in inflation, central banks might reduce interest rates around mid-year. Finally, the likelihood of avoiding a significant recession is enhanced by a controlled global economic slowdown.

However, investors have reasons for caution, including prolonged geopolitical tensions that could reignite inflation. Another concern is that central banks may overextend the period of high-interest rates to combat inflation, overlooking the adverse impact on the economy. These factors could lead to a further, albeit orderly, slowdown of the global economy.

Focusing on Thailand, the Thai economy is projected to grow by 2.8 per cent this year, driven by consumer spending and tourism. The government aims to attract 40 million international tourists and achieve THB3.5 trillion in tourism revenue by 2024. Despite ongoing external challenges such as high inflation and the risk of recession, geopolitical conflicts also present foreign risks that require vigilant monitoring.

Gidon Jerome Kessel shares his insights on investment strategies to navigate another volatile year. “Entering 2024 brings reasons for both optimism and caution. It’s crucial to be aware of market and political cycles and the associated risks. Diversifying portfolios to mitigate potential volatility and pursuing steady income through multi-asset strategies are advisable,” he suggests.

UOB’s Risk-First Approach emphasises Core Allocation as the foundation for wealth planning. This strategy aims to protect investors’ wealth with sufficient cash reserves and suitable insurance solutions, addressing long-term financial needs before pursuing wealth enhancement through Tactical Allocation to seize market opportunities as they arise.

Multi-asset strategies and investment-grade bonds are key components of Core Allocation, offering portfolio diversification, risk reduction, and the potential for regular monthly dividends.

A diversified approach ensures consistent returns over time with reduced volatility. Investors are encouraged to accumulate multi-asset strategies to capitalise on opportunities across various market cycles and asset classes, including stocks, bonds, and alternatives.

Investment-grade bonds are poised for strong performance this year, as economic growth and inflation slow, and central banks are expected to cut interest rates. UOB predicts the US Federal Reserve will initiate rate cuts in 2024, providing both income from current high yields and potential capital appreciation to enhance bond returns. Duration plays are more of a tactical call as it is opportunistic and tends to outperform in a changing rate environment.

For those willing to embrace risk, Tactical Allocation offers promising opportunities. Sectors like global healthcare and regions such as Asia ex-Japan and ASEAN present valuable investment prospects. The healthcare sector, known for its resilience in slow growth periods, is buoyed by potential positive earnings growth and long-term developments in technology and medical innovation. Asia’s economic performance, particularly in ASEAN, is expected to outshine that of the US and Europe, with strong stock dividends and attractive valuations supporting the region’s markets.

UOB’s Wealth feature in UOB TMRW enables investors to buy – sell – and switch mutual funds allowing investors to easily manage their wealth from their mobile phones. Starting in the second quarter, investors can access direct offshore funds, allowing direct investment in foreign currency-denominated mutual funds from 14 renowned fund houses, including Blackrock, PIMCO, JPMorgan, and Fidelity.