Asset class to deliver the highest returns

Krungsri Asset Management expects its highest investment return in the second half will come from asset class in Asian emerging markets on the back of anticipated strong economic growth momentum.

Managing director of Krungsri Asset Management (KSAM) Siriporn Sinacharoen expects investment return in asset class, such as stocks, fixed-income securities, and commodities, of Asian emerging markets will trump other investment destinations as developing Asian economies still record the highest economic growth rates, particular for China, India and the Asean region.

China’s economy reportedly grew 6.9% year-on-year in the first two quarters of 2017, while India’s economic growth clocked in at 6.1% year-on-year during the first three months.

In the case of Thailand, GDP is projected to expand an improved ratio in the second half, anticipating GDP growth above 5% with exports and tourism attributed as factors propelling the economic engine, said Ms Siriporn.

Southeast Asia’s second largest economy grew by 3.3% year-on-year and 1.3% quarter-on-quarter on a seasonally adjusted basis between January and March.

The National Economic and Social Development Board will announce GDP growth figures for both the second quarter and half year on Aug 21.

Equities in the global markets are expected to generate high returns in the second half especially in Asian emerging markets, said KSAM chief investment officer Supaporn Leenabanchong, noting that small and mid-cap stocks in the domestic stock market have better growth potential than large-cap stocks due to higher net profit growth.

Investment percentage of asset allocation for investors with medium-risk appetite is recommended at 63% equity and 37% for fixed-income securities, said Ms Supaporn.

For the equity investment portfolio, it is recommended to invest 33% in Thai equities, 21% in developed markets, and 9% for emerging markets from the total of 63%, she said.

For the fixed-income portfolio, investment diversification is suggested for 27% in local fixed-income securities, and 10% in foreign fixed-income fund 10% from the entire 37%.

Stock markets in Europe and Japan, meanwhile, are expected to continue recovering thanks to government economic stimulus measures, said Ms Siriporn.

Investors should, however, tread carefully as several risk factors prevail in the second half, including faster-than-expected rate hike by the US Federal Reserve, rising geopolitical tensions particularly transpiring from North Korea’s missile test, and possible reduction in the ECB’s moneypumping programme, said Ms Siriporn.