CIMB Preferred organized a seminar titled "CIMB Investment Outlook: Navigating Thailand's Economy and Financial Market in the Trump Era" at The St. Regis Bangkok on March 5, 2025. The event featured esteemed investment experts from CIMB Thai Bank and CIMB Group, as well as investment specialists from various asset management companies, including Eastspring, SCBAM, and MFC, who provided valuable insights on investment opportunities to CIMB Preferred clients.
Global Economic Update Y2025
Dr. Amonthep Chawla, Executive Vice President, Head of Research Office, CIMB THAI Bank, suggests that Trump's trade policies could impact the Thai economy. According to the IMF, the global economy is expected to slow down, despite the U.S. economy continuing to grow at 2% and China’s growth dipping below 5%. The U.S. is also likely to experience an increasing trade deficit, although its deficit with China has reduced from 40% to 20%. However, trade deficits with other countries, including Thailand, are on the rise. Thailand, in particular, is at risk as it ranks 11th in terms of having a trade surplus with the U.S. However, U.S. economy continues to expand, inflation remains at 3%, which exerts pressure on the potential for interest rate cuts.
For Thailand, although the economy is projected to grow by 3% in the first quarter of 2025, it is expected to slow down to 2% in the latter half of the year. The effects of Trump’s policies are likely to become more apparent in the following quarters, with Thai interest rates potentially being lowered due to the slowdown in the economy. Exports in early 2025 are expected to pick up, driven by businesses pushing for exports before trade tensions escalate further. However, in the longer term, risks may arise from a currency war.
Trump is expected to pursue policies that slow down globalization, promote reshoring of industries, and implement neutral fiscal spending. These measures could lead to an increase in public debt and a weakening of the currency, aiming to boost trade competitiveness.
Investment Opportunity & Market Outlook
Mr. Patrick Chang, Regional CIO, CIO Office, CIMB Group, discussed the significant changes in the investment landscape, particularly after the inauguration of President Donald Trump, which led to a phenomenon known as "Trump 2.0." This shift has created volatility and uncertainty in global markets, particularly in the U.S., China, and Europe. Mr. Patrick emphasized that adaptability and flexibility are crucial factors for investors in 2025. A diversified investment portfolio, including investments in developed markets, fixed-income securities, and alternative assets such as gold, is essential. He also highlighted the effectiveness of strategies like Covered Call, which can generate solid returns amid market volatility.
Mr. Patrick believes that the U.S. stock market is not yet in a bear market, but rather in a phase of consolidation driven by factors like tariffs. In the future, tax cuts and regulatory easing could support market recovery. Furthermore, he sees continued growth opportunities in the technology sector, particularly in AI, which will remain a key driver for the U.S. market.
He also pointed out the promising recovery of the Chinese market following the government's economic stimulus measures and noted that the European and ASEAN markets may present attractive investment opportunities, despite facing economic challenges. For example, the REITs sector in the Singapore market offers appealing returns. Overall, he advised investors to maintain diversification and risk management in their portfolios to navigate market volatility and capitalize on emerging opportunities effectively.
Finding Opportunities Amid Market Uncertainty
Mr. Yingyong Chiaravutthi, CFA, Executive Vice President and Head of Investment, Eastspring Asset Management (Thailand), discussed various aspects of Donald Trump’s life and business approach, which reflect his distinctive traits. From his youth to becoming a globally recognized public figure, Trump’s career trajectory showcases his unique style. Around 40 years ago, Trump authored “The Art of the Deal”, a book that revealed the art of negotiation in the construction and casino projects in Atlantic City. Despite financial difficulties and challenges in securing investors, he managed to bring Holiday Inn on board as a partner by creating a lively and impressive image of the construction site to attract investor attention. His ability to negotiate skillfully and capture public interest was evident in this work.
In the past decade, Trump’s reality TV show “The Apprentice” gained massive popularity with high TV ratings and even won an Emmy Award, further cementing his status as a symbol of success in the media industry. As for his current trade policies, Trump’s approach is expected to be one of “threatening” trade partners with tariffs and retaliatory measures based on a “tit-for-tat” principle, leading to market uncertainty globally.
Trump's “inflationary” policies—such as tax cuts, increased government spending, and immigration control—could exert economic pressure and potentially lead to future inflation. Despite the volatility, the U.S. stock market continued to grow during his presidency. For key investment recommendation for the next 3-6 months can be outlined to 4 groups: Asian equities, growth stocks, U.S. bonds, and defensive sectors such as healthcare.
“Trump not only demonstrated his skill as a shrewd negotiator but also as a master of public image, influencing the global economy and trade policies. His ability to adapt and create opportunities in an ever-changing market reflects his strategic mindset and entrepreneurial flair.” Mr. Yingyong said.
Market Outlook and Investment Strategies Amid Uncertainty
Mr. Chaovakorn Chotibunt, Assistant Managing Director, Head of Investment Strategist, MFC Asset Management: The return of Donald Trump may lead to increased volatility in the U.S. stock market. Investors should prepare strategies such as "buying on dips," supported by U.S. strong fundamental factors like 2% GDP growth, solid employment numbers, and expanding consumption, which reflect the robustness of the U.S. economy despite uncertainties around trade and financial policies. He recommends the MFC US Equity Premium Income Fund: MUSPIN-H/UH, a fund that feeds into J.P. Morgan-managed fund. This fund focuses on U.S. stocks, with diversified risk and a defensive selection style. The fund also employs a covered-call strategy to generate cash flow and reduce total return volatility, allowing investors to access leading U.S. companies while managing risk in a volatile investment environment.
Mr. Yingyong Chiaravutthi, CFA, Executive Vice President and Head of Investment, Eastspring Asset Management (Thailand): Donald Trump’s trade war is described as "very loud noise" and aims to set new standards for American society. We are entering an era of "Protectionism, Standalone, and Unwind Globalization." However, from our perspective, the U.S. will still depend on China’s manufacturing sector, and over the next five years, the U.S. will remain the world leader. Regarding Emerging Markets (EM), they are currently undervalued and present attractive opportunities. He recommends the ES-GQG Fund, which feeds into Wellington-managed fund, focusing on high-quality global stocks with long-term growth potential driven by strong free cash flow. Another recommended fund is the ES-USBLUECHIP, which feeds into T. Rowe Price-managed fund focusing on large and mid-cap U.S. stocks with strong fundamentals and a "High Conviction" approach. Both recommended strategies will suit for current volatile environment as opportunistic play.
Mr. Piyapat Patarapuvadol, FRM Director, Head of Investment Strategy Department, SCB Asset Management (SCBAM): The U.S. stock market is expected to continue growing steadily, but this year, a shift toward more diversified investments is anticipated. Investors may reduce their allocation in the “Mag 7” large technology stocks and shift toward mid and small-cap stocks that benefit from lower interest rates and potential tax cuts. He recommends the SCBRS2000(A) Fund, which invests in small-cap U.S. stocks through the Russell 2000 Index ETF. The strong earnings growth outlook for the Russell 2000 group is also a key factor. For more volatile investment conditions, he suggests the SCBLEQA Fund, which feed into Alliance Bernstein-managed fund. This fund focuses on low-volatility strategies, which aim to minimize volatility and protect against losses during periods of market uncertainty.
Q&A from the Experts
1. Is there a chance for the Thai stock market to recover? What factors could affect it?
The Thai stock market still has high liquidity, even though the economy is growing slowly. These factors have already been reflected in the market. Additional downward pressure is limited, as stock prices have already adjusted to some extent in response to negative factors. However, the direction of the market will still largely depend on external factors and domestic economic policies.
2. Should I invest in MUSPIN-H or MUSPIN-UH? Which class is a better choice?
Currently, investing in the Unhedged Class is more appealing, as currency hedging costs around 2-3% per year. The core fund has an expected return of 7-9% per year, with a 1% fee from the Thai fund, leaving a return of 6-8%. If you choose to hedge the currency, the return will decrease by an additional 2-3%. The exchange rate is currently around 33-34 baht per dollar, which is not a major disadvantage. However, if the baht weakens beyond 35 baht per dollar, a Hedged investment option may become a safer choice.
3. Are global stocks and U.S. stocks overpriced? Should I invest now?
Diversifying investments across various asset classes is a good strategy to reduce risk, especially by gradually investing in global stocks. This approach will help you better time the market and reduce the impact of short-term market volatility.
4. What proportion of Russell small-cap stocks should be in my portfolio?
Since small and mid-cap stocks are more volatile than large-cap stocks, it’s advisable to allocate no more than 5-10% of your portfolio to this sector, allowing you to manage the risk appropriately.
5. If the next Fed meeting does not result in a rate cut, is there a chance that the Bank of Thailand (BoT) will reduce its rate?
If the Fed decides not to cut interest rates in its next meeting, which could indicate a desire to maintain the stability of the U.S. economy. There is still a possibility that the Bank of Thailand (BoT) may consider reducing interest rates. This would depend on whether Thailand’s economy shows signs of slowing down or faces external pressures. The BoT's rate decisions generally respond to domestic economic conditions and global market considerations. However, the decision will ultimately depend on the economic situation in Thailand at that time.
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