Equity is projected to generate the highest returns among asset classes next year, with global equities best positioned because of further monetary easing and subsiding trade tensions, says Bualuang Securities (BLS).
With the global and US economic recovery and reduced US-China trade tensions anticipated, the US stock market is expected to continue rising into next year, said BLS executive vice-president Chaiyaporn Nompitakcharoen.
Further monetary easing from global central banks is on the cards, which will also help rev up fund flows moving into bourses globally, said Mr Chaiyaporn.
Vietnam's stock market is identified as the most attractive investment destination in the region on the back of high economic growth ratio and listed firms' combined net profit expanding by around 12% during the past five years, he said.
Relocation of Chinese production facilities into Vietnam and a large population also strengthen Vietnam's economic fundamentals, he added.
With a year-to-date return of 0.64% as of yesterday, the Stock Exchange of Thailand (SET) index is considered as nearly bearish compared with stock markets in Japan, Europe and the US where an average return is around 12-20%, according to BLS.
"For next year's investments, we recommend diversifying into global equities more than focusing on the domestic stock market. Our investment theme for this year is equity at 15%, fixed income securities at 45%, gold at 15%, property at 15% and cash at 10%, but the portion of equity will increase significantly next year with a greater focus on global equity markets," said Mr Chaiyaporn.
For next year's investment outlook in Thailand's stock market, BLS still prefers defensive assets such as property funds, infrastructure funds, real estate investment trusts, high dividend stocks, gold funds and fixed-income funds.
"REITs have offered average returns of 20% and 14% for gold this year and we expect these assets to continue generating good returns in 2020. These assets will be sold and funds will move into riskier assets if the global economy recovers next year," said Mr Chaiyaporn.
The SET index, meanwhile, was in the red yesterday with the bourse tumbling by 24.17 points or 1.54% to close at 1,549.74 in turnover worth 54 billion baht.
Energy and utility stocks saw highest sell-off, with GULF plummeting by 5.8% and GPSC tumbling by 5.5%.
Krungthai Asset Management executive vice-president Somchai Amornthum said stocks market in Thailand and the Philippines saw a steep plunge as funds diverted into stock markets in Northeast Asia on the back of subsiding trade tensions.
"Subpar banking stocks and recent domestic political protests are internal factors drumming up investors' concerns," said Mr Somchai. "Profit-taking was also seen in utility stocks yesterday."