Transcription
The real crisis hasn't happened yet because yields are rising, but it will happen when yields fall. People think yields have peaked, leading to a major asset allocation rebalancing. They sell all assets and rush into bonds because people want to lock in at the highest possible yields, near the peak. Huge amounts of money will pour into the bond market, flowing in like this.
This inflow into bonds might seem fine, happy even, but the money coming in comes from selling everything else. The ultimate move, the final trump card, is to create a crisis. Let the economy collapse for a while, right? Let the economy collapse for a while, yields will fall, and it's over.
There are continuous warning signs about bond sell-offs from developed countries. Most recently, Bloomberg, which we are discussing today, has issued a warning. Their analysis states that the bond market of the G7 industrial nations – seven countries including Europe, America, and Japan – is being challenged. This market, valued at up to 50 trillion US dollars, is experiencing heavy selling. This signals that investors lack confidence in inflation management. The spark for this comes from the Middle East conflict, which impacts oil prices and global supply chains. Furthermore, the market believes that central banks in various countries might raise interest rates again. What follows is that governments already have high public debt. If interest rates rise, their debt will skyrocket. This might cause many developed countries with high debt to scratch their heads, wondering what to do about managing their debt. They need to issue bonds to borrow money and pay off debt, but the cost keeps rising, creating a vicious cycle. Therefore, this is seen as the biggest challenge, causing anxiety for investors. This is why we are seeing massive sell-offs in the G7 market. Today, we will analyze this. Crucially, what does this signal for our overseas investments? Should we trim some positions and hold cash? Today, we have invited Khun Nat Mahattanan, Assistant Managing Director of Investment Strategy at Krungthai Asset Management, to discuss this. But before we talk to Khun Nat, a quick reminder for those who have registered: our event on Sunday, May 24th, with 500 seats, is fully booked. All 500 seats have been registered and reserved. However, we are not closing registration. Anyone who wishes to register additionally or walk in is welcome. We anticipate that some of the 500 registered attendees might not show up due to prior commitments or cancellations. So, if you arrive, register, and we will place you on a waiting list. There might be available seats if someone cancels, allowing you to take their place. The waiting list may also gradually open up. Please try to register or walk in. This is a free seminar on "Trading Day: Crisis or Opportunity? Enhance Your Portfolio, Build Profits with Gold." We have top experts from Thailand, major gold traders from MTS Gold and YLG Bullion, as well as analysts and investors. One of them, Khun Man Akraphong, is a seasoned trader and considers the gold market his arena. Importantly, at the event, we will launch Mini Gold Online Futures. Previously, contracts were for 10 ounces, but now it's reduced to just 1 ounce. One ounce is approximately 2 baht of Thai gold. For futures contracts, a 10% margin is required, which is a fraction of the contract's value. You might be able to trade gold for 2 baht with just over a thousand baht. Join us on Sunday, May 24th. Registration starts at 9:00 AM. Please come to the Stock Exchange of Thailand building, on the 3rd floor, Ratchadaphisek Road. We will see you on Sunday. I will be there too. If you see me, don't forget to say hello. Now, let's talk to Khun Nat.
"Hello, P'Nao."
"Hello, Khun Nat. You've been closely monitoring the international situation. Are you seeing any signs now? Today, there's a latest news report from Bloomberg stating that G7 bonds, representing global economic superpowers, are shaking and being sold off, with yields reaching 20-year highs. What does this warn us about for the global investment market? What signals is it sending?"
"Bonds are the most crucial variable in the financial market because they affect the discount rate in the DCF (Discounted Cash Flow) equation, which is used to assess the fair value of various assets. This variable, bonds or interest rates, changes the fair value. When yields rise significantly, the fair value of assets adjusts downwards. However, yields are not the only variable. If yields rise and are accompanied by increased expectations for economic growth and company profits, it depends on which factor prevails. If growth is truly strong, yields might rise but not enough to pressure fair value, which could then increase. But if bond yields rise for other reasons, not related to growth expectations, such as fear of inflation, or as is happening now, fear of interest rate hikes, it can pressure asset prices. You'll see that during periods when bond yields surge sharply – look at the speed, not just the level, the intensity of the upward adjustment on those days – if it adjusts sharply, the market gets shocked. The fair value becomes highly uncertain. Risky assets are usually sold off. Currently, bond yields are linked to oil prices. As oil prices rise, people expect inflation to surge, and central banks will have to raise interest rates. Bond buyers will demand compensation. Holding assets over time, if inflation surges, the value of money depreciates significantly. So, if they buy bonds, they will demand higher yields to compensate for this situation. Therefore, the first concern is definitely inflation, as mentioned. The second is interest rate hikes. While similar to inflation, another factor is the future supply of bonds. When there are inflation problems and the cost of living is insufficient, we see wealthy countries that can print their own money, like Japan, clearly distributing money. Listen carefully: inflation problems make the cost of living insufficient, and they solve it by distributing money, not just once. When they distribute money, they need funds. Where do they get it? They borrow it, issue bonds, borrow money. When they issue bonds, they increase the supply of bonds in the market. Increased supply leads to lower bond prices, and yields rise in inverse proportion. So, another factor is market concern about increasing bond supply due to various reasons, such as economic management policies that wealthy countries tend to adopt, like distributing money. AR, etc., also involve distributing money. Another factor is war. War affects not just the combatants but the entire world. Countries need to stockpile weapons, and any action requires budget allocation. War budgets are becoming increasingly significant. Where does the money come from? By issuing bonds again. Issuing bonds increases bond supply, impacting yields as mentioned. So, there are two main issues now: first, inflation, stemming from the conflict. Second, the consequence is that interest rates might not fall; in some places, they are already rising. And another issue is the supply of bonds, due to fiscal policies in the current era, post-COVID. Observe that since COVID, governments have become more willing to spend because they've already distributed funds. If they don't distribute, they risk losing elections to opposing political factions. Therefore, everyone must distribute. And war budgets also play a role. Beyond that, there are general factors. For example, now we see accelerated investment, fearing missing out on AI. This leads to accelerated investment, stockpiling chips, and purchasing capital goods. This results in a kind of competition for resources, but in terms of investment. Chip prices, for instance, reflect the significant cost of many items: electronics, mobile phones, computers, etc. It affects everything. When we look at the overall picture, we see everything going up. We need to look ahead. For investors, when investing in stocks, for example, we don't just look at profits that have already materialized or will materialize next quarter or even next year. The value of a stock reflects the future, reflecting expectations far into the future, even to infinity. We don't just look at the present. We need to look far ahead, through countless cycles, to infinity. No one can predict that perfectly, but there are assumptions about the distant future. These assumptions drive stock prices. As time passes, these long-term assumptions change. Therefore, if we see something going up now, be prepared that it can also come down. So, I'm getting many questions: yields are rising, interest rates are rising, how to invest? Before, people always asked, 'When the war ends, how to invest?' I said, 'Not yet.' Ending the war, you think it will end today, right? But it won't end easily. As time passes and it doesn't end, your plans for investing after the war ends become irrelevant. Now, yields are rising. How to invest with inflation? I said, 'Wait a moment.' Let's see how high it will go, what will make it continue to rise, what will make it fall. Are there other possibilities? Investment opportunities arise from deviations from reality, from current expectations. We try to think differently, are there any differences? Yes. But from your perspective, Khun Nat, what is the real trigger now, even if it stems from inflation, bond supply, and the belief that interest rates won't fall easily due to inflation? What is the trigger that will lead to a breaking point, a signal that a crisis is definitely coming?"
"I see it this way: can bond yields rise indefinitely? Let's question that first. We see gold prices, Bitcoin prices, crypto prices, etc. I think those can rise; they have more room to rise. If they keep rising, those who don't want to buy don't have to. But bond yields, like oil, can they really rise indefinitely? Let's start with oil. Can oil prices rise indefinitely? At a certain point, if oil reaches, say, 200 per liter, will people still fill up as usual? No. We have to adapt. We have to work from home, do whatever we can. So, when prices reach that point – I'm not saying it will reach that point, but even before that – adjustments will occur. This is called demand destruction, the collapse of demand due to adjustments. We might reduce consumption or change behavior. So, demand won't be the same; it will drop significantly. Then prices won't go that high; they will have to come down, right? Or consider interest rates or bond yields. We can try to estimate. This is difficult. I'm closely watching two main US yields: the 10-year yield at 4.5-5%. Initially, I thought it wouldn't break through. It did. It broke through again. But I still don't believe it will break through and go parabolic. If it goes parabolic like gold, crypto, or stocks, it keeps going. Who wins and who loses? What about governments that need to borrow long-term? Can they accept bond yields soaring this high? Look at Japan: yields soaring this high, public debt at 250%. Will they let yields rise like this and refinance at such rates? America is the same. Yields breaking through 5%. Initially, I thought it wouldn't. Now it's breaking through. I still say, wait. It's not necessarily parabolic just because of technical principles. Someone loses, at least the government. So, there must be an effort to push it down, to keep it within a range. How? How? Now, I focus on America not being too critical yet. I think the truly distressed party is Japan. Before we get to how governments will control yields, we need to understand the reasons for yields. How high can they go? It's hard to give a number, but there's a principle: if inflation is truly surging, or the economy is overheating, governments can collect more taxes. Right? They can collect more taxes and have money to pay higher interest. So, how high can interest rates or bond yields go? It depends on how high inflation goes. And it's not just about inflation. If inflation is moderate and the economy is weak, what's called stagflation, which everyone fears: prices go up, but the economy doesn't grow. Prices increase, inflation surges, but tax revenue doesn't increase much, or only slightly. This is dire. But if inflation surges and the economy improves along with it, if inflation comes from a good economy, then governments can allow interest rates or bond yields to rise further. This is the first point. But if inflation is the only factor, as feared with stagflation, they cannot allow it. Even if inflation persists, if tax revenue doesn't come in, the government cannot let bond yields rise indefinitely because they can't afford to pay. So, what to do? I look at Japan. Today, there's data showing core inflation below expectations. It's not a big deal; stocks are rising. They think interest rates won't have to rise further. This might be a way out. But people see it as just the current or latest figure. What if the war continues? If the strait is closed for a long time, inflation will surge again. So, I think Japan is one country that will be severely affected when bond yields rise. Starting from this point, they have certain conditions, like the exchange rate, which makes policy implementation very difficult, almost stuck. I'll go step by step. Japan has been allowed, I interpret it as allowed, by the BOJ to let yields rise for a while. It seems they have no intention of intervening in the bond market, and yields keep rising. But this week, for a day or two, the BOJ released news, or rather, leaked news, that the BOJ is starting to survey dealers, market participants, banks, about whether to adjust certain parameters. These parameters refer to the speed of QE tapering. Japan is still buying bonds. The Bank of Japan is still buying bonds daily, around 2 trillion yen per month, plus or minus. They are still involved. This is an ongoing program. But a while ago, for over a year, they have been doing tapering. Most people use the term QT, but I think it's QE tapering, meaning they are gradually reducing the speed of purchases. They are buying 2 trillion yen per month, and they are reducing this speed by about 200 billion yen per quarter. The purchase speed is 2 trillion per month, so about 6 trillion per quarter. They are reducing this speed by about 200 billion yen per quarter, very gradually. And this week, they surveyed dealers, asking if they would consider reducing this tapering speed to, say, 100,000 yen. The exact figure wasn't mentioned. They said they are considering such adjustments. Possible approaches include not reducing it, keeping it as is, reducing it to 100,000 yen, or stopping it altogether. Stopping tapering means buying bonds as before without reducing the purchase speed. Reducing the speed of bond purchases is like a slight interest rate hike. They are buying bonds slower and slower, so the force pressing down yields becomes less and less. This has been the case for a year. But if they adjust this speed down or stop it, meaning they continue buying bonds at the same speed, the downward pressure on yields will stabilize. This will be interpreted by the market as the BOJ intervening, almost like buying more bonds, or simply not reducing purchases. This kind of signal is one of the first indications that the BOJ is starting to intervene in the bond market. So, if we look at why they are intervening this week, we see that the Japanese 10-year bond yield has been fluctuating around 2.8%. This is the highest in how many years? This is the news that's making headlines. So, I'm starting to realize that Japan, which previously allowed bond yields to rise, has a red line it doesn't want to cross, perhaps 2.8%? The 10-year Japanese bond yield at 2.8% has been breached. They are sending the first signals. And they can't do just this; they have many other measures. Will they increase bond purchases again? From 2 trillion, they could increase it because they can print unlimited money. And they can implement unlimited bond purchases, capping yields at a certain level. They have many tools. So, if they truly want to control it, they can. But there are side effects; nothing is free. When I intervene like this, the first thing is, I've outlined today, this week, I published a paper. I listed 5 ways Japan can lower bond yields. From mild to severe. 1. Not necessarily opening the Strait of Hormuz, but starting with something mild. 1. Opening the Strait of Hormuz. This is the root cause. To put it concisely, it means success. There's news that they might negotiate. They've tried twice, and it would have been better if it ended well. But they went ahead and regret it every day. I don't know if they truly regret it, but it hasn't succeeded yet. This week is important for the market's resolution at the end of the week because there are rumors, and more rumors, that it might be resolved. I myself will focus on the base case: it's like being stuck, unable to resolve it. Because the Hormuz Strait and nuclear issues are unacceptable. If they accept, the existing regime in Iran will be gone. But I'm trying to assume that Xi Jinping has real influence and Iran must concede. How will it concede? I see a small possibility: they might concede on uranium. Let it be buried in the ground at that level, at that base level. Don't develop it further. It's harder to develop it again, easier to leave it as is. But control the Strait of Hormuz, jointly with Oman. There are hints of this. They will collect tolls together. This is easier. For America to pry Hormuz from Iran's possession is difficult. So, if they divide it, America takes the uranium, letting it remain there, not developing it further. Iran might accept this. And Iran retains control of Hormuz, maintaining bargaining power. So, this is a potential resolution. I'm starting to see a possible way out. Let's see if Xi has real influence. This is possible, and the market seems to be looking at it that way. Stocks rose at the end of last week. 1. Opening Hormuz. 2. Will the BOJ or Japan want to lower yields? 2. Raise interest rates. There's a hint that next month, they will raise interest rates. Raising interest rates, if the market perceives a 25 basis point hike as sufficient to curb inflation, bond yields will gradually adjust downwards, or at least stabilize. Raising interest rates doesn't always make yields rise. If interest rates rise and inflation is expected to fall, long-term bond yields will fall. This is called yield curve inversion. The market will be like two years ago: a massive sell-off, everything crashing. Will it be like that? Back to the original condition I mentioned at the beginning: you can only raise interest rates if inflation is truly strong, if economic growth is truly strong. At that time, they couldn't raise because Ueda had just taken office, and he was hesitant. He didn't just say 1% isn't a wall; he said it's not a barrier. People thought Ueda would do something like four hikes of 75 basis points. That was a miscommunication. People thought Ueda-san would come and raise rates without regard for the market or inflation, being ahead of the curve, thinking far ahead. But now people know that Ueda-san is cautious. He knows what to say. So, if they raise interest rates, the market will likely accept it. Because Japan's economy is growing, and inflation is also high. Only the latest figures have softened slightly. But it seems inflation will rise anyway. This time will be different from before. I think a 25 basis point hike will be enough to break inflation? Because a 25 basis point hike brings the rate to 1%, and inflation is higher than that. It depends on this. The risk of raising interest rates is not that raising rates will lead to that outcome. I think it's not. I think after raising rates, the market will consider whether inflation can still be controlled. The risk is that if they raise by 25 basis points, the market thinks inflation is still out of control, and long-term yields will continue to rise. It depends on the signal they send and their capacity to raise. If their capacity to raise is low, and the market realizes they can only raise this much, and inflation is still out of control, you will face two things: you've raised rates, but you haven't controlled inflation. You need to do something else. This is the second risk. We need to see what happens after the hike. The third is the method. How to lower yields? As they are starting to signal, they will intervene in the bond market. This is straightforward. To lower yields, they must intervene in the bond market. This is from mild to severe: signaling an end to tapering or adjusting tapering. Then, from mild to severe: QE or implementing Curve Control, unlimited bond purchases. They can do this. But it's difficult. Why are they doing just a small amount today, just signaling a little, with little effect? Because if they truly control it, yields will be controlled. But the market won't be balanced. The market will have to find something else to balance inflation. If it's out of control, how to balance? If yields are capped, the yen will weaken. If they truly implement Curve Control, I believe they will have to let go of the 160 yen per dollar level, which has been sacred for a long time. They intervened constantly at 160, right? It won't be sacred anymore. So, they have to let it go, and the market will look towards 200 yen per dollar. That's the target people will look at. I bet if they implement Curve Control, you can bet on the yen going to 200. At that point, they will have to make a decision. A decision to truly let go or not. If you travel to Japan then, don't buy yen yet. Let it go first, and then... Oh, because if they let it go now, the yen will weaken, and imports like oil will become more expensive, further fueling inflation. So, they can't do this. This method, to slightly curb yields, to implement Curve Control, they can't do it. Because the yen will weaken significantly, further fueling inflation. If they accept that, they must accept hyperinflation, which is possible. Because inflation helps reduce their public debt from over 200% down. Letting inflation happen reduces public debt because you can collect more taxes than interest, as interest is fixed, and taxes follow inflation. Right? It's possible, but political conditions don't allow it. If they do it passively, they lose elections because many people are suffering from inflation. But if a crisis occurs, I think to do this, a crisis must occur first to make people in society accept it politically, allowing them to do it. And the yen going to 200 is extreme. A crisis must occur first to choose that path. So, it's probably not now. 4. What they are very good at: Japan just waits. Waits for external factors to resolve themselves. I think they are very good at this. They might intervene by selling tens of billions of dollars into the market to intervene in the yen's exchange rate. It only has an effect for a few days. They do it, but they choose the timing. Some problems might be nearing resolution, and they don't want the yen to fall below a certain level. They have survived this long. They have survived every time. Japan uses this method: buying time, waiting for external factors to resolve themselves, waiting for US bond yields to fall, then their yields will fall. Waiting for the dollar to weaken, then the dollar-yen will fall from 160. They have done this many times and are very skilled at buying time for external factors to help them. This is the fourth method. They know it. They will do it. They know how to do it. They will wait. They will wait for the Strait of Hormuz not to open, for the lock to remain. They will continue without doing anything, using stillness to overcome movement. Method 5: This is a bit conspiratorial. Colluding with America to create a special situation for a flight to quality. It's not difficult now. Because the dollar, quality, people rush to buy US Treasury bonds, and this likely includes Japanese bonds. What happens when people are extremely fearful, a Black Swan situation? It's not difficult now because the dollar, first, are US Treasury bonds still considered safe assets? We don't know, but the dollar has returned, right? You see, when stocks fall, when the market fears risk, the dollar returns. This year, the dollar has returned. And what is its competitor? The yen. It's already falling. Interest rates aren't falling, right? Many central banks are starting to sell because they need to defend their currencies. The dollar is starting to return. You see, when stocks fall, when the market fears risk, the dollar is a safe haven. So, if a situation arises that favors it, they won't hesitate to buy US Treasuries. Because the dollar has become a safe haven. So, events similar to COVID lockdowns. Why lockdown? To create a flight to quality. Why did AIG need a bailout? Some event that might occur. If you ask me, I don't know. Because if I knew, it wouldn't be a shock. It wouldn't be a virus or anything like that. Because some people know the path, they know what will happen next. Like COVID. Or something you can't imagine. There are many things. When people profit excessively, they can sell a lot, and assets can fall deeply. This can create a reflation signal, meaning when prices of goods fall, it creates a deflationary signal and demand for bonds. Then it cycles. When bonds are bought, yields fall, signaling deflation, feeding into algorithms. Yields will fall, and then they will borrow. To do what? Defense spending, distributing money, anything. When yields fall, say to 2-3%. Then they borrow. So, it can be arranged, it can be arranged within America's capabilities. Yes. Yes. So, Khun Nat, can we now say that we are likely entering an upward interest rate cycle? Yes. What I mean is, if we look at it this way, we're not looking at the first-round effect, meaning if it continues like this, it will be a downward trend, right? But I see it rising to a level where it seems unsustainable. If it seems unsustainable, it will be forced down. Therefore, I will position my portfolio for rising interest rates, or should I position it, at least partially, for a crisis that will be engineered, and interest rates might even fall from here? There is a lot of uncertainty. We cannot yet assess where governments will become unsustainable. They seem to be able to handle rising interest rates. But if we see something, some big player that seems unsustainable, then we might not be able to play for rising interest rates. We might have to start thinking about how to survive a crisis in our portfolio if a crisis is coming. How to manage it? If a crisis comes, what do we do? After that crisis, interest rates might even fall. What do we do? Right? So, perhaps I need to... This means... If it's truly the case, I'm not sure. We need a three-pronged portfolio. This means you believe another crisis must occur. This means you believe there might have to be another crisis, perhaps method 5, the conspiracy, where they conspire to create a crisis to push down yields. Yes, because otherwise, they go bankrupt. If yields keep rising to a point where they cannot pay interest, they go bankrupt. Why would they let that happen when they have methods to push it down? We've seen it happen before. Oh, the Middle East war is still a crisis? Yes. I think one thing is, if it continues like this, closing the Strait of Hormuz, oil inventories will fall to a critical level, leading to a crisis anyway. We are counting down to a crisis, but the market is still standing because they still think it will be resolved. I myself am not confident it will be resolved. Let's see this week. I'm not confident it will be resolved. But if it's not resolved, people will become increasingly restless because we are counting down to a point where it's called the "tang bottom," meaning when stocks run out, you will have a crisis, and economic activity will change drastically. At that point, it's not that yields will rise or inflation will turn into a depression. Yields will fall. Therefore, when setting up a portfolio, it's very difficult. We can't say, 'Interest rates are rising, let's invest this way.' I will say, 'Interest rates are falling,' but they haven't fallen yet. It's uncertainty. So, setting up a portfolio now is very difficult. That's why I think those who have made profits of, say, over 10% this year, might be satisfied. And you might have a portfolio with 2-3 diversified strategies. Or you might hold more cash. But don't try to chase profits endlessly. I don't think it's like the past two years. This year is very risky. And it's risky because I've explained why. So, if you get over 10%, I think this year's portfolio will be... finished. Oh, okay, that's good. Secure your principal first. Don't try to get too much. If you get over 10%, I predict that by the end of the year, we'll talk again. Those who get around 10% might be considered outstanding, because many will have lost everything. For example. Yes. Yes. Khun Nat, are bonds still a safe haven now? And gold, you previously thought gold wouldn't skyrocket. If someone buys at high levels, they might get trapped like in 2012-2013. If they are not safe havens, where is the money flowing now? Where is the money flowing?"
"I think now it's a period of swings because the situation I've described involves inflation that could go very high, depending on the decision. For example, deciding to let inflation run wild, leading to hyperinflation, or deciding to save the bond market, save the currency. If necessary, they might have to let the economy collapse into a deep recession. Bonds and currencies will still exist. Because there will be a flight to quality, depending on who makes the decision and what they choose to save and what they sacrifice. I cannot answer that. Therefore, it's difficult now. I still believe that ultimately, if I have to choose, countries or governments must preserve their currencies. They must preserve their ability to borrow, so the bond market cannot collapse. If I start with this premise, I can take a side. When the time comes, if it's critical, they will have to let the economy collapse. And save the currency and the bond market. I won't be on the side that says, 'US bond yields will keep rising, and no one will want them, no one will buy dollars.' I won't be on that side because they have a choice. They can choose to save the dollar, save the bonds. They can choose to create a crisis. And they can save the dollar and bonds because they are ultimately more important than economic growth or continuous growth. The crucial point for those in power is to maintain power. Power is the dollar, which has immeasurable value as a reserve currency. Or the bond market, which is also immeasurable. You might have to sacrifice something else, like letting the economy collapse for a while, to preserve these two things. So, it's immeasurable. If I choose, I will choose this side. Therefore, I will position my portfolio and prepare for this situation significantly. Okay, cut off limbs, preserve life, start anew. If they can borrow at 2% interest, they will have more power than now, right? This refers to the US. The US is called a "bigger government," right? Preserve the dollar, preserve it, borrow a lot, and you can distribute money, control politics in all sorts of ways. People are suffering, the economy is collapsing, so they have to distribute money, right? They still preserve the dollar and bonds. So, if I choose, I will choose to preserve the dollar and the bond market. So, now, Khun Nat, what do you think at this moment?"
It is currently near the end of May. The war between the United States and Iran has not ended. The Middle East, Russia, and Ukraine have also not ended. The trade war has also not ended. How should I adjust my portfolio? What do you recommend now? My capital is... How should I proceed?
>> Currently, I have a special tool.
>> One special tool is my China ETF. It has a currency status that is quite good, especially when the market is fearful. Currently, it benefits from the difference between the Yuan and the Baht. The Yuan outperforms the Baht. This means that when the dollar strengthens, the Baht tends to weaken more than the Yuan.
>> Uh-huh.
>> Ah, this will have a good effect on this fund. Our fund is KD China B. I have a special tool that is difficult to find now, a tool to seek refuge and still get returns. Because the bond market is bad. Bonds are still like this. But I believe that if there is a situation where there is a problem with the economy, a recession, a deep recession, then US Treasury bonds, long-term US bonds, should be useful. This is one leg, the leg that is called...
>> Yes.
>> But currently, US bonds are not working. However, what is working is China Boy, as I mentioned, because it has a special currency position. It's a bit difficult. As for the other side, if what I think shifts a bit, then this week will be good. I have recently invested in stocks of luxury brands, global brands.
>> Yes.
>> Like now, in Europe, oh, these have fallen a lot.
>> Yes. The Chinese economy doesn't look good, purchasing power is low, right? Shops are closed. The Middle East is not open. Oh, they have fallen a lot. Luxury bag stocks, what not. They have fallen a lot in many years. It can be called a low price, so we have to buy in this kind of situation, at this price. I bought stocks of global brands. If the strait can be opened, as a surprise, if the strait can be opened, these will rise sharply. We are buying. I think there is a sufficient safety factor because we bought at a very cheap price. This is one leg, like they call it a barbell portfolio. One leg is the safe part.
>> The other leg is, suppose the strait opens, a surprise, everything is good, there is another one that should rise sharply. But if the strait opens, I am worried that when the strait opens, maybe there will be an "opening the strait" theme?
>> Similar to the "opening the city" theme.
>> Can it be? When the city opened, there were very good "opening the city" stocks, and another group of stocks was very bad, they were sold off, which were vaccine stocks.
>> Those, those, those, what group? Those work-from-home groups, right?
>> Yes.
>> Like now, if it's opening the strait, I'm worried if chip stocks will still be around?
>> Because chip stocks rose even though the strait was closed, they were chased up a lot, right?
>> And if people enter luxury brand stocks or even Thai stocks that are affected when the strait opens, because they have to pour into those strong stocks, the stocks that are strong now, regardless of whether they are closed or not, they are too strong. But it's a cycle, and there's also stockpiling of chips.
>> Will chip stocks still be around if there is an adjustment?
>> It's like buying in advance.
>> Uh-huh.
>> Yes. It might be a rotation. Selling chip stocks and buying opening-the-strait stocks, an opening-the-strait theme, similar to opening the city. I think...
>> If the strait opens, what kind of stocks are there, Khun Nattha? Thai stocks are one of them. Anyone who says that if it keeps closing, they will suffer, you should target them. India, India, etc.
>> Anyone who says that if it closes for a long time, they will die, that's the opening-the-strait theme. Those will be lifted. Thai stocks too.
>> And luxury, those brands, tourism stocks, all sorts of things.
>> Then the money will flow this way. I'm worried they will sell chip stocks.
>> Because there are many scenarios, and it's very difficult. So I have to have diversification. I have brand stocks, I have China ETF. Something like that. And Thai and Chinese stocks are my main holdings. But they are the ones that will bring inflation, so that deflation disappears. Thai and Chinese stocks have special characteristics, which I have planned for the long term, right in the middle.
>> Ah, so you are positive about Thai stocks?
>> Very much so.
>> It rose to over 1,530 points, then dropped a little.
>> Thai stocks are a long-term matter for me. I don't just look at whether there will be something in the short term. I don't look at the short term at all. Since last September, there was a loss of blue and orange.
>> At that time, I interpreted that the political landscape of Thailand had changed.
>> Yes.
>> It was a big compromise.
>> And the politics stabilized. At that time, I bet that Thai politics since last September would be stable for a long time, very stable.
>> Meaning power doesn't go anywhere anymore, it's stuck, right?
>> Therefore, I can expect that there will be reforms. I haven't seen it yet, but it's possible.
>> The same view as Moody's. Moody's upgraded Thailand, saying that stable politics will create opportunities for reform. I see it that way. And there's a trend, right? They called the private sector. And they used the word "reform" too. Foreigners also use the word "reform" when reporting news. This word is very important. "Reform" makes people believe continuously that this reform is real. Reform is very important because wherever there is reform, long-term investment will come.
>> Ah, we see tax reforms in India, for example, which created a big cycle.
>> I think in Thailand, legal reforms, right? Similar to India.
>> I think if Thailand can maintain the reform theme, foreign capital likes this theme. They will invest continuously. Don't worry that Thai stocks will be expensive. They will become more expensive. Earnings won't keep up. Thai stocks, if they come with China's reforms, foreign investors will come. They will chase prices up to be very expensive first. PE will be high. Don't worry.
>> Uh-huh.
>> Right? If it's not real, then there will be a sell-off. But if it's real and continues, they will come and reserve their positions first because the reform theme is something that...
>> People like it very much, and it's starting to happen. I see white heads. Thai...
>> Thai stocks are what I like very much.
>> Uh-huh. Currently, it's number 1. I don't know if it will compete with Delta or not. In the short term, there might be something like that. And it might make people dismiss it, saying, "Oh, it's just this group."
>> But I think it will come quietly. Eventually, the groups will have to change. This is just a short-term matter. I'm not interested in this. I think in the long term, when there is a reform theme, money will come in and stay for a long time.
>> Ah, but this year we have to survive first. On the 25th, it's full from 6 PM onwards. Don't forget, "Kon La Kreung Plus." If you register in time, register.
>> It's extended until probably 30 million people, right? From the 25th to the 29th, it's from 6 PM. The system opens at 6 PM. But don't forget to update the app first so we can register for "Kon La Kreung Plus" on the 25th. Then we'll pay in June. It will probably be an domestic economy theme, right, Khun Nattha? If it's...
>> It's a short-term bridge. So there will be something like this. It will help close the gap in the short term. This reform is something much longer.
>> Much bigger than this.
>> Yes. Ah, let me ask, Khun Nattha. We see warning signals from foreign media continuously. And most recently, Bloomberg warned that the G7 group is being heavily sold off, with bonds worth 50 trillion US dollars. In this situation, as someone investing abroad, should we reduce our portfolio and hold some cash, just in case for the opportunities that Khun Nattha mentioned, they might create some crisis to preserve the bond market and currency?
>> Yes, yes. I think this year, by this point, it's the end of the 5th month. Investors should have decent profits.
>> I said if you adjust your portfolio, for those who can adjust, it's over 10%. I think try to lock in profits and hold more cash, as you said. If you want to keep something, keep something that you think, ah, a new game, buy cheap, like luxury overbrands.
>> Or Thai and Chinese, I still hold them, but the position isn't that large. Just in case to add some.
>> If there's a real opportunity, just in case to add some.
>> And assets that have performed well, like...
>> Baht, as I gave before, or...
>> Something that gives me absolute return, something that is stable. If there's a crisis, it shouldn't fall much. It can be converted to cash at a value that doesn't change much. So, holding it is correct.
>> Uh, I don't want you to chase anything right now. If you've made over 10%, lock in your profits and prepare. I think better investment opportunities will come soon. If there's a crisis or prices fall as expected, those opportunities will allow us to generate returns, possibly this year, when they rebound. But we must consider that the opportunity for a crisis is high.
>> Yes.
>> Be well prepared.
>> Ah, ah, this is what investors can change their lives by. As Khun Nattha said, the opportunity for a crisis is high. It's just a matter of when and what our entry timing will be. And what's important is, which assets are the most attractive to enter? What's important, as Khun Nattha said, is that we can't predict accurately. What we can do is place some here, place some there, place some over there, so that the balanced portfolio is not affected by any single asset to the point of collapse. In simple terms, we cannot bet everything. We might end up with no money left. We still have some assets that are rising, some that are falling. Thank you very much, Khun Nattha, for joining us and sharing good information and knowledge with investors. Thank you, Khun Nattha. Goodbye.
>> To not miss any investment information and news, don't forget to like, share, and subscribe to all Money Chat channels.