The Russia-Ukraine conflict, the spike of global oil prices beyond 100 USD/barrel, the hike of the US policy rate by 25 basis points, accelerating inflation and the transition to the full-fledged digital economy – all of these are both opportunities and challenges which Thai investors should brace for this year. Against this backdrop, various financial and investment gurus have recently shed light on the global economic and investment trends while providing insights and advice during the online seminar entitled, “THE WISDOM The Symbol of Your Vision: Game Changer”.

Dr. Pipatpong Poshyanonda, President of KASIKORNBANK, said that since early March, gold prices have risen unabated, while stock and forex markets worldwide have been on a volatile course due to the intensified conflict between Russia and Ukraine as well as other Western countries. This crisis has hindered the Thai economic recovery while also pressuring inflation, which may remain at high levels throughout the second half of this year. Therefore, KASIKORN RESEARCH CENTER (KResearch) has downgraded its GDP growth projection to 2.5 percent, compared to the previous estimate of 3.7 percent made at the end of 2021.

 

Global and Thai economy continue to enjoy growth…forecasts hinge upon the course of the Russia-Ukraine crisis

 

            The International Monetary Fund (IMF) has forecast that the global economy may grow 4.4 percent, slightly decelerating from last year. The Russia-Ukraine crisis will be a major factor. Dr. Don Nakornthab, Senior Director, Financial Stability Department, Bank of Thailand, holds the view that the Russia-Ukraine war is most likely to be protracted throughout this year.

 

  • US: Economic growth is set to stand at 2.8 percent in 2022 even though it may contend with rising interest rates and a soaring inflation rate of 7.9 percent – the highest level in 40 years – amid the heated employment market. The US economy may be quite resilient to the Russia-Ukraine war, as it is one of the world’s largest oil producing countries.
  •  Europe: The European economy is set to plunge into a recession, as it is heavily reliant upon oil and natural gas from the warring factions.
  •  China: The Chinese economy is projected to be impacted chiefly by the COVID-19 outbreak, not the Russia-Ukraine war. Currently, as many as 20 major regions of the mainland – accounting for 70 percent of its GDP – are grappling with the outbreak. Chinese authorities have set its economic growth target at 5.5 percent for this year.

Skyrocketing oil prices are set to hurt the Thai economy in 2022 because the country must import 90 percent of its oil. As a result, inflation will increase, and GDP growth will decline. However, the export sector will continue to serve as a driver for the Thai economy, as it exhibits a promising outlook. There should be no cause for concern about Thai exports, as long as the war is limited to Russia and Ukraine or does not spread across Europe, because Thai shipments to Russia and Ukraine amount to less than 0.5 percent of Thailand’s total exports.

 

Close attention must be paid to four hottest trends

 

In terms of investment, aside from an investment war, one must keep an eye on a physical war or a battle. Ms. Siriporn Suwannagarn, CFA, CFP ®, Senior Managing Director, Financial Advisory Head, Private Banking Group, KASIKORNBANK, said that investors must monitor four important trends, as follows:  

1. Russia-Ukraine war: How will the war end, and how long will it last? Investors must keep an eye on related factors such as sanctions, the cancellation of SWIFT, and trade barriers. 

 

 

 

 

 

2.  Downgrade of economic growth forecasts: How much will global GDP growth be trimmed when oil prices and inflation rates worldwide keep rising?  How will the COVID-19 situation in China exacerbate supply chain problems?

3. Monetary policy: If the Russia-Ukraine war continues unabated, will central banks worldwide be more patient? It is expected that they will only gradually increase their policy rates, at a slow rate.

4. Fiscal policy: Close attention must be paid to fiscal spending of various countries, and whether or not they will introduce new economic stimulus packages or programs. 

 

Today’s best investment strategy is to look at your portfolios once more. If you put all your money in investment and have sound risk diversification, you should keep your portfolios intact and do not panic. Those having cash should diversify their investment by gradually purchasing stocks, fixed-income funds and gold, because the current downward trends in these markets offer opportunities for those with cash. 

 

Cryptocurrency remains highly volatile despite its robustness

             

Since 2000, there has been a substantial change seen in the use of cryptocurrency, triggered primarily by COVID-19. Mr. Sanjay Popli, Co-founder, Cryptomind Group and Advisor, THAI DIGITAL ASSET ASSOCIATION, said that there were only hundreds of thousands of traders in the Thai cryptocurrency scene during 2018-2019, but that number has surged by about 20x over the course of two and a half years, which is considered a high rate, and it is set to grow further. Cryptocurrency will tend to see the following trends in 2022:

  • Its usage will shift from specific groups to a wider audience that is not limited to investment but extends into lifestyle, arts and gaming. For this reason, an increasing number of artists and gamers have ventured into the world of digital assets.
  • Major companies will gravitate more towards investing in cryptocurrency.
  • Many countries worldwide are considering the adoption of Bitcoin as legal tender, after El Salvador became the first country in the world to officially implement such usage last year.

However, persons interested in making an investment in this market should first be aware of the highly volatile nature of cryptocurrency and consistently monitor its movements as changes can happen quite rapidly. Many factors and data should be taken into careful consideration. The frameworks used for investing in stocks and/or mutual funds cannot be applied to cryptocurrency.

 

Digital Tokens: New Dimension of Investment

            Digital tokens are currently attracting much attention as a new form of digital asset that can help to diversify portfolio risks. Ms. Apinya Ruangthaveekoon, Managing Director of Kubix Digital Asset Co., Ltd., explained that Thailand’s digital tokens are ‘coins’ issued by large domestic corporations or companies, and can be divided into two types, namely:

1. Investment Token: This type of token is issued for fundraising purposes to encourage investment in a program introduced by the issuer. The benefits of joining this investment scheme may be to partake in a share of the program’s revenue or dividend. Thus, it represents a new channel for raising funds and a new way of tapping into sources of capital.

2. Utility Token: This type of token offers its holders the benefit of receiving the goods/services provided by the issuer, for instance, hotel stays and discounts at department stores. Holdings will thus become digitized for the owners’ greater convenience.

Since digital tokens are a relatively new industry, investors should familiarize themselves with the tokens and/or industries that they plan to enter, while keeping track of information, news, rules and regulations, tax and relevant changes at all times. This type of alternative asset is expected to generate opportunities for issuers and investors alike.