KBank Private Banking, in partnership with Lombard Odier, hosted a seminar titled “Repositioning Portfolio to Embrace Rate Cuts,” analyzing the global economy for the second half of 2024.
They predict a high likelihood of a soft landing without entering a recession. Risk assets like equities are expected to increase, but investors should remain cautious due to ongoing risks such as prolonged high interest rates, geopolitical conflicts, and the upcoming U.S. elections.
Kattiya Indaravijaya, CEO of Kasikornbank, highlighted that 2024 is favorable for investments, with global equity markets continuing to deliver strong returns from 2023. The MSCI All Country World Index rose by 11.5% due to global economic recovery and robust corporate earnings across various industries such as technology and consumer goods. However, challenges remain, such as the Federal Reserve’s interest rate decisions and the potential impact of the U.S. presidential election on economic and political policies.
Homin Lee, Senior Asia Macro Strategist at Lombard Odier Singapore, noted that the U.S. market, particularly the tech and semiconductor sectors, remains strong. Despite a slower-than-expected interest rate reduction by the Federal Reserve, there is an expectation of two rate cuts within the year. The cooling labor market, with slower wage growth and rising unemployment, should not significantly affect inflation, allowing for future rate cuts. The upcoming U.S. elections, with the possibility of Donald Trump returning to the presidency, could bring significant changes to labor markets, the economy, and international relations.
In Europe, the European Central Bank (ECB) has already cut interest rates twice, benefiting SMEs and supporting economic recovery. China faces challenges from the real estate sector and external risks, especially from potential escalations in the U.S.-China trade war. Key events to watch include the Third Plenum of the Chinese Communist Party and the Politburo meetings, where further measures to support the real estate sector are expected.
Siriporn Suwannakarn, Senior Managing Director and Financial Advisory Head at KBank Private Banking, advised dividing investments into two parts. The first one is a core portfolio at around 50-70% using a risk-based approach across multiple asset classes like equities, bonds, commodities, and volatility indices. The other is a satellite portfolio at around 30-50% focused on growth stocks, long-term government bonds, and alternative investments like currency trading strategies.
These strategies aim to build and sustain long-term wealth through systematic and diversified investments, aligning with market fundamentals and future interest rate trends. (NNT)
