US equity funds have attracted the biggest inflows this year to date, attributed to the US economic recovery and anticipated interest rate cuts, as mutual fund investment in Thai stocks fell by nearly 10 billion baht during the same period, says Morningstar Research (Thailand).
This year nearly 7.8 billion baht in funds have been invested in US equity funds, an increase of 5.04% from 2023, with a net inflow for six consecutive months.
The most popular fund types focus on investing in the main indices of the US stock exchanges, such as the S&P500 and Nasdaq.
Thai equity funds have registered net outflows, with large-cap stock funds recording outflows for five consecutive months since the beginning of the year.
Outflows exceeded 15.4 billion baht, of which nearly 90% was investment flowing out of long-term equity funds that gradually matured.
Large-cap stock funds returned an average of -3.54% this year to date, the lowest average return of all fund types, according to Morningstar.
Amid a sluggish investment atmosphere in the Thai market, investors turned to global exchanges, including the US and Asian bourses.
The three Asian markets attracting the most investment were India, Vietnam and China, with stock funds investing in these three markets posting net inflows of 6.92 billion baht since the start of 2024.
The Indian bourse has generated strong returns, with an average return of 23.8% over the past year and a 7.22% return this year to date.
The net inflow of Indian equity funds hit 2 billion baht in March, a record high since September 2017.
China's stock market is beginning to show signs of improvement and the average performance of Chinese stock funds has started to turn positive. This was apparent in May, when Chinese stock funds had a net inflow of roughly 1.5 billion baht, the highest value among stock funds, noted Morningstar.
Vietnam's stock funds recorded a return of 13.1% so far this year, and 17.7% over a one-year period.
Analysts predict Vietnam will be a beneficiary of a supply chain shift, potentially moving from a frontier market to an emerging market in the future, said the mutual fund ratings firm.
Technology stocks generated the highest average return of 25% over the past year, posting a 5.71% gain this year to date.
Technology equity funds registered the greatest net inflow this year of 2.5 billion baht.
A supporting factor for growth is the artificial intelligence trend, benefiting businesses in the supply chain and increasing stock prices, said Morningstar.
As policy interest rates decline, technology stocks might gain greater attention from investors, said the firm.
It is worth following the Federal Reserve's rate comments closely to determine the trend for the rest of the year, said Morningstar.