Bull and bear mascots sit in the Stock Exchange of Thailand museum on Ratchadaphisek Road. UOBAM underweighted domestic consumption-related stocks for the current quarter. TAWATCHAI KEMGUMNERD
UOB Asset Management (UOBAM) has recommended underweighting domestic consumption-related stocks, particularly retail and tourism, this quarter amid weak consumer sentiment.
Sentiment does not lend support to domestic consumption, said Kulachat Chandavimol, head of product and investment strategy.
The company rated the energy sector as neutral and banking a range of neutral to underweight. Construction is its preferred sector, he said.
Central bank governor Veerathai Santiprabhob recently said the Bank of Thailand is keeping a close eye on the economy in the event some business activities slow down during the mourning period for His Majesty the King.
Vana Bulbon, chief executive of UOBAM, recommended investors diversify their global assets with selective allocation to mitigate external risks.
European economies remain fragile and China's economic growth is still cooling during its transition away from manufacturing and heavy industry to more stable growth approach.
The chaotic environment will continue to next year thanks to geopolitical uncertainties and the prospects for the US Federal Reserve hiking interest rates in December, said Mr Vana.
"Financial markets will fluctuate because of the divergence of monetary policies of major economies. For example, the Fed could raise interest rates, while the European Central Bank and Bank of Japan continue their easing policies. Some Asian countries such as India are expected to cut interest rates to stimulate the economy," he said.
Commodities and oil prices are expected to become more stable, helping investment sentiment.
Mr Kulachat said the global investment market has entered a new phase where returns from low-risk assets have fallen sharply while those from high-risk assets increased for several years.
"Investors must adjust to this new reality with selective investment. The US market is interesting for investors looking for low volatility and steady income, but those wanting higher returns may choose small European stocks," he said.
A market correction in Japan's equities is expected this year, said Mr Kulachat.
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