Mr. Sukit Udomsirikul, Managing Director and Chief Research Officer at InnovestX Securities Co., Ltd. stated, “The global economic landscape for the fourth quarter of 2023 is expected to face significant challenges due to three main factors: 1. A Synchronized Slowdown in the global economy, particularly in developed countries. This slowdown is evidenced by a contraction in global manufacturing activities, as measured by the Manufacturing Purchasing Managers' Index (PMI). The manufacturing sector has faced challenges due to higher interest rates, impacting demand for various products. Additionally, the service sector is now experiencing similar issues, driven by the prolonged period of high-interest rates. 2. Higher for Longer Interest Rates: In recent times, inflation has subsided in many developed countries, primarily driven by a reduction in production-related inflation. However, looking ahead, the persistently high-interest-rate environment in the service sector, coupled with rising oil prices following OPEC+'s production cuts, may make it more challenging for inflation to decline further. Consequently, central banks are compelled to maintain higher interest rates for a longer period, which could exert additional pressure on the economy. 3. Divergence Among Economies (US and The Rest): The United States has exhibited relatively strong economic growth compared to other regions, notably Europe and China, which are facing significant slowdowns. The U.S. economy has been buoyed by wage increases, leading to robust consumer spending. However, in the near term, worsening financial conditions are expected to impact both consumer spending and business activities. Europe's economy is increasingly vulnerable to a potential setback due to tight monetary policies. Meanwhile, the Chinese economy faces the risk of a prolonged slowdown, reminiscent of the 'Lost Decade' experienced by Japan in the 1990s.”

         While the Thai economy is currently experiencing a significant slowdown, there is optimism for the future due to increased political stability and government stimulus policies. We anticipate that the Thai economy in 2024 will show improved growth compared to 2023. Specifically, we expect the Thai economy to expand by 4.1% in 2024, which is higher than the previous estimate of 3%. This 1% increase is due to the government's economic stimulus measures, and it represents an improvement from the 2.7% growth observed in 2023.

         Additionally, we expect foreign capital inflows will return to the Thai market when considering:        1. the improved growth trends in the Chinese economy, 2. the completion of credit rating adjustments, business performance, and GDP, 3. the Federal Reserve's easing of monetary policy, and 4. domestic economic stimulus measures and tourism.

         However, two significant challenges remain. Firstly, the low water levels and the severe El Nino phenomenon during the crucial crop season could lead to significant agricultural damage. This may adversely affect the spending capacity of farmers, albeit mitigated by government economic stimulus measures in the first quarter. Secondly, if the government chooses to increase borrowing to support economic stimulus measures, it may have implications for fiscal strength.

         Therefore, our SET Index target for this year is set at 1,650 points, with a target of 1,750 points for next year. Key entry points in the fourth quarter are expected to be in the range of 1,500-1,550 points, with expected returns ranging from 5-7%.

         “Investment strategy should focus on stocks with a clear profit recovery trend, gradually increasing positions, and efficient cost management. Stocks that are closely related to domestic consumption within Thailand are likely to benefit from economic stimulus measures and profit recovery. Notable stocks for the fourth quarter of 2023 include AOT, BCH, CRC, KCE, and KTB,” emphasized Mr. Sukit.

Key Highlights of Stocks for the Fourth Quarter of 2023:

• AOT: Strong growth in traffic and profits.
• BCH: Profit recovery, increased social insurance premium rates, and favorable valuations.
• CRC: Profit recovery and benefits from economic stimulus measures.
• KCE: Cost Pressures Ease, Prospects for Recovery, and Chinese Inventory Replenishment Drive Profits Beyond the Bottom
• KTB: Strong profit growth.

         On the other hand, Mr. Phasuvut Vilainerun, Assistant Managing Director and Head of Private Fund at InnovestX Securities Co., Ltd., revealed, “For the global economic outlook in the fourth quarter, there are still risks stemming from a recession in the United States and Europe, internal economic issues in China, and renewed inflation. Additionally, global interest rates remain high. Therefore, investment remains cautious, with a focus on selecting individual stocks from countries with faster economic growth rates than Thailand. Vietnam, with a nearly 100-million population and an economy smaller than Thailand's, but with GDP growth rates over the past five years consistently around 6-7% per year, double that of Thailand. Indonesia, with a population of over 270 million, ranks as the world's fourth most populous country, following China, India, and the United States. Despite having the largest economy in ASEAN, it continues to grow at a rate of 5% per year. Both countries have attracted significant foreign investments, with direct investment last year being 2 and 4 times higher for Vietnam and Indonesia, respectively, compared to Thailand. Moreover, both nations have a substantial working-age population, comprising up to 50-60% of their total populations. These individuals are transitioning from agriculture to industry and increasingly residing in urban areas, resulting in rapidly rising incomes. This, in turn, is expected to lead to increased spending over the next 5-10 years. Industries set to benefit from this growing middle-class population include consumer goods and services like food and beverages, electronics, mobile phones, and jewelry. The shift in purchasing behavior from traditional trade to modern trade, which is growing rapidly, and the expanding accessibility of retail credit to the general population, currently at low levels, are poised for significant expansion in the future.”

         “Investments that yield excellent returns often occur during periods when most investors are concerned about various negative factors at a macro level. This leads to selling stocks at prices lower than their long-term value. For instance, the fears of the COVID-19 pandemic in 2020, concerns about high inflation rates, and rapid interest rate hikes in 2021-2022, and apprehensions about an economic recession in 2023. Personally, I view these as investment opportunities that can yield better long-term returns if we can select the right stocks and buy when others are fearful of the stock market,” Mr. Phasuvut concluded.

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About Alpha Fund by InnovestX

The investment approach of the Alpha Fund by InnovestX, a private fund, focuses on businesses with robust business models that can grow in the long term and have reasonably priced stocks. It does not heavily rely on short-term macroeconomic conditions for investment decisions. Investors can choose to invest in three emerging markets: Thailand, Vietnam, and Indonesia. However, the investment strategy for each country may vary based on the suitability of each market.

3 key highlights of the Alpha Fund

1. In-House Analyst Teams: The fund maintains dedicated in-house analyst teams for each country it invests in. These teams conduct comprehensive research on business fundamentals, external factors, as well as detailed assessments of management and owners. This thorough analysis is used to systematically evaluate the target business's value and make direct investments in the business, rather than relying on feeder funds that often involve redundant fees and decisions made by others.

2. Concentrated Portfolio Strategy: Alpha Fund follows a concentrated portfolio strategy by selecting only the best 7-15 stocks that the analyst teams identify as prime choices during each specific time frame. This approach minimizes excessive risk diversification and allows for investments in various industries, thereby spreading investment risk without holding a large number of stocks.

3. No Index Benchmarking: The fund does not base its stock holdings on index benchmarks. The      analyst teams are not afraid to invest in lesser-known stocks in the market, believing that comprehensive analysis, risk diversification across different industries, and purchasing stocks at reasonable prices can yield better long-term returns, even in stocks that are not currently in the mainstream.

For more information, contact Facebook: InnovestX

*Investors should research information and understand the nature of the products, return conditions, and risks before making investment decisions.

About InnovestX

InnovestX Securities Co., Ltd. (INVX) was founded in 1995 as a subsidiary of the SCBX group. The company provides a broad array of investment services, including Thai stocks, foreign stocks, funds, bonds, and digital assets, through its investment advisors and “InnovestX Super App”. In addition, it establishes a comprehensive digital asset business infrastructure across the ecosystem of the financial and investment industry, positioning the company to become a trusted leader in investments and digital assets in ASEAN.

www.InnovestX.co.th