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Hello, today we are inviting our guest to talk. She has been nicknamed the "Godfather of Fund Flow." She is a top analyst in the industry regarding capital movement. That is Dr. Wisit Ongphipatanakul, Chairman and Chief Executive Officer of Trinity Securities Company. We saw a very high outflow of money from the Imaging Market during March. Before this, we were happy in January and February, thinking this year would be a year with a lot of money flowing into the Immeric Market, and it did flow in. But when the Middle East war broke out, capital flowed out in March. Now, the question we will discuss today is: the war is not over yet, but if we look beyond the war, will the money that flowed out in March return to Asia? And which country will be the law for Thailand? What are the reasons for capital to flow back into the Thai capital market, including the bond market? Simply put, it is indirect investment. It is considered a point we are watching because it will cause asset prices in our country to adjust upwards. Today, we will talk with P' Him, Dr. Wisit, to analyze it in-depth for us. Hello, P' Him. >> Hello. >> Yes, P' Him, the Godfather of Fund Flow. Today, we must invite you to analyze in-depth. Because we have seen fund flow coming in since the beginning of the year. We interviewed P' Him, and P' Him said there would be a lot of fund flow into Thailand, hundreds of billions. But that was an analysis from JP Morgan. But then we encountered the Middle East war first, so it stopped, and fund flow went out. Now, I would like to ask, the fund flow that went out in March, was it mainly due to fear of the impact of the Middle East war, specifically, P' Him? In the Southeast Asian market, we encountered quite a heavy impact from oil prices, or were there other reasons? >> Yes, thank you for inviting me to talk today. I would like to refer to slide 7, which is about why fund flow is going out and the opportunity for it to flow back in at the end of the year. In slide 7, this picture is like this: this period is a picture of the forward curve of oil prices. Oil prices have experienced disruption. This disruption this time is the second largest disruption since 1990. This energy disruption is still greater than in 1990 during the Gulf War when Iraq invaded Kuwait. You can observe that this time, it is only less than the disruption during the Russia-Ukraine war. During the Russia-Ukraine war, we might not have been affected much because Europe was more affected. But this time, we feel a great impact. Therefore, this time, there has been a disruption of all energy. And it is the second largest disruption in almost 40 years since 1990. I don't have a chart since 1970 when the oil crisis occurred, when oil prices rose from $3 to $10, a 3-4 fold increase. So, you can observe that this disruption is quite strong, considered the second largest in almost 40 years. What is the impact? The impact is shown in slide 10. We can see that the fund flow that went out was quite a lot. You can see that South Korea had an outflow of almost $20 billion. India is a country that imports a lot of oil. You can observe that the Indian rupee has weakened, with an outflow of nearly $16 billion. Taiwan had an outflow of $17 billion. Our country had an outflow of about $1.1 billion. However, if you observe carefully, if you look at the net flow since the beginning of the year, in slide 11, you will see that since the beginning of the year, fund flow is still net positive. Net buying, which is around $768 million. I understand that at its peak, foreign investors bought almost 70,000-75,000 million baht, which is quite a lot. Now it's around 7,068 million. Meanwhile, other Asian countries, you can see that South Korea, India, and Taiwan have been net sellers since the beginning of the year. Therefore, the impact is that the war has caused fund flow to leave countries that have to import a lot of oil. You can observe that the money flowing out is mostly from countries that have to import oil. Now, let's look at the performance during the war. Which countries were the winners? Please allow me to refer to slide 12. In slide 12, you can see that since the war began, oil prices have risen by 25%. Bitcoin has risen by 18%. US stocks have risen by 3.6% to 6%. Part of this is due to the strengthening US dollar. You can also see that stocks in developed markets (DM) have risen by 2.1%. You can observe that the groups of assets above are the winners in a war situation. Now, let's look at Thai stocks. Thai stocks have fallen by about -3%. Vietnamese stocks have fallen by -3.4% to -4%. You can observe that the countries with negative returns are countries that have to import oil. Gold has also fallen, by about -8.5%. Part of the reason is that despite the war, gold has underperformed, falling by 8.5%. What happened is that due to the strengthening US dollar and rising inflation, investors might think that central banks of each country will maintain or even increase interest rates instead of lowering them. This has caused gold to underperform during the war. However, if we look at the performance since the beginning of the year, please allow me to refer to slide 13. Since January, oil has given a return of 45%. Thai stocks are among the top performers in the industry, giving a return of 17.7%. This is consistent with the expectation at the beginning of the year that fund flow would come in this year. You can observe that after the net flow, we see fund flow into Thai stocks since the beginning of the year. >> Thai stocks have given a return of 17.7%. >> Yes, Japanese stocks have returned 16.2%. So, this year is a year where Thai stocks have outperformed. >> Mmm. So, does this mean that currently, most of the money is overweight in the stock market? What will be the trigger for money to flow back into Asia again, after it came in and then went out, and then came back in again? >> Yes, I must admit that regarding the Strait of Hormuz. I think many people are watching the oil flow out of the Strait of Hormuz. You can observe that oil prices rise with the news. Some days they open, some days they close. But I would like to show you this: currently, Iran has closed the Strait of Hormuz. The United States has also closed Iran once. It's like a double closure. The first time... >> Yes. What happened is that it caused the flow to stop. Everyone is hoping for negotiations, and how much benefit they will get from these negotiations. >> What happened is, I sat down and thought, I looked at the whole scenario. I think the Strait of Hormuz, with each side closing off to the other, and how long can Iran endure? I believe the United States thinks the same way. I've been watching the tankers, including storage tanks, and the oil storage tanks that have been produced. Iran currently has a production capacity of about 3 million barrels per day. It has storage capacity in ships, floating storage, or whatever, of about 90 million barrels. So, currently, 50% of the tanks are used. What does this mean? It means Iran can endure for another month. One month. >> In terms of producing oil and storing it in tanks. And when there are no more tanks to store it in, what happens is that Iran might have to stop oil production. Of course, regarding ships not being able to leave the Strait of Hormuz, Iran can pass through various shadow channels to escape. That might not be much, but I believe we will be in a situation of high oil prices, expensive petrochemicals, and a shortage of LNG for at least another month. >> Mmm, so it will end in May. >> Yes. At supplymarket.com, they see it this way: initially, they predicted an 80% chance of the Strait of Hormuz opening by the end of May. Now it's down to 62%. But the good thing is it's more than half. However, I think this is a game where the US wants to end it quickly, but Iran can endure more pain than the US. >> Mmm. P' Him, what do you think? Because the latest news is that Indonesia is starting to have similar thoughts to Iran, saying, "Should we collect tolls through the Strait of Malacca?" But it's shared with Malaysia and Singapore. >> Yes, they said they disagree. This is not a suitable approach. There is a chance it could spread to other straits, especially the Strait of Malacca. >> Yes. Observe carefully, the Strait of Malacca is a strait through which almost the most cargo ships in the world pass. If I remember correctly, it might be the most in the world. Because China also passes through that strait. I think the chance is unlikely because, mainly, Singapore uses it. Singapore is against collecting tolls through the Strait of Hormuz. Therefore, I think it might just be noise. The disturbances that come out, so I don't think that chance is possible. However, I think Iran might use the toll collection through the Strait of Hormuz as one of the agreements to open the Strait of Hormuz. We will have to follow that. I think the negotiations will take many rounds, back and forth, and will take more than a month. >> Ah, so if we return to the original point, where P' Him believes we will have to endure high oil prices and petrochemical prices, and shortages for about another month. In this situation, what are fund managers around the world most afraid of, P'? And when will they stop being afraid and return to Asia? >> Yes, I would like to say that whether the fear will end or not, this one month is just a rough estimate. It depends on whether Iran can produce oil and store it in tanks until the tanks in the country are full. That is a scenario I imagined, where Iran can no longer produce oil. However, I believe Iran can endure longer than that. Therefore, we must prepare ourselves, as it might be more than a month, possibly beyond May. What happened is, I think the difficulty now is that if the Strait of Hormuz opens, because inventories in many countries are running low, we will see news about a chemical complex in Vietnam of a listed company that cannot operate due to raw materials. Therefore, I think it will take some time to get raw materials. However, I believe this: if we look at COVID as a case study, normally, stocks bottom out before the COVID cases peak. Therefore, I believe the stock market has likely bottomed out. However, the real impact will likely occur in the second and third quarters. Please allow me to refer to slide 1. In slide 1, you will see that the closure of the Strait of Hormuz leads to an increase in natural gas prices. Another issue is that financing costs are also increasing. If you observe carefully, financing costs are currently high, bond yields are rising. This leads to an increase in the cost of urea fertilizer, and agricultural product prices are also increasing. Therefore, I think the market may have to absorb the decline in earnings in the second and third quarters for now. However, I believe this: after the war ends, the US dollar will weaken. Currently, the US dollar is overvalued compared to inflation and compared to its competitiveness, overvalued by 13%. Therefore, there is a chance that after the war ends, we will see the US dollar weaken. Then we will see fund inflows. >> Mmm. >> Yes, please allow me to refer to slide 3. In slide 3, during this war period, the blue, gray, and red areas represent bond yields of countries. You can observe that during this war, and in the past 2-3 years, we have seen bond yields of various countries rise significantly. Observe the red line, Japanese bond yields have risen rapidly, meaning their slope has increased very quickly. The green line at the bottom is for China. You can observe that during this war, China is the only country that has lowered interest rates, increased liquidity, meaning it has injected liquidity into the system. Other countries have seen liquidity increase through bond yields. Therefore, the increase in financing costs is the second side effect of this war. >> So, we are facing two things, P' Him: operational costs and financing costs. >> Yes. >> Another thing is the decrease in purchasing power due to rising product prices. I think the capital market may have to absorb these three shocks before it starts to enter an uptrend again. Please allow me to refer to slide 4. In slide 4, you can observe that this picture shows the relationship between the MSCI World Index (white line) and the Money Supply (light blue line) worldwide. The blue line is the MSCI World, global stocks. You can observe that whenever central banks do not withdraw money, meaning they maintain liquidity, meaning they do not do QT or raise interest rates, you can observe that inflation is starting to rise, and central banks of each country have not yet raised interest rates. This picture indicates that when there is a lot of liquidity in the global system, stocks can still sustain themselves. So, in the context of what I mentioned earlier, we have to prepare for three shocks in the real economy. >> The issue of interest rates, rising costs, and decreasing purchasing power are real economic factors. But in the capital market, observe that in many countries, stocks have reached new highs. Part of this is due to the liquidity in the system remaining high. You can observe that whether it is the VIX index, which measures market volatility, or the VIX index, which measures stock market volatility, it is still decreasing. Therefore, the picture of the stock market and the real economy are separated, as if they are in different worlds. You can observe that since the stock market depends on liquidity, I think that stock markets may have to consider system liquidity. Whenever central banks of each country raise interest rates, that will be a signal for the stock market to consolidate. I would like to watch the ECB, which has a chance to raise interest rates in June, and the BOJ, the Japanese authorities, to raise interest rates at the end of the year, to see how much the stock market will consolidate. Therefore, at this moment, it indicates that liquidity in the market still exists. That is why the stock market is still making highs in new markets. But at the same time, the real economy is facing three shocks. >> Real economy, financing costs, operational costs, and reduced purchasing power. We are facing difficulty selling goods, right? Selling goods is difficult because purchasing power is not good. We cannot raise prices, and if we sell, sales will decrease. This is what P' Him says we will have to prepare for in the second and third quarters, meaning we investors will have to face this pain. But in the fourth quarter, it will start to get better, right, P' Him? >> Yes. >> Please allow me to refer to slide 16. If we look at 1970, during the stagflation period. >> Please allow me to refer to slide 16. If we look at 1970, during the stagflation. >> The stock market moved like this. Observe that it was a large sideways movement for the entire 10 years, from 1970 to 1980. Therefore, you can see that the stock market was not a one-way downtrend. At the same time, when the stock market rose, it was a market that rebounded quite strongly. Observe that throughout the 10 years of the 1970s, the capital market here is the American capital market. At that time, I didn't... the stock market hadn't developed yet. I used the Dow Jones first. >> The US stock market, you can observe that it was a large zigzag, a large W shape. When it rebounded, it would fluctuate by 40-50%. It would rise by 40-50%. That was in 1970. This era is slightly different. First, there is the issue of algorithms involved. Because when the stock market rises, observe that it rises sharply and falls sharply because of algorithmic trading, short-term trading, and so on. It also involves monetary policy, which has become more diverse. Therefore, I would say that if we use 1970 as a case study, we will see that the stock market was not a one-way downtrend. At the same time, it was not a one-way uptrend, but a very large sideways movement. Therefore, investors may have to use valuation as a special consideration to determine at what point it is appropriate to buy, as well as to read monetary policies of each country. >> Yes. So, could you give us an example, P' Him? For the first market, the United States, because it is the financial center of the world, and its interest rate hikes have a global impact. If we look from the US perspective, regarding liquidity and interest rates, how do you assess it, P' Him? And for stocks? >> Yes, I think for the United States, we have to look at the policy of the new Fed Chairman, Jerome Powell. You can observe that if you look at his past thinking, he prefers lowering interest rates. So, you can observe that in the first half of the year, the Fed's interest rates will likely remain stable, neither rising nor falling. But it is possible that in the second half of the year, it might decrease, perhaps 1-2 times. But the important thing about Jerome Powell is that he prefers this: looking at his thinking, he likes the idea of a shrinking balance sheet. The reason is that a large balance sheet is equivalent to subsidizing the business sector. So, the Fed's costs will also increase. Therefore, what he can do is perhaps allow commercial banks to reduce their reserve requirements. Or, it means reducing long-term bonds and holding short-term bonds instead. Therefore, I think Jerome Powell's policy may have an impact on fund flows. So, this indicates that if the US lowers interest rates at the end of the year, we will likely see the US dollar weaken, as I mentioned, the US dollar is currently overvalued, meaning the Real Effective Exchange Rate, which is the exchange rate compared to competitiveness and inflation, is overvalued by almost 13%. Therefore, I interpret this as a possibility that fund inflows will occur around the fourth quarter. Inflows into emerging markets, and we are one member of emerging markets. As for US stocks, we have to admit that currently, US stocks are rising because of AI. Please allow me to refer to slide 36. In slide 36, you can observe that as long as EPS growth, earnings per share, observe the purple line, it is EPS growth, meaning the growth of earnings per share for US tech stocks. The light blue line is the return of stocks. You can observe that EPS growth and stock returns have a relationship. As long as tech companies can deliver EPS growth, tech stocks will lead the market. You can observe that in the past period, tech stocks led the market. However, the rise of S&P stocks, US stocks in general, is a concentrated rise. Therefore, if anything goes wrong with tech, it could cause the stock market to fall. Please allow me to refer to slide 37. In slide 37, normally, when analysts look, they look at PE divided by GR. For companies with high PE and still GR, if PEG is very low, that sector is interesting. You can observe on the right side, the formula is Tech, PE/GR, which is 1.5. This indicates that everyone is flocking to tech stocks. Observe that tech stocks are still outperforming S&P. Also, observe the Max 7, which is around 1.66. Max 7 is considered expensive, but the GR is quite good. Look at the sectors on the left side. The leftmost is Real Estate. Real Estate's PE/GR is the highest, meaning it is a sector that people are completely ignoring. This is for US stocks. Therefore, tech stocks have become the vanguard of this US rally. Please allow me to refer to slide 38. If we look at earnings, earning growth in 2026, the light blue line is AI Infrastructure. You can observe that AI Infrastructure can provide earnings growth for the S&P group by 39%, from 42% out of 100%. So, more than half of S&P comes from AI Infrastructure. >> This makes tech stocks perform quite well. Please allow me to refer to slide 41. The blue line is the AI Infrastructure group. Observe their growth, their performance, as the driving force behind the rise of tech stocks. Meanwhile, other tech stocks, whether they are hyperscale, are starting to improve. Meanwhile, AI Productivity, those that use AI, are not doing much. Observe the green line. Also, if it's software, you can see the bottom line. This means US stocks are not rising across the board; they are rising selectively. I would like to continue. In slide 42, if we look at tech stocks, in the AI Infrastructure group, you can see that the Data Center group and the Optical Networking group, observe their performance, they have risen quite well. Meanwhile, the cooling group, even though liquid cooling groups, because data centers require a lot of electricity, require cooling systems, and so on, the cooling groups are starting to rise. Another group that is rising is the influencer group. Therefore, when investing in US stocks, investors may need to look at sectors, trade sectors, and see which companies are upstream, midstream, and downstream. >> If we look at investing without much volatility and with a tendency to receive good news from the prolonged war or after the war, P' Him, what do you think about the upstream, midstream, or downstream groups that will benefit? >> Yes, currently, I must admit that the upstream group is considered the group that continues to outperform. Because the AI Cap Cycle is a big thing, it will dominate investment for the next two years. >> Oh, so what P' Him has told us all along is that the tech group, in reality, some groups may outperform the overall index. If we choose to invest, right, P' Him? And it will be the factor that supports the US stock market. >> Even if there are any impacts, tech will still be the group that... and will support the market. >> And also, the US market has high liquidity. Will it support the market indefinitely? I dare not say that. It will support for at least two quarters. For other quarters, please allow me to observe the development. >> Please allow me to refer to slide 40. >> Why can't it be said to support indefinitely? Please allow me to refer to slide 40. What is slide 40? Normally, if a company sees growth, we will invest more, and that company will invest more. This picture is called hyperscale capital spending. You can observe that in 2026, >> The black line for 2026 is what has been invested, what was planned to be invested around October last year. Observe that in April this year, the investment increased again, meaning companies see growth. These hyperscale companies see growth. Observe that in 2027, growth will increase again. Therefore, if we interpret this picture this way, the growth of hyperscale companies will likely improve in the next two years. But the question is, the stock market often reflects ahead of time. What happened is, if hyperscale companies reduce their spending, observe their growth in 2028, 2029, 2030, it starts to decrease. Therefore, if I interpret this, it means that tech stocks will likely peak in about 6-9 months from now. Because it will overlap with the decrease in tech spending. Therefore, I think supporting indefinitely is not possible. >> So, 6-9 months from now would be the end of this year. We might extend to the beginning of the first quarter of next year. >> About 6 months. 6 months means the fourth quarter. If the fourth quarter, if my timing of fund flow is correct, then during that period, I will sell tech stocks and buy into emerging markets. >> Yes, P' Him. Now, regarding the three properties that P' Him said we should deposit money in which market, we should look at three things: valuation, interest rates, and liquidity. I understand that the US market will win hands down in terms of liquidity because it has injected so much QE. Are valuations attractive, based on your analysis of the tech group that is currently supporting the US market? Is the valuation still attractive? >> As I mentioned, the PEG for the tech group is around 1.something, which is considered low. However, we still need to look at next year. I don't have next year's data, but will the PEG for the tech group increase? But if you look at slide 40 again, you can observe that the tech group has been rising steadily since the end of last year. Initially, investors predicted that tech companies would spend about $500 billion on development. By March of this year, after the conference, they said that spending related to their growth would increase to almost $700 billion. Observe that this is the driving factor that has made the tech group grow. Next year, it will be almost $800 billion. But observe that from then on, spending related to growth starts to decline. Therefore, if I interpret this from the cap cycle, the tech cap cycle will likely peak this year. >> Okay, so mid-year, meaning the third quarter. It starts entering the third quarter. Yes. Entering the fourth quarter. And by then, the war will likely be over. It won't drag on to the fourth quarter. If it's the fourth quarter, then... >> Mmm. Is this also a reason why P' Him said that in the fourth quarter, money is likely to flow back into Asia again? >> Yes. As I hypothesized, the fourth quarter is likely to see fund inflows into Asia. This is due to 3-4 reasons. First, the tech cycle cap cycle is nearing its peak. Second, the US dollar is overvalued by 13%. >> Third, the midterm elections. It is highly likely that the Republicans will control at least one house of Congress, or perhaps both houses. If this happens, it means Trump's power will be reduced. Therefore, I also see it as possible that in the fourth quarter, fund flow will go into Asia. >> Yes, P' Him. Regarding interest rates, do you still think the US Federal Reserve has a chance to lower interest rates a few more times this year? >> Yes, I read that it will be 1-2 times. As I mentioned, when interest rates are lowered, the US dollar will weaken. What I want to watch is the ECB more. If investors remember, in 2008, it was the first year the ECB was the first central bank to raise interest rates, leading to a global liquidity shortage. Therefore, I want to watch June and August. When the ECB raises interest rates, investors may have to brace for the impact of liquidity disappearing. There is one impact that I have studied and has not happened yet, I'm not sure when it will happen, which is the unwinding of the yen carry trade. Regarding the yen carry trade, I would like to look at slide 33. In slide 33, the left side shows the 30-year Japanese bond yield. Observe this increase. I think with this increase, almost over 3%, almost 4%, it is considered a strong increase, a very strong increase. Over 3% is close to the Fed's interest rate. What happened is, if you look at Japanese institutions, Japanese financial institutions invest in foreign bonds, with a total amount of about $2.4 trillion. This is more than 25% of their balance sheet. What does this mean? It means that if they see such yields in their country, with yields of almost 3.5%, I think they might pull money back to invest domestically. Therefore, the unwinding of the yen carry trade is something to watch. I think when it happens, it will be a big shock. When they pull money back, we have to see if the yen strengthens rapidly. At that time, investors may have to be cautious. So, I have a location for investors to watch. >> Please allow me to refer to slide 34. >> Slide 34. What is this picture? The black and gray lines represent the global stock market, MSCI World. >> The blue line is the exchange rate between Australia and Japan. Observe that this exchange rate has a correlation of almost 80% with the global stock market, 76%. What does this mean? Currently, money is being borrowed from the yen to invest in commodity currencies. Therefore, whenever the yen strengthens compared to the Australian dollar or other currencies, it may cause the global stock market to become volatile and could be correlated quite a lot. I think we should watch the movement of the Australian dollar against the yen. This is what institutional investors and funds are also watching: the possibility of the yen strengthening. >> Yes, P' Him. I would like to ask, of the $2.4 trillion that institutions have invested abroad, if they see such high Japanese bond yields and bring the money back, what is the composition of their investment portfolio? Is it that they hold the most US bonds out of that $2.4 trillion? >> Yes, to my knowledge, it should be, but however, I would like to do some homework because I don't remember the exact figures of how they invest, in what proportion in America and other countries. What happened is, in the past, the Japanese yen was a funding currency. And this funding currency is used to fund global investments, not just stocks, but also bonds and project financing. It is Japanese money, like JBIC loans. Therefore, I think the impact is not just on bond investments, but on global investments. >> P' Him, will it be as strong as it was in the past 1-2 years when we saw the yen carry trade unwinding, and the whole world fell by thousands of points? For example, US stocks, the Dow Jones, also fell significantly. >> Yes, I think there is a possibility. Why? Because when it happens, people are usually caught off guard. >> They are usually caught off guard. There are not many signals. Observe that bond yields have risen so rapidly, so strongly. This indicates a possibility of it happening. From now on, within the next year and a half, I think if it happens within the next year and a half, the reason I believe it will happen within the next year and a half is this: I read that the BOJ's policy interest rate has a chance to rise to 1.5% by mid-2027. >> 1.5% is higher than ours. Therefore, observe that with the policy interest rate of the central bank at 1.5% in the future, what will the situation be like? Therefore, if I interpret the BOJ's thinking, along with the yen carry trade, the chance of it happening within the next year to a year and a half is there. >> Mmm. I would like to ask P' Him, Japan is also a country that imports a lot of oil. The Middle East war has affected them quite a bit. Inflation and interest rates have been low for a long time. If inflation rises slightly and interest rates are nudged up slightly, it will have an impact. Now, with the Middle East war, P' Him, will it put more pressure on them to raise interest rates faster or higher? Which will directly affect bonds. >> Yes, as I mentioned, the BOJ's terminal rate target is 1.5% by mid-2027. This is almost mid-2026. So, in another year, they have a chance to raise interest rates by at least 50 to 75 basis points. Therefore, what happened is that this is within their thinking, within their policy plan. That is why, if I map this to investment, the playbook is to observe the BOJ, the ECB, and the US interest rates to see what will happen. Observe the interest rate cuts. The ECB has a chance to raise rates. The BOJ has a chance to raise rates. What happens, and how do we plan? Please allow me to refer to playbook, slide 16. Slide 16. Let's go back to 1970. How did we plan then? Observe slide 16. It is likely to be a major shake-up because there will be truly uncertain events. Therefore, I think investors may need to have some cash on hand to prepare to buy when the market bottoms out. Observe that currently, people may have already priced in the Strait of Hormuz. But as I mentioned, the real impact will be seen in Q2 and Q3. Regarding the unwinding of the yen carry trade, it is something that cannot be accurately timed, but it has a chance to happen within the next year. Therefore, investors with prepared cash can enjoy this. >> P' Him, regarding Q2 and Q3, the chance of a correction, will it be the global stock market, or will we focus on specific regions only? >> In my opinion, it will be like that. Because currently, everyone is pricing in that it will open, the war will end. But everyone is not pricing in the war dragging on for more than a month, or three months, or six months. I think things will change. Observe oil prices. There are two assets whose prices are currently higher than during the war, very high. First, oil prices. Second, yields. Both oil prices and bond yields eat into consumption. Therefore, in the second and third quarters, I think no matter which country in the world, it can be called a triple impact: 1. Costs are rising. 2. Purchasing power is decreasing. 3. Financing costs are rising. >> Mmm. So, the impact on listed companies will be clearly seen in the second and third quarters, right, P'? >> Yes. >> I think in the second and third quarters, in the first quarter, I think many companies will still have profits from the increase in oil prices. Therefore, the profit reduction will not be significant. Please allow me to refer to slide 20. What is the impact? Slide 20. Observe that this is a slide about oil prices in this region. Observe.
Certainly, here is the translation of the provided Thai text into English, adhering to your rules:
Okay, regarding the oil prices in this region, when compared to Brent, the oil prices sold domestically in the Philippines have increased by 8%. Brent has increased by approximately 46%, around 30-40%. Looking at Thailand, domestic prices have increased by 30%, while Brent has increased by 45%. Simply put, we are still using oil that is considerably cheaper than our neighboring countries. Therefore, the impact of inflation might be lighter for us compared to our neighbors. This could be due to government subsidies, price reductions at refineries, and so on. Consequently, the impact might be said to be gradually slowing down.
Yes, I'd like to ask a question. You mentioned earlier that a petrochemical company in Vietnam had to temporarily cease operations due to a lack of raw materials. Are there any companies in Thailand with a similar business model to the company in Vietnam?
Yes, it's like this. Regarding the supply chain for petrochemicals, it's impacting the entire world. I think the price of basic chemicals will likely increase. You'll notice that the spreads for HDPE and others have increased quite a bit. These factors will affect the supply chain, increasing costs for businesses and consumers. Therefore, I believe that securing the petrochemical supply chain will be a very challenging task for the second and third quarters.
Yes, will we have an opportunity like that? Where there are no raw materials coming in, forcing production lines to stop?
Well, if we look at it, if my memory serves me correctly, there's a plastic pellet production factory in Samut Prakan with 400 employees. They had to lay off all their employees because they couldn't find raw materials to import. The impact is quite significant this time around.
Yes, and this poses a considerable risk to listed companies on the Thai stock market, especially the large ones that might be part of larger conglomerates like SCG or PTT. I believe our large companies have quite good plans. They have preparations for raw materials for 3-6 months already. Therefore, we hope that the Strait of Hormuz issue will be resolved by the end of May, and not drag on any longer.
Okay. Looking at the stock market analysis you've provided, the US stock market's valuation is still interesting and suitable for investment. The tech sector can also help support the market for another approximately six months, perhaps until the end of this year. Now, what about the Chinese stock market? The Chinese market is currently being heavily impacted. If the Strait of Hormuz remains closed like this, China, which relies on oil passing through the Strait of Hormuz, will be significantly affected. It's as if Iran and the US are holding China hostage with this situation, impacting China. Will China be affected by this?
Yes, may I please see slide 3? On slide 3, China's oil imports, the green line at the bottom, are lower than everyone else's.
Simply put, I think the Chinese government has probably prepared for this. In a situation like this war, the government has been injecting liquidity into the system. This means their impact might not be very significant in terms of financing costs.
Yes. May I please see slide 25 again? This image shows that the PBOC, the People's Bank of China, has been injecting liquidity into the system. You can see this from the red dotted line. So, you'll notice that China's GDP this time is 5%. It might decrease this year, but regardless, they can still maintain liquidity. What's interesting about China, on slide 26, and the next slide, is that their exports are improving. This might allow their economy to continue moving forward. What's particularly interesting is the tech exports reaching new highs. On slide 27, in March, their technology exports increased to nearly approximately 234 billion dollars, which is the highest in many years. So, you'll notice that the technology sector is what is supporting the Chinese economy. Therefore, if you look at China's valuation, on slide 28, currently, China is at a PE of 11.6 times, which is not very expensive. So, I think if we take the Chinese government as an example, I believe they can maintain liquidity. The central bank is helping with liquidity by injecting it into the system. On the other hand, their exports are quite competitive. This has led to the Chinese stock market underperforming recently, but I believe it is a stock market that is a winner in terms of exports.
Oh, okay. And which sectors are still interesting? For the American market, the tech sector is supporting the market. What about China?
Yes, definitely not the state-owned enterprises. I think it's the tech sector as well. However, this time, you'll notice that those using AI users are not performing well. I think regarding oil, it's definitely the EV sector, but the competition in EVs is fierce. I think investors might need to look carefully. Consider the large platform companies, like various banks. I believe large companies with strong ecosystems will have an advantage.
Okay. And now, regarding the Thai stock market, Mr. Him?
Finally. If money were to flow into Thailand, either at the same proportion as before, or more, or more than neighboring ASEAN countries, what are the reasons for them to enter the Thai stock market, Mr. Him? On slide 4.
As I mentioned, I view the US dollar as overvalued. After the war, there's a chance it could weaken by 13%. Normally, the Thai stock market, may I please see slide 17. On slide 17, if you look, the comparison for the Thai stock market should be based on the earning gap. Actually, I should also include the dividend gap, because our dividend gap is very high. Companies that pay good dividends. You'll notice that our earning yield gap is still good. PE is the inverse of PE minus government bonds. You'll notice we are still high, around 4.5% to 5%. This means if the stock market corrects down a bit more, say 5-10%, I think it will be interesting. It will be close to the end of 2025. If you look a bit, at the beginning of 2026, before foreigners started buying heavily, the yield was around 5%. Therefore, I see it this way: with our yield gap, if it corrects down a bit more, it will be very interesting. However, there's one charm of the Thai stock market, slide 18. May I please see slide 18?
What is slide 18? The Private Investment Index. Private investment. You'll notice we are investing in things like data centers and various other things. Look at the growth of PII, the Private Investment Index. Ours has grown the most since 2022. Therefore, PII is something that could be an engine to help us in a situation where exports face difficulties due to supply chain disruptions. Secondly, private consumption is decreasing. Government consumption might require additional borrowing. However, there is a small glimmer of hope, the PII, the Private Investment Index, which has improved significantly. However,
Can the stock market rise? It needs liquidity.
Yes, may I please see slide 19? What is this image? The gray line is interest rates. Notice how quickly our interest rates are falling. The blue line is called M2 growth. What is M2? It's the total money supply in the system. And look at the growth. You'll notice that M2 growth is improving. Notice that for the stock market to rise, there needs to be liquidity in the system and liquidity growth. You might notice that from 2022 to 2023, M2 growth adjusted downwards.
Yes. Therefore, notice that anyone who invested in 2022-2023 made profits. But notice currently, our M2 growth is starting to improve. Therefore, when compared to the earning gap, which is attractive in some sectors, improved M2 growth, and falling interest rates, it makes many investors start to become more interested in the capital market.
Okay. Now, Mr. Him, we often talk about asset allocation, like 60-40. But from your perspective, are you overweighting or underweighting anything? Stocks, gold, oil, cash, or bonds?
Yes. First, cash must have a portion.
Yes. Cash should be around 30-40%. Look at the timing of the purchase. I think there will definitely be opportunities to buy in the second and third quarters. Second, there must be at least 10% gold, because I believe when the dollar weakens, and importantly, I read that the Fed will lower interest rates. At that time, gold is sideways. It's sideways right here. It's been sideways for a long time.
Because people fear the Fed raising interest rates and the dollar strengthening, gold has been sideways. But I read that in the fourth quarter, the dollar price will weaken, and the Fed might not raise interest rates, perhaps even lower them. Therefore, gold should be in the portfolio. Did we see cash earlier? Cash can be 40%.
Okay. Gold is 5-10%. 5-10%. What's important is dividend-paying stocks, definitely. I think dividend-paying stocks are essential now. Dividends must be at least 25%. At least we get dividends. The remainder, I think it should be Japanese stocks, including the stocks of the market, which is America. However, in America, we see AI infrastructure, which is very fast and very strong.
I'd like you to look at the second tier, things related to cooling systems and influences. These are things that should follow.
Yes. Mr. Him, a quick question. If the worst-case scenario happens, let's ask in advance. The war doesn't end, it keeps escalating. Inflation returns because of the prolonged closure. Is the portfolio you mentioned still usable, or do we need to adjust and prepare?
Yes, I think it can still be used. Notice that.
We have almost 40% cash.
Yes. Regardless of any shock, whether it's carry trade or anything else, we have 40% to cushion it. For good buying opportunities, I think some people's lives could change. Meaning, they can look for opportunities when things are volatile and uncertain. Look for buying opportunities. Second, we have gold. At least gold, at this moment, is underperforming. Did we see earlier that gold hasn't performed since the war started?
I think gold, if I'm not mistaken, if the Fed doesn't lower interest rates, or rather, doesn't raise interest rates, it will allow gold prices to move sideways up. High dividend stocks, definitely. We have dividends to sustain our lives. The remainder, Japanese stocks or American stocks, which are called "hot stocks." However, for hot stocks, I would choose the second tier, not those that have already risen.
Okay. And Thai dividend stocks are interesting. Because right now, if stock prices fall, it's like we get more dividends. But if stock prices rise, we get a double benefit: dividends and capital gains that are about to happen. However, we have to wait and see until the fourth quarter. Mr. Him, if it really comes in, will it be more than at the beginning of the year, when it came in around 70 billion, as you mentioned earlier?
Yes. At that time, American tech was probably very expensive. In the fourth quarter, I think there will be people who flee from the stock market into the emerging market. And it's possible that the oil price at that time would not be 120 or 110 dollars as it is now. It might have come down to around 80-90 dollars. Therefore, I think at that time, it should be much better than in the second and third quarters.
Wow, today Mr. Him has prepared a PowerPoint. Simply put, he has prepared a lot of information for us. The number of pages is very large, and perhaps not all of it could be shown, but we see it as very solid information prepared for us to plan our investments. We can identify two periods: one is Q2 and Q3, which are quarters where asset prices will adjust downwards. That's a windfall that we need to keep 30-40% cash for. For those who miss that period, there will be another opportunity in 1.5 years, which Mr. Him believes could be a yen carry trade, meaning money flowing out of developed markets and returning to Japan. That could cause asset prices to adjust again. Therefore, asset allocation is to hold 30-40% cash, 5-10% gold, 25% dividend-paying stocks. Prepare for those who want to manage their portfolios. Mr. Him said that in the worst-case scenario, this portfolio would still be usable. Today, we have received very complete information. Finally, in the fourth quarter, we will wait and see if there's an opportunity for money to flow back into Thailand and the Thai stock market again. So, let's keep following. Thank you very much, Mr. Him, for preparing the information for today's Money Chat fans. It has been very beneficial. Thank you very much, Mr. Him. Goodbye.
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