Mitihoon – InnovestX Securities Co., Ltd., the financial investment flagship of the SCBX Group, has assessed the global economic and investment landscape for the fourth quarter of 2024. The company notes that this period represents a critical transition from an era marked by robust U.S. economic growth, high inflation, and tight monetary policies, with interest rates remaining elevated, into a new phase where the U.S. economy is expected to slow down. Interest rates are projected to begin a downward trend through 2025, with key focus on U.S. economic and political policies following the November 2024 presidential election. This environment could lead to heightened volatility in global financial markets, particularly in developed markets (DM). However, the declining U.S. bond yields and the weakening U.S. dollar are expected to bolster the appeal of emerging market (EM) equities, including the Thai stock market. The Thai economy is poised to recover in Q4 2024, aided by the implementation of the first phase of the Digital Wallet initiative, which is set to stimulate domestic consumption.As a result, the investment climate in the Thai stock market is anticipated to improve compared to previous quarters. InnovestX projects that the SET Index will reach 1,500 points by the end of Q4 2024 and rise to 1,550 points in 2025. Key stock picks include BDMS, CPALL, GPSC, HANA, and LHHOTEL.
Mr. Sukit Udomsirikul, Chief Research Officer at InnovestX Securities, stated, “Key factors to watch in Q4 2024 include: 1) Whether the U.S. economy will continue to expand without entering a recession, as the market expects; 2) The outcome of the U.S. presidential election, which will have lasting effects on both the global economy and politics due to the differing policies of the two parties; 3) The direction of the technology sector and its ability to maintain growth; and 4) Further economic stimulus measures in Thailand beyond the Digital Wallet initiative. He added, “The recovery in the Thai stock market during August and September can be attributed to a resolution of the ‘confidence crisis,’ which has caused stock prices to once again reflect fundamentals. This is evident from the more than 30% increase in daily trading volumes compared to the eight-month average in 2024. Foreign investors have resumed net buying, bringing the Thai stock market’s performance closer to that of its regional peers.”
Mr. Sutthichai Kumworachai, Head of Investment Strategy at InnovestX Securities, stated, “The global economy continues to expand steadily, though major economies are beginning to slow in a soft-landing scenario. The Federal Reserve’s rate cuts are likely to prompt other central banks to follow suit, enhancing the appeal of emerging markets (EM), including Thailand. Inflation is easing, with energy prices expected to decline further due to a shift in the oil market towards oversupply as demand slows and supply increases. Recommendations include closely monitoring U.S. economic and employment data following the interest rate cut, China’s economy, which may miss its 5% growth target, and the U.S. election, which will impact global economic and geopolitical dynamics. In Thailand, a focus on new government policies and corporate earnings is advised, as both will influence the movement of the SET Index in the near future.
Dr. Piyasak Manason, Head of Economic Research at InnovestX Securities, commented,”In Q4 2024, the global economy, interest rates, and politics will enter a new era. Major economies are expected to slow down, especially in the manufacturing sector. Interest rates will begin a downward cycle following proactive rate cuts by the Federal Reserve, while global political dynamics will shift and become more volatile, particularly in the U.S., where the two presidential candidates have starkly different economic policies. Globally, Europe’s economy is projected to grow by 0.8% this year, slower than the U.S. at 2.3%, while China will see a slowdown to 4.8%, and Japan’s growth will decline to 0.0%. In Thailand, the economy slowed in the first half of the year due to political factors and tight fiscal and monetary policies. However, with the successful implementation of the Digital Wallet initiative, Thailand’s economy is likely to recover in Q4, with expected growth of 3.5%. For the full year 2024, growth is anticipated at 2.5%. There is also the possibility that the Monetary Policy Committee (MPC) will cut interest rates by 1.0% in 2024.”
Mr. Sitthichai Duangrattanachaya, Senior Global Equity Strategist at InnovestX Securities, stated, “In Q4 2024, we expect significant market volatility, largely driven by external factors, especially the U.S. presidential election, where the polls remain close, and the candidates’ economic policies differ greatly. However, the Federal Reserve’s interest rate cuts will positively impact emerging markets (EM), where economies are growing faster compared to developed markets (DM). The weakening U.S. dollar will further attract capital inflows into emerging markets, including Thailand. Domestically, new government policies to stimulate the economy and restore confidence will support the continued rise of the SET Index. We project the SET Index will reach 1,500 points by the end of 2024 and 1,550 points in 2025. Our top stock picks focus on companies with strong recovery potential, benefiting from domestic consumption and economic stimulus measures, as well as interest rate cuts. These include BDMS, CPALL, GPSC, HANA, and LHHOTEL.”
“Following the Federal Reserve’s interest rate cuts, aimed at mitigating the impacts of a slowing economy and weakening employment, the global economy has not yet entered a recession. Risk assets remain attractive. Stocks benefiting from lower interest rates include home improvement retailers (HD, LOW), clean energy companies (FSLR, ENPH), and those with low valuations and high dividends (VZ, PFE, F, TGT). Technology stocks with strong earnings potential (MSFT, AMD, CRM, PANW, NVDA) are also appealing. Beyond the U.S., we recommend focusing on stocks with strong fundamentals, rather than relying solely on low valuations. In Europe, clean energy stocks like Iberdrola and Enel are expected to benefit from declining interest rates. In the technology sector, we suggest companies with less exposure to the automotive industry, such as ASML and SAP. In China, we advise focusing on companies tied to new industrial infrastructure, including China Mobile, CATL, CRRC, and SMIC, as well as fundamentally strong stocks less affected by external factors, like BYD, Luxshare, Tencent, Trip.com, and Xiaomi. Meanwhile, in Asia, high-growth stocks such as FPT, Hon Hai, Infosys, MediaTek, SK Hynix, and TSMC remain attractive.”
Mr. Visakorn Kirivan, CFA, an Investment Strategist of Wealth Products & Strategy department at InnovestX Securities, stated “The investment landscape in late Q3 has been highly volatile and is expected to increase further in the final quarter of the year, until three major events conclude: 1. The impact of the first Federal Reserve interest rate cut, 2. The outcome of the U.S. presidential election, and 3. The downward revision of growth expectations for large-cap stocks.”
“InnovestX maintains the view of a soft landing, as reflected by the slowdown in U.S. inflation and employment, while U.S. GDP growth remains above its long-term average of 1.8%. We expect global equity markets to remain volatile in the first half of Q4 but to recover after the U.S. election. We recommend that investors reduce their holdings in large-cap U.S. stocks and Thai equities, which have risen on short-term political news, and diversify into U.S. small-cap value stocks to prepare for the upcoming rate cuts and elections. Additionally, we are shifting our view towards bonds, given the clearer outlook for Federal Reserve rate cuts this year and next. For the first time this year, InnovestX has increased its short-term cash allocation to preserve liquidity for future investment opportunities. Based on this investment theme, we emphasize the soft landing, neutralizing political risk, and the rate cut cycle through funds such as ASP-USSMALL, which focuses on high-quality U.S. small-cap stocks; PRINCIPAL VNEQ-A, a Vietnam fund to benefit from any escalation in trade wars; and BGOLD, a gold fund, to hedge against the upcoming U.S. fiscal deficit.”
For investors seeking investment opportunities, InnovestX offers a wide range of analysis and strategies for both short-term and long-term investments. Investors can choose strategies that best suit their preferences. For more information, visit www.innovestx.co.th/cafeinvest and follow us on Facebook: InnovestX.
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