Citibank recently shares global economy forecasts for the second half of 2022 as the rest of the world continues to face challenges. The two powerhouses also face difficulties: the US local economy slows down due to many factors, while China, with gradual recovery, continues to be under pressure from its Zero COVID policy. For Thailand’s economy in 2022, the GDP is expected to be 3.5% thanks to the return of tourism. It is also expected that the Monetary Policy Committee will raise interest rates by 25bps three times in this year and next year to support the recovering economy in Thailand.
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As a result, the investment market continues to be challenging. For the second half of the year, recommended investment options are reducing cash on hand by investing in bonds that will potentially offer better returns, investing in long-term industry leaders to reap benefits from well-performing industries such as clean energy, electric vehicles, digitalization, fintech, and healthcare and medicine. Another option is to invest outside main assets to diversify and protect portfolio in the long term, while keeping a close eye on global affairs
Mr. Ken Peng, Head of Investment Strategy, Citi Global Wealth for Asia Pacific, said that in the second half of the year, inflation will continue to be high in many countries. There will still be a supply chain imbalance, and stricter finance and banking policies in different countries. Oil prices concern will continue due to the ongoing issues between Russia and Ukraine. Global volatility will remain as the US will face an economic downturn due to ongoing inflation, unemployment, and wage increase.
At the same time, consumer confidence index drops, especially in consumer products, real estate and services, except for natural gases. Meanwhile, as the Fed proactively increases interest rates to curb inflation, Citi analysts believe that the inflation situation in the US will take about 10 years to reach the same point as before the Russia-Ukraine conflict began.
China, on the other hand, begins to see the recovery of its economy, but the Zero COVID policy puts pressure on its growth. The PMI in the service sector has increased. The Chinese government has announced various measures to stimulate the recovery of the investment market, especially in real estate, as it is an important factor that drives the growth of the country’s economy.
Therefore, the investment market will continue to face challenges, such as volatility of stock markets and government bonds. Citi analysts remain optimistic about high-quality bonds that will benefit from current market situation, such as the rough doubling in the US government bond yields which has restored higher quality fixed income to a more appropriate yield level for the first time in several years. However, there are other pressure factors from the market, such as uncertainties amid geopolitical tensions. Investors should therefore closely monitor international affairs and diversify their investments to protect their portfolio in the long term.
Recommended investment strategies for the second half of the year are:
Bonds are Back! – Reduce cash on hand by investing in bonds that offer promising returns such as treasury bills and 10-year US treasuries.
Long term leaders –Investment in long-term industry leaders in high-quality sectors with steady returns and high potential for long-term growth, particularly options that offer regular and growing dividends, such as clean energy, electric vehicles, digitalization, fintech, healthcare and medicine, and technology related to cyber security.
Alternative Investments in Uncertain Times – Consider alternative investments outside main assets as the market is volatile. This will help prevent long-term risks. Another option to consider is equity instruments and private equity.
Ms. Nalin Chutchotitham, Investment Advisor of Citi Thailand, said that Citi has raised tourist arrival expectations for Thailand in the second half of 2022 and in 2023 as arrivals proved stronger than expected after travel restrictions were removed, and neighboring countries have reopened their borders once again. Current account is likely to remain in deficit in 2022 due to high commodity prices and freight payments, but a high surplus is expected in 2023 from stronger tourism revenues.
Citi has revised down GDP forecasts for 2022 to 3.5% (from 3.6%) and for 2023 to 4.5% (from 4.8%) due to expectation of slowdown in government spending and global growth. Citi also maintains its expectation for three 25bps policy rate hikes by the Monetary Policy Committee – once in the second half of 2022 and twice in the first half of 2023 as previously forecast.
Ms. Jane O’Charoen Retail Banking Head, Citi Thailand, said that in the second half of 2022, Citibank has prepared new funds to offer to Citigold and Citi Priority customers, leading to investment growth. Recently, it has partnered with a leading asset management company in the US, Wellington Management, to offer two new funds: Wellington Global Health Care Equity Fund which invests in the equity securities of healthcare companies worldwide, and Wellington Asia Technology Fund which invests in the best-run Asian companies powering the exponential growth of the multi-year tech cycle. Both funds focus on up-and-coming investment trends.
Additionally, Citibank also offers international investment options with more than 200 funds to choose from with five local asset management partners and 13 foreign asset management partners, offering diverse types of funds in terms of assets and regions. At the same time, Citibank facilitates its customers by taking care of their accounts, offering consultation and ad services on investment transactions via phone, and making wealth management more convenient with the Citi Mobile® App. Customers can sell and buy funds directly, monitor their investment portfolio, transfer money via PromptPay to other banks, or transfer money overseas conveniently. They can also open an account for foreign currencies 24 hours a day.
Citgold customers can get special fund trading privileges on the Citi Mobile® App. Enjoy 5% or up to 150,000 baht rebates on fees when buying participating funds at the minimum of 100,000 baht, and get up to 150,000 baht of credit rewards when making a new investment in participating funds. New customers can get up to 15,8000 baht of credit rewards when opening a new account and making transactions using their Citi credit card. Get 2% monthly interest rate for three months for a fixed deposit account. These offers are valid from July 1, 2022, to September 30, 2022. Those who are interested in Citigold can contact Citibank Thailand at 0-2081-0999 or www.citibank.co.th/th/citigold.
Citibank Thailand has recently organized “Citigold Mid-Year Outlook 2022” to share economic and investment trends for the second half of 2022. For more details, contact Citibank Thailand or visit www.citibank.co.th.