DBS Vickers Securities recommends overweighting Chinese stocks because the country's prospective policy changes will make Chinese equities be traded at a deep discount.
Thanawat Patchimkul, head of overseas business at DBS Vickers Securities, said the global economy in the first quarter is an "anchor in the storm" that has withstood an array of difficulties, including the Russia-Ukraine war, the Omicron variant, high energy prices, elevated inflation and rising interest rates.
However, the brokerage has an optimistic outlook for the global economy the rest of the year and suggests overweighting Chinese stocks as it expects them to become more attractive due to their laggard prices.
He said stocks have become preferred over bonds in the global investment arena because bonds have been shown to have a lower payoff in the past quarter.
However, Mr Thanawat still considers investment-grade corporate bonds to be attractive.
According to data from DBS, the Thai stock market has outperformed the global market as the SET Index has risen 2% year-to-date, surpassing the global average of -1%.
He said the increase could be attributed to net foreign fund inflows of 111 million baht since the beginning of the year.
For domestic stocks, the brokerage recommends stocks related to technology, electric vehicles, commerce and consumer products, healthcare, finance, utilities and mass transit, as well as stocks that benefit from the country's reopening. Top picks from the group include ADVANC, GPSC, AOT, MINT, PTT, CPALL, BH and BEM.
For the second quarter, DBS recommends allocating 50% in equities, 28% in fixed-income assets, 18% in alternatives such as private equity or gold, and the remaining 4% in cash.
For equities, DBS suggests a portfolio of 54% US stocks, 20% from Europe, 20% from Asia ex-Japan, and 6% from Japan as Chinese equities become more attractive and European shares slide.
