UOB Asset Management (UOBAM) recommends investors reduce their cash and short-term government debt instrument holdings as the cycle of interest rate hikes has passed.
To cash in on the trend of declining interest rates, invest in corporate bonds around the world as treasuries have dropped sharply, making yield levels on the credit side more attractive, said chief executive Vana Bulbon.
As markets normalise amidst improved economic conditions, investors can breathe a sigh of relief that the "hard part is over" and the US economy will avoid a hard recession, though EU and China face more challenges, said Mr Vana.
"We recommend portfolio diversification, allocating to high-quality global corporate bonds, global thematic equities and Asian equities. There are investment opportunities in thematic global equity; environmental, social and governance; and the innovation and healthcare sectors," he said.
UOBAM's assets under management increased 10% last year to 248 billion baht, with net inflow of 19 billion from institutional clients.
The company projects global economic growth to fall from 3.1% in 2023 to 2.7% this year, before rebounding to 3% in 2025.
UOBAM forecasts the Stock Exchange of Thailand index at 1,480 points this year, with earnings per share of 93, a price-to-earnings ratio of 15.9, and an earnings yield gap of more than 4%. The downside risks are a global slowdown and the Federal Reserve keeping rates "higher for longer", according to the firm.
UOBAM believes markets are entering a "more normal economic and financial environment" in 2024, noted a release.
"The company projects inflation has already fallen to levels that would allow developed market central banks to back away from the extreme inflation-fighting agenda of the past two years," said Mr Vana.
Asian stock markets have become more volatile after the recovery momentum following the pandemic faded, as external demand slows based on concerns about the recent deceleration, he said.
However, funds could return to Asia after the dollar peaks, said Mr Vana. Equities will be driven by earnings growth, while bonds should have lower but attractive yields.