2024-03-26 11:58:23
Mr. Sornchai Suneta CFA Deputy General Manager Head of Investment Office and Product, Wealth Business Group Siam Commercial Bank Revealed that US inflation numbers decreased more slowly than investors expected While the US policy interest rate has been higher than the inflation rate for 6 consecutive months. It is expected that US inflation will gradually decrease and whenUnited States Federal Reserve (Fed) Confident that inflation can be controlled within the target range of 2%.
After that, the Fed will return to focus on economic growth. and began to reduce interest rates for the first time which the market expects will happen in June. 67 and including this year It is expected that interest rates will be cut approximately 3-4 times during which interest rates will begin to decrease. This will cause the return on holding cash in US dollars to decrease. and the returns are not better than other assets
“In 2023, holding cash in US dollars returned approximately 5.1%, better than investing in commodities. But it may not give better returns than other assets. Meanwhile, statistics dating back 30 years show that cash denominated in US dollars gave better returns than other assets in years of crisis. But at a time when inflation is stable Interest rates are in a downward direction. The economy can still expand. Risky assets will give positive returns. Cash in US dollars does not provide better returns than other assets, so we should find ways to invest in other assets before we get lost.” Mr. Sornchai say
From the beginning of last year until the beginning of March. 67 Investments around the world continue to flow into the money market, with the US dollar being the highest. Followed by private sector debt instruments, government bonds, and stocks. In the money market, the US dollar currency If you count all the past 5 years, it is found that there has been a total of 3.6 trillion US dollars flowing in. This means that when interest rates begin to decrease, the money in the money market is denominated in US dollars. This segment tends to move to invest in various assets.
For investors who park most of their money in the money market in US dollars. Because it is considered that investing in financial instruments which has a short period of time It also gives good returns. This prevents the movement of investment funds to any of those assets. In the future, short-term returns are likely to decrease rapidly. While other assets have already begun to improve, so for the opportunity to create good returns Investors should look for ways to invest in other interesting assets, including debt instruments with maturities of approximately 1-3 years, as well as increasing opportunities to invest in attractive stock markets in Asia such as Japan and South Korea.
In this regard, investing in foreign debt instruments, it is considered that debt instruments with maturities in the next 1-3 years still provide high returns. It’s an interesting group. You may also receive returns from the price difference during the period when interest rates decrease during the 2nd-3rd quarter. As for investing in stocks, it was found that over the past 1 year, developed stock markets such as the US stock market and European stock markets All have good operating results. With the benefit of the increase in large stocks that have quite a lot of weight in the index, such as the S&P500 index of the United States since the beginning of ’24 until the present. Adjusted approximately 7-8%
This is the return that comes from large stocks in the group of 7 angels, approximately 6%, while the remaining not more than 2% is the return of other stocks in the market, clearly reflecting the concentration of returns that come from large stocks. The European stock market When looking at the STOXX600 index, it is found that from the beginning of 2024 until the present. increased by 4.5%, resulting from the performance of 7 large stocks and almost 4%, with only a small portion remaining from small stocks.
Mr. Sornchai Said that in the past the market expected quite a lot of returns from large stocks in developed stock markets. and give returns according to the target These stocks may undergo a correction. from selling to make a profit Meanwhile, fundamental factors still support further growth. And the interest rate cut is also positive for this group of stocks. Even though investors are aware of the factor of reducing interest rates in stock prices, therefore, the future trend may not increase as much as in the past, making it appear that investors can continue to invest in developed stock markets. But the returns received may not be as high as before.
For stock markets in Asia, it is considered that the Japanese stock market And the South Korean stock market is interesting, with the Japanese stock market from the beginning of 2024 until now giving returns of 15-16%, but the returns are concentrated in large stocks in the luxury goods group. and technology is the main As for the Japanese stock market index Even though it has improved a lot But when compared to the previous increase that had reached a record high, it was found that the price to earnings per share (P/E) was different. This time it has a lower P/E level.
Meanwhile, the Japanese stock market has taken measures to reform good governance. Encourage companies to put large amounts of stored cash on their balance sheets. Go out and buy back shares. This will give the stock price a chance to rise, driving up EPS and being able to pay higher returns to shareholders. It will help increase the return on equity (ROE) of the Japanese stock market. Compared to the present, it is still lower than the US and European stock markets with ROE of more than 20%. As for the overall picture of the Japanese economy, Inflation began to increase. Employment is better Especially in the service sector As for wages, they increased in line with inflation. This helps improve consumption in Japan. and will result in more investment coming from Japanese investors accordingly.
Therefore, we view the Japanese stock market as interesting in the medium to long term. only in the short term The Japanese stock market rose significantly. There may be some adjustments. Investors may wait for the market to correct in order to invest again. The South Korean stock market It currently has a very low share price to book value (P/BV) ratio in almost every business sector and has a lot of cash on its balance sheet. The South Korean stock market is trying to increase company value similar to the Japanese stock market. through share repurchases and paying dividends to investors
Moreover, the ROE of the South Korean stock market tends to move in line with the cycle of South Korea’s merchandise exports. which are mostly groups electronics semiconductors, so when the world economy recovers better South Korean exports should recover, causing the ROE of the South Korean stock market to improve. As for earnings per share, it is likely to improve following exports. In addition, price to earnings per share (P/E) is still cheap, with P/E over the next 12 months at 10.6 times or -0.3 SD, low. than the 5-year average, making the South Korean stock market an attractive market for investing in Opportunistic Portfolio, which is a supplementary investment portfolio For increasing the opportunity to receive returns in the 2nd quarter.
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