Thai institutional investors foresee policy interest rate cut in 2024

The Association of Investment Management Companies (AIMC) disclosed that institutional investors anticipate Thailand’s policy interest rate to reduce by 0.25% to 2.25% this year. Investors are encouraged to take a heavyweight stance on fixed-income assets.

Chavinda Hanratanakool, AIMC chairwoman, conveyed the results of a survey conducted amongst institutional investors. The survey explored their views on economic conditions and interest rate trends. The primary concern remains the global economy, which is predicted to either stabilise or experience some deterioration throughout the year.

The survey, undertaken in December’s closing days, demonstrated a predominantly positive outlook from Thai fund managers. They value the direction of interest rates, inflation levels, and economic growth as encouraging aspects for investment. However, political stability could pose a potential hindrance.

Institutional investors expect the interest rate to be a key support for the economy to continue to expand. Therefore, it is expected that the policy interest rate in 2024 will remain at 2.5% or maybe slightly reduced to the level of 2-2.25% to maintain the stability of product prices and take care of the economy to achieve sustainable growth, says Hanratanakool.

When discussing investment weightage, fund managers stressed the importance of fixed-income assets, particularly medium to long-term debt instruments.

Regarding equity investments, a neutral to heavyweight perspective is proposed, with a focus on large-cap stocks. Sectors of interest include commerce, healthcare services, tourism, food and beverages, and electronics, according to Hanratanakool.

Institutional Investors

Institutional investors maintain a neutral outlook for alternative assets, emphasizing Real Estate Investment Trusts (REITs) in property and core infrastructure.

The survey also revealed a focus on environmental, social and corporate governance (ESG) amongst fund managers. For domestic investments, they will concentrate on large stocks, particularly those with a strong environmental focus. The anticipation is to launch funds that spotlight sustainability for overseas investment via foreign investment funds.

On a global scale, investors predict a slowdown in the world economy. They expect US interest rates to gradually decrease to the 4.5-4.75% range by the end of the year, a reduction from the current 5.25%-5.50%.

Regarding investment assets, fund managers perceive debt instruments as more enticing than other risk assets. This is particularly the case for long-term US and European debt instruments. They maintain a neutral stance on stocks, focusing on large-cap stocks in developed markets.

Countries deemed attractive for stock investments include the US and India. The focus sectors are information technology, communication services, consumer sectors, and medical services groups, adds Hanratanakool.

For alternative investments globally, institutional investors suggest a neutral weight, with a focus on property and infrastructure REITs, reported Bangkok Post.