Post-outbreak equity opportunities on the horizon
Although the Covid-19 pandemic has ravaged a lot of businesses, some have reaped gains from the global outbreak, with investment opportunities presenting themselves in the post-outbreak period, says an investment veteran.
Win Phromphaet, chief investment officer at CIMB-Principal Asset Management, said the investment trend after the Covid-19 pandemic ends will favour four segments that offer investment returns higher than banks' deposit rates.
These are high-dividend stocks, real estate investment trusts (REITs), selected Asian stocks and global technology stocks.
"Stock markets have reacted in advance as governments around the world have begun to ease their lockdown measures," said Mr Win.
REITs still have an average return of around 5-6%, but investors have to focus on assets that invest in logistics and infrastructure such as telecommunication tower lines and data centres, while avoiding REITs linked with hotel and retail businesses, said Mr Win.
He said Asian stocks will recover faster than their US and European counterparts, especially Chinese equities where companies are involved in technology, online gaming, healthcare and cybersecurity businesses.
For global technology stocks benefiting from the pandemic crisis, Amazon stands out as the e-commerce behemoth recruited around 175,000 new staff worldwide, said Mr Win. Firms involved with cloud computing and online education also have good investment potential thanks to gains from the lockdown measures, he said.
Therdsak Thaveeteeratham, executive vice-president at Asia Plus Securities, struck a note of caution, saying although new infections have subsided in Thailand, a second wave could not be discounted as Covid-19 cases remain high in Europe and the US.
"Overseas air travel is unlikely to see restrictions eased in the second half and foreign tourist arrivals will disappear. This will cause Thailand's GDP to contract by 6-7% this year," said Mr Therdsak.
Domestic tourism is anticipated to recover in the second half as the government has eased some lockdown measures, he said, but even a recovery in private consumption will not be enough to shore up the aviation and hotel sectors, said Mr Therdsak.