Local investors are recommended to focus their investments on stock markets in Vietnam and Indonesia for the final quarter of 2023 to cope with risks that have emerged from the Chinese economy and the high possibility of a global economic slowdown, said InnovestX Securities.
Amid the volatility of the global economy as interest rates remain high, lnnovestX has revised up Thailand's GDP forecast for 2024 by 1% from 3.1% to 4.1% on the back of a stable political situation and stimulus measures to be launched by the government, said Sukit Udomsirikul, managing director and chief research officer.
lnnovestX has retained its forecast for Thai GDP growth in 2023 at 2.7%.
Some Asean countries, however, are expected to grow at a higher rate than Thailand. Vietnam's GDP, for example, is projected to grow 4% this year and 6%-7% next year, while Indonesia could expand 5% this year and 5%-5.5% next year.
"Investors should diversify investments into emerging markets such as Vietnam and Indonesia, which stand to gain from the US-China conflict. That is an opportunity worth exploring," he said.
The brokerage targets the Stock Exchange of Thailand (SET) index to finish at 1,650 points this year and 1,750 points in 2024. The key entry point in the fourth quarter is a range of between 1,500 and 1,550 points, with expected returns ranging from 5-7%.
Phasuvut Vilainerun, InnovestX's assistant managing director and head of private funds, said Vietnam, with a population of 97.4 million, has seen its economy grow consistently at roughly 6-7% per annum, double that of Thailand's.
Indonesia, the largest economy in Asean with a population of 273 million, is on course to grow at a rate of 5% per year.
"Both countries have attracted significant foreign investment, with direct investment last year being two and four times higher for Vietnam and Indonesia, respectively, compared to Thailand," said Mr Phasuvat.
Moreover, both nations have a working-age population of up to 50-60% of their total populations. These individuals are transitioning from agriculture to industry and increasingly residing in urban areas, resulting in rapidly rising incomes.
"This, in turn, is expected to support the increase in domestic spending over the next 5-10 years. Industries set to benefit from this growing middle-class population include consumer goods and services like food and beverages, electronics, mobile phones and jewelry," he added.
Mr Phasuvut said Thai investors are increasingly interested in investing in the Vietnamese and Indonesian markets.
Currently, there are investments through private funds in these three countries (Thailand, Vietnam and Indonesia) with a fund value of 12 billion baht, divided into 3.5 billion baht in Thailand, 6.5 billion in Vietnam and 2 billion in Indonesia.
The return on investment this year to date for assets is 23% in Vietnam and 15% in Indonesia while Thailand has a negative return of 1%-2%, he pointed out.
Mr Sukit said risks Thai investors should be aware of in the next 6-12 months include the global economic slowdown, including China's economic slowdown. Second is natural disaster risks involving El Niño, water management and drought. Finally, there are geopolitical risks including that of the US and China.
Recommendations for the final quarter are stocks with clear profit trends and those benefitting from government stimulus, namely Airports of Thailand (AOT), Bangkok Chain Hospital (BCH), Central Retail Corporation (CRC), KCE Electronics (KCE) and Krung Thai Bank (KTB).