KASIKORNBANK sees the promise of a global recession, reflecting an unusually jumping inverted yield curve following the rising trend of rising interest rates and rising inflation. Thailand is expected to have a heavy impact on the global economy. Recommend to reduce investment portfolio for panic situation
KASIKORNBANK sees the promise of a global recession, reflecting an unusually jumping inverted yield curve following the rising trend of rising interest rates and rising inflation. Thailand is expected to have a heavy impact on the global economy. Recommend to reduce investment portfolio for panic situation
Mr. Soonthorn Thongthip, Senior Director Securities Analysis Department KASIKORN SECURITIES COMPANYGives a view on the economic situation entering the 2nd quarter of 2022. There is more risk from the situation where the yield of short-term government bonds is higher than the yield of long-term government bonds, known as inverted Yield Curve 5 years, 10 years and 30 years in the US that is happening now. This puts pressure on the economy in the medium term and has growth problems. Indicates a recession (Recession)well
With such a situation coming from a strong interest rate hike by the US Federal Reserve (FED) to suppress inflation. As a result, yields on bonds aged more than 2 years will increase, affecting economic growth in the medium term. And it’s also a very accurate signal to look at the economy going forward. This is because it reflects the views of investors around the world through the massive bond market and the FED is unable to direct.
“Even the FED is unable to direct the inverted yield curve, the most it can do is for the Bank of Japan (BOJ) to buy back unlimited bonds. To prevent yields at almost 10 years old, not to increase with the Japanese economic structure, but the FED can’t implement such a policy. Make it a good warning signal. economic recession will follow.”
The situation poses a challenge to Fed policy amid warning signs of a recession. And the more inflation problems followed, making it difficult to implement monetary policy.
Including reducing the FED’s balance sheet or QT will affect capital flows and liquidity in the capital market at risk. which resulted in the forecast Return per share per earnings (P/E) stock market has declined. Consistent with the year 2018, the Thai stock market P/E was adjusted down 1 level and coincided with the inverted yield curve.
However, in view of the economic outlook of the Bank of Thailand (BOT), the latest released on March 30, that the Thai economy is in a period of recovery rather than a slowdown. But I see that Thailand is a country that is very open to foreign risks from reliance on export and tourism sectors.
Therefore, it is even more impossible to focus on domestic consumption like China. because each structure If the world faces a recession, Thailand cannot escape this cycle either. Which looks at the investment picture, there is a chance that when going to the risk point there may be able to find the stock market panic within this year
For this year’s investment, you must allocate your investment well, focusing on not investing 100% of the full portfolio and sharing the proportion according to how much risk you can take. If investors are able to take a lot of risk, they can invest 60-70%, but if they can take less risk 50-60% to support the stock market that has declined sharply from the above factors. This will allow investors to have money waiting to support. and is not in a state of stress from the stock market