By Jarupong Krisanaraj
He said financial markets faced a number of challenges last year, such as the US-China trade war, uncertainty over Brexit, the political unrest in Hong Kong, and natural disasters in other countries.
“However, the market also gained a boost from central banks' loose monetary policies, while the US Federal Reserve lowered interest rates, boosting liquidity and helping risky assets generate good returns on investment, especially in developed markets,” he said.
“Although the Thai stock market the previous year generated a poor return on investments due to regional market directions, the country’s economy and changing accounting policies and standards helped it increase by 1.02 per cent year on year.”
KTAM estimates gross domestic product growth this year will be 2.8 per cent, better than the previous year, which is likely to have grown at 2.4 per cent.
“The main engines driving the country’s economy are the annual budget in fiscal 2020, which has already been approved by the House of Representatives, government investment in infrastructure and the Eastern Economic Corridor, growth in tourism, and the low-interest rate trend,” Somchai said.
“However, the economy still faces both long-term and short-term challenges, such as an ageing population, technology disruption, a stronger baht, risks to global economic expansion, and water shortages. We feel the Monetary Policy Committee may cut interest rates to help stimulate the economy. The policy rate at the end of the year may be at 1.00 per cent.”
KTAM estimates the Stock Exchange of Thailand Index trend this year will be 1,700 points, expecting that the profit of listed companies will expand around 6 per cent and the price-to-earnings ratio will be 18 times that of the previous year due to a low-interest trend.
“Investors should closely follow major conflicts among countries, the US presidential election, the Brexit situation, central banks’ movements, the country’s economic weakness, pressure from the baht appreciation, uncertainty in government regulations, and the changing accounting standards,” he advised.
KTAM will invest in stocks that have benefited from the low-interest trend and the US-China trade conflict, as well as stocks that have improved earnings and low prices.
The asset manager still recommends that investors diversify their purchases of various assets due to the fluctuation in financial markets. Therefore, managing investment portfolios which are capable of acceptable risks is important.
“At the beginning of the year, we still believe that risk assets might gain from an economic recovery after investors relieve concerns about an economic recession. Therefore, we suggest there should be slight investment in risky assets, such as in emerging markets, and those with not very expensive prices, as well as the US stock market with strong fundamentals,” he said,
“In the next phase, investors may have to be careful about profit-taking sales and various risk factors, which might affect their investments in the future,” Somchai added.