Fund managers tout stocks despite volatility 

Economy February 21, 2018 01:00

By   THE NATION

FUND MANAGERS see bright outlook for global stock markets on the back of economic expansion, despite short-term volatility.



Win Phromphaet, chief investment officer of CIMB Principal Asset Management, said the fund company remained positive on investments in the global stock markets this year in spite of be possible volatilily due to several factors such as higher prices, fiscal policies, political developments.

The US stock market has continued to be driven by the growing economy, listed companies' profits and tax cut policy. But, it now confronts risks from rising stock prices in the past eight years, he said.

However, amid expectation of rises from economic expansion, stock markets in Europe are still awaiting for Italy's election, Britain exit (Brexit) issue and normalisation of the European Central Bank's monetary policy, he said.

Even though emerging stock markets tend to increase on improvements of economic fundamentals across the world, risks remain from likely drops in commodity prices, he said. 

Similarly, the Thai bourse which have benefited from positive factors from economic expansion, listed companies' earnings per share may not grow accordingly and profit taking could occur, he said.

Win expected the Thai stock market to make a correction in line with other stock markets worldwide, while commenting that the February correction came sooner than expected. It would be normal if the Stock Exchange of Thailand Index drops 100 points, he said.

Monrat Phadungsit, managing director at Land and Houses Fund Management (LH Fund), said the company holds a positive view on the economies and investments in emerging stock markets, ranging from China, South Korea, Taiwan, Brazil, South Africa, Russia to India. The economic growth of these countries is forecast at 4.9 per cent in 2018.

Emerging stock markets remain attractive compared to developed-country markets due to higher economic growth, higher profit growth, lower valuations and capital inflow since the middle of 2016, he said.

Vasin Vanichvoranun, executive chairman at Kasikorn Asset Management, expects Thai economy expansion to continue, a positive factor to listed companies and stocks would remain more attractive than bonds.

“Overall, stocks will start to get expensive. Higher bond yields across the world will also pressure (stock markets) as a result from expectations of the Federal Reserve's faster-than-expected interest rate hikes, following acceleration in US inflation. Therefore, assets across the world could face profit-taking in the short term and markets could be more volatile,” he said.

Meanwhile, the global economic fundamentals have not been changed and tend to improve, he said, indicating market corrections may be good chance for more investment in the long term.