With relieving on covid-19 situation, SCB WEALTH HOLISTIC EXPERTS is back to serve and enhance clients’ portfolio management. SCB CHIEF INVESTMENT OFFICE (CIO) suggests five portfolio management tactics to tackle high inflation and rising interest rates. During periods of market volatility, investors should accumulate high-quality bonds and diversify their exposure to private assets, structured notes, and ESG stocks. As a result of the reopening of the country, SCBS forecasts 3.4% growth in the Thai economy this year, fueled by the country's reopening and expects the SET to fluctuate between 1,550-1,750 points with a year-end target of 1,650 points. SET-listed companies strong profit and undervalued like banks and food and beverage-related are recommended
Dr. Yunyong Thaicharoen, Senior Executive Vice President and Chief Wealth Banking Officer of Siam Commercial Bank, noted that during the volatile market, SCB WEALTH prioritizes in providing holistic advisory services to HNWI clients by providing investment solutions and managing asset allocations in all circumstances. The primary objective is to build a powerful brand that focuses on wealth planning through Wealth Relationship Managers, Investment Advisors, and Product capabilities that meet all investment goals and customer requirements. SCB Wealth features a Chief Investment Officer (CIO) and Investment Office and Products Function, comprising veteran fund managers, economists, strategists, securities analysts, and investment planners that are professionals in offering wealth management solutions. These teams operate in tandem to monitor financial and investment market situations in order to design product selection methods and allocate investment assets, while also being able to provide timely advice and tailor investment portfolios over changing market conditions. The Estate Planning and Family Office is a consulting center that focuses on family asset and inheritance management for high-net-worth individuals, with an emphasis on providing initial comprehensive tax advice related to family property management and asset transfer planning from generation to generation. The office collaborates closely with SCB Securities Co., Ltd. (SCBS) to provide in-depth analyses of Thailand's listed firms. The quality of information is essential to the success of financial and investment transactions, including the creation of investment products for example, Structure product and Private Asset that fulfill consumers' expectations at all stages. It is therefore a crucial factor in enhancing SCB WEALTH's capacity to build wealth for clients in a sustainable manner.
Sornchai Suneta, Executive Vice President & Head of the Investment Office and Product Function and Chief Investment Office, Siam Commercial Bank, revealed that stubbornly high inflation and an economic downturn pose a threat to the global economy. This may put several countries in danger of falling into economic recession over 2023-2024, with the following three primary factors influencing the global economy and financial markets:
In terms of investment outlook implications, prolonged high inflation will result in a cycle of rising interest rates continuing during 2022 – 2023 and directly affect the global financial market through an increase in bond yields, but also a decline in returns from global stock markets, particularly long duration equities focusing on high revenue growth but lacking short-term cash flow support. It will also boost market volatility for speculative assets.
SCB CIO suggests the following five portfolio management measures to counter high inflation, harsh and rapid interest rate increases, and volatile global financial markets:
In his assessment of the Thai stock market for the second half of 2022, the Managing Director of SCB Securities Co., Ltd.'s Research Group, Sukit Udomsirikul, finds that the reopening of the country will contribute to a 3.4% economic growth this year, despite the threat to domestic demand posed by persistently high inflation and rising interest rates. In the worst-case scenario, GDP should increase by a minimum of 2.9%. The influence of negative sentiment in US and China stock markets mean the second half of this year is not likely to be a buyer's market. As a result of Thailand’s reopening, profit for listed companies as a whole will continue to rise, with a modest impact of inflation and interest rates on market segment.
The operating results of firms listed on both the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (MAI) in the first quarter of 2022, showed a total net profit of 284 billion baht, an increase of 11% YoY. Industries in which profits grew included Energy and Petrochemicals (15%), Real Estate (14%), Medical (331%) and Electronic Components (46%); profit fell however, in Agriculture (54%), Automotive Parts (4%), Insurance (78%) and Packaging (4%).
SCBS believes SET fundamentals will remain strong in 2022-2023, with earnings per share (EPS) likely to increase by 10% annually on average. Segments whose earnings per share have returned to pre-COVID-19 levels are Banks, Petrochemicals, Commerce and Tourism. SCBS expects the SET Index to fluctuate between 1,550 and 1,750 points and has set this year’s SET target at 1,650 points, based on the assumption that the index will not fall as precipitously as it did during the pandemic because impact on profit will be less severe. Risk factors jeopardizing profits of listed companies in 2H22 include: 1) energy and raw material costs, which will impact the Transport and Construction Materials and 2) a rate hike by the Monetary Policy Committee (MPC), which may impact the Tourism, Food, Commerce and Power Plants. However, the Thai stock market will see its nadir in the third quarter as the US Federal Reserve has raised interest rates dramatically and China is managing its coronavirus crisis stringently. The trajectory of operating results of publicly traded firms is clear, the country's reopening supports the market and inflation seems stable. The transfer of foreign capital, the delayed reopening of China and the Russia-Ukraine War pose additional threats that must be monitored.
"We utilize a bottom-up approach to forecast stock valuations and industry expansion. We set a SET Index target at 1,650 points based on the current economic climate. Banking, communications and food are segments that will be outperforming fundamentals, while transportation, hospitals, electronic components, real estate and tourism will underperform fundamentals. We have used the bear case valuation as a key buying point, with a margin of safety of 5% or below 1,600 points from the current level. We see the SET Index fluctuating between 1,550 and 1,750 points," Sukit stated.