Amid looming recession, investors advised to give greater weightage to bonds over equities

The advice was given at the third “Wealth Forum”, hosted jointly by The Nation Group and 12 business alliances on Monday at Conrad Hotel in Bangkok.

Danucha Pichayanan, secretary-general of the Office of the National Economic and Social Development Council, delivered the keynote address. He shared his opinion on the overall Thai and global economic trends for 2023.

He predicted a mild recession next year, but said Thailand's economy would continue to grow, as tourism, private consumption expenditure, public investment, and service exports accelerate.

He said the Thai economy had expanded by 4.5% in the third quarter of 2022, up from 2.3% and 2.5% in the first and second quarters, respectively. After adjusting for seasonal factors, the economy grew by 1.2% in the third quarter.

Meanwhile, the Thai economy is expected to expand by 3.2% in 2022, up from 1.5% in 2021. The headline inflation rate is expected to be 6.3%, and the current account deficit is expected to be 3.6% of gross domestic product (GDP).

However, he predicts that as the global economy slows, Thailand’s growth will slow as well, although it will still expand when compared to other developed and emerging markets.

He stated that in this scenario, it would be best to carefully plan investments, closely monitor market and global movement, and consider your risk tolerance.

• A year of bonds

Sornchai Suneta, Siam Commercial Bank's chief investment officer, wealth segment, Sorrabhol Virameteekul, senior vice president of Kasikorn Securities, Jitipol Puksamatanan, UOB's investment strategist, and Pramukh Malasit, Krungthai Bank's head of CIO office all agreed on a strategy of investing 60% in bonds and 40% in equity.

They explained that given the inflationary environment, rising interest rates, and geopolitical tensions, it is preferable to invest in the bond market because it provides observable returns, as evidenced by the current two-digit yields on bonds.

They recommended purchasing Investment Grade bonds. However, they suggested that investors who are just starting out could put their money into mutual funds.

In the coming six months, stocks will continue to be very interesting for some investors who can afford to take a little risk. For long-term holdings, investors are advised to seek out stocks with solid fundamentals, such as those in the pet food, power plant, and beauty and wellness industries.

• Alternative Assets

Properties, gold and digital assets remain alternative assets for investors to diversify their risk.

Tipa Nawawattanasub, executive of YLG Group, a family-owned company that provides a fully integrated one-stop investment service in the gold industry, strongly advised investors to include a 5-10% stake in gold in their portfolio.

She noted that gold is a safe haven and a hedge asset against inflation and recession. According to the World Gold Council, 5-10% of gold investment over the last decade has helped save investors receive average returns of 1.69%.

However, she insisted on not investing more than 10% in gold because doing so does not help generate more returns and reduces the opportunity to profit from investing in other assets.

Warangkana Akharathaphon, president of XSpring Capital, explained that digital assets included more than just cryptocurrencies. They also include digital tokens.

She defined digital tokens as a digital representation of securities that can be electronically received and stored using distributed ledger technology. The market continues to offer opportunities for expansion.

She encouraged Thai investors to research the market and try to invest in it.

Regarding cryptocurrency, Jirayut Srupsrisopa, founder and Group CEO of Bitkub Capital Group Holdings, Thailand's largest digital asset exchange, suggested taking a break and returning to the market in 2024.

He stated that it is preferable to hold cash over the next two years, particularly for retail investors with limited funds. He emphasised the importance of not taking risks and incurring debt.

He said his suggestions were the result of attending several international conferences and forums, such as World Economic Forum and the recent G20 summit.

He said that he has noticed that no one is talking about investing in 2023. They simply skipped the year and plan to start their business in 2024. Climate technology and breakthrough green premium will be the rising star industries for the years after 2024.

Meanwhile, Woradech Rukkhaphan, CEO of VBeyound Development, Kavin Eiamsakulrat, managing director of Ally Global Management, and Surachet Kongcheep, managing director of Property DNA, three of Thailand's leading property developers, all agreed that real estate prices have already reached their bottom.

The coming years will be the ideal time to invest in real estate. However, banks who serve as lenders rather than developers, are what will actually alter the playing field. Ordinary people with limited financial resources are advised to purchase a low-cost condominium near a skytrain or subway line.

Real estate is a long-term investment, so investors must be patient and understand that investing in real estate is risk-free if they do not speculate, they said.