Institutional investors expect Thailand's policy interest rate to be cut by 0.25% to 2.25% this year, recommending an overweight position in fixed income assets, according to the Association of Investment Management Companies (AIMC).
AIMC chairwoman Chavinda Hanratanakool said a survey of institutional investors regarding economic conditions and interest rate trends found that they are still concerned about the global economy that is expected to either stabilise or deteriorate to some extent this year.
Conducted in late December, the survey's results showed that almost all Thai fund managers have a positive view of the country's economic situation going forward. The direction of interest rates, the level of inflation, and economic growth are positive factors influencing investment in the country, while political stability will be a drag.
"Institutional investors expect the interest rate to be a key support for the economy to continue to expand. Therefore, it is expected that the policy interest rate in 2024 will remain at 2.5% or may be slightly reduced to the level of 2-2.25% in order to maintain the stability of product prices and take care of the economy to achieve sustainable growth," Ms Chavinda noted.
Regarding the weight of investments, the fund managers emphasised fixed income assets, especially medium- to long-term debt instruments in portfolios.
For investing in equities, they placed a neutral to overweight perspective focusing on large-cap stocks, especially in commerce, healthcare services, tourism, food and beverages, and electronics groups, Ms Chavinda said.
Institutional investors also have a neutral outlook for investing in alternative assets this year, but place weight on Real Estate Investment Trusts (REITs) in property and core infrastructure.
Fund managers also placed an importance on environmental, social and corporate governance (ESG). For domestic investments, they will focus on large stocks, especially those that give importance to environmental factors, and expect to launch funds that focus on sustainability for overseas investment through foreign investment funds.
Regarding the global view, investors believe the world economy will slow down and expect US interest rates to gradually be reduced to the level of 4.5-4.75% by the end of the year, from 5.25%-5.50% at present.
For investment assets, fund managers see debt instruments as being more attractive than other risk assets, particularly long-term US and European debt instruments. Meanwhile, they have a neutral perspective on stocks, focusing on large-cap stocks in developed markets.
Countries that are attractive for stock investments include the US and India, emphasising information technology, communication services, the consumer sector and medical services groups, Ms Chavinda said.
For alternative investments globally, institutional investors have a neutral weight with a focus on property and infrastructure REITs, she added.