Mr. Thanakorn Manunphon, Executive Investment Advisor and Product Manager at CIMB Thai Bank Public Company Limited, commented that the ongoing COVID-19 pandemic continues to impact global investment landscapes significantly, marking a historical crisis. In comparison to the financial crisis in the United States (Subprime Mortgage Crisis), during the lowest point of the U.S. stock market, there was only one day where the market dropped more than 9%.

In contrast, during the COVID-19 crisis, the U.S. stock market experienced daily declines of over 9% three times within just two weeks, and since the beginning of the year, it has fallen more than 30%, necessitating temporary trading halts (Circuit Breaker) four times, similar to stock markets worldwide, including bonds, oil, gold, and real estate mutual funds. Investors have been aggressively selling off assets to hold cash, leading to unprecedented volatility.

The severity of this crisis has prompted many central banks to cut policy interest rates and inject liquidity into the system to support the economy, including in Thailand. However, this crisis differs from previous financial crises primarily caused by the financial sector; this time, the main issue arises from business activity, as consumers are not spending, and business operations have stalled. Consumption and investment figures have plummeted, which will inevitably affect business performance. Before the COVID-19 crisis, the SET Index Earnings Forecast had already been reduced by over 7% due to the strengthening baht since last year and weak consumption, along with oil prices dropping to $24 per barrel, the lowest since 2016, impacting the largest sector of the SET Index, the Energy Sector. Therefore, the actual impact remains difficult to assess if the outbreak continues.

CIMB Thai Private Banking predicts that this crisis will reach its lowest point by the end of Q2 2020, based on the expected peak of the outbreak in the USA and EU. They recommend dividing investment strategies into two phases for moderately risk-tolerant investors:

1. Pre-Bottom Phase: It is advised to hold 40-50% in cash, 15% in stocks and bonds each, 10% in gold, and 10% in REITs/Infrastructure Funds. Given the current SET Index level of around 1,100 points, we see significant support at 860-940 points, indicating we are nearing a long-term investment opportunity. The government has also introduced a special SSF fund, making this an opportune time for investment at the best cost in eight years. Bonds remain attractive, but there may be risks if interest rates rise after a prolonged period of low rates, so it is recommended to select only companies with strong financial positions that do not heavily rely on rolling over bond issues. Investments in real estate mutual funds and infrastructure funds unrelated to the hotel business remain appealing due to significant price drops, offering returns that exceed government bond yields at their highest in 15 years.

2. Post-Bottom Phase: After Q2, we believe we will gradually enter a rising interest rate environment due to fiscal stimulus leading to increased debt supply from various countries, pushing interest rates higher and potentially resulting in rising inflation. During this period, we will view it as an opportunity to invest in stocks again, aiming for a portfolio allocation of 40%-50%.