Asia Plus Securities (ASP) suggests investors increase their weighting for Thai stocks to 40% from 35%, while maintaining investment in other instruments such as equity-linked notes (ELN) at 10% to reduce risks from market fluctuation, says Therdsak Thaveeteeratham, senior executive vice-president at ASP.
"Thai shares have been spurred by foreign fund flows for all of November after foreign holdings declined much of the year, with Thai equity prices underperforming compared with neighbouring markets since the beginning of this year," said Mr Therdsak.
The progress in the development of Covid-19 vaccines has turned investors to a risk-on mode, as more funds move to global assets over the past few months, reflected by the rise of the MSCI World Index by 12.9%, the Dow Jones Index by 12.7% and S&P 500 Index by 11.0%.
Offshore fund inflows entering the Thai stock market were valued at 32.6 billion baht on a month-to-date basis in November. However, foreign investors were registered as net sellers of local equities worth 267 billion baht on a year-to-date basis as of Nov 30.
He recommends investors reduce the weight of investment in money markets to 15% from 20% to take advantage of the risk-on mode.
Mr Therdsak prefers a weight equal to the market as cash is a cushion for market volatility that provides purchase opportunities in case of market corrections.
The company also recommends retaining the bond weighting at 20%, higher than the market, as these are some of the safest assets with certain returns.
Investments such as ELNs should equal market sentiment, making up about 10% of a portfolio, to reduce the risk of market fluctuation, he said.
However, Nuttachart Mekmasin, an analyst at Trinity Securities, suggests the opposite, recommending investors reduce their equity weighting in the domestic market to 5% from 15%, while cutting emerging markets to 15% and developed markets to 10%.
"The Thai stock market in November was quite overheated as it jumped by 20%, placing it among the outperforming global markets. This is a good opportunity to cut weight," he said.
In December, Mr Nuttachart suggests investors allocate 15% of their funds to bond and global REITs (real estate investment trusts), adding another 5% to their cash holdings, making up 40% of the total.
"Worries over a bond yield spike eased after Joe Biden won the US presidency. We suggest investors allocate 15% of their funds to global fixed income, up from 0% last month, and that they invest in global REITs such as data centres and warehouses," he said.
Trinity Securities suggests investors maintain their investment holding in gold and bitcoin at about 10% of the portfolio, while recommending zero for oil.
"We do not recommend oil stocks as the number of Covid-19 cases continues to increase, leading to more travel restrictions and less demand for oil," said Mr Nuttachart.