Pick 10 stocks with 3 themes to get lower yields on US bonds. Money flows into Thai Asian stock markets.

Asia Plus Securities said the US reported important economic figures, including June inflation +3.0% y/y, below market expectations of +3.1% y/y and slowing from the previous month at +3.3% y/y, including a 4-year low and the latest 222,000 people filing for unemployment benefits, continuing to slow from 230,000 last week.

US inflation slowed more than expected in June. In addition, the US labor market is sending a signal of continued slowdown. These are all factors that the Federal Reserve (FED) has taken into account for further monetary policy easing. As a result, the market is expecting the Fed to cut interest rates up to 3 times this year (previously expected 1-2 times), with the first time in September, an increase of 84.6%.

This situation continues to show a picture of money leaving safe assets. More inflows into riskier assets, with the dollar index falling to 104.44 points, while the price of West Texas Intermediate crude oil rebounded to $85.4, and most global stock markets closed in positive territory. As for the US 10-year bond yield (BOND YIELD), it fell to 4.2% (-4.2% Mt or 27bps lower), narrowing the gap between the US-Thailand 10-year bond yield. At 1.59%, supporting the baht to rise to 36.37 baht/USD

Accordingly, the investment strategy during this period, the research department expects that there will be 3 groups, hoping that they will recover to receive the downward trend of US bond yields as follows:

1. High dividend stocks like SIRI, TTB, PTTEP

2. Stocks Benefiting from Strong Pale: GULF, BGRIM, GPSC

3. Stocks suffering from a bearish interest rate cycle: JMT, MTC, SAWAD, TIDLOR

The Fed is expected to cut interest rates based on US economic data. Sending a signal to slow down and this gives us a picture of money tending to leave safe assets. And flowing into riskier assets

In this regard, the US interest rate downward cycle is about to happen. This may cause more funds to move to Asian stock markets or emerging stock markets in the coming period due to 3 reasons as follows.

1. Emerging market stocks tend to rise well when the Fed accelerates monetary policy easing or uses quantitative easing. During that period, money tends to flow into technology stocks. Developing market stocks are up more than developed market stocks, both during QE1-3 at MSCI EMERGING +134%, more than MSCI WORLD +116%, and during QE COVID at MSCI EMERGING +89%, more than MSCI WORLD +75%.

2. MSCI WORLD (Developed Stock Market) P/E67F 20.4x, accelerating higher than MSCI EMERGING (Developed Stock Market) 13.4x, especially NASDAQ stock market with P/E of 44.2x (P/E67F 35.6x), which should motivate investors to increase their weight in emerging stock markets. There is also an opportunity to earn additional profits from the exchange rate.

3. Asian currencies or the baht have a chance to strengthen. From the narrowing of the Thai-US interest rate spread. We started to see signs of accelerating baht appreciation during this period, and within two weeks, the baht appreciated by almost 1 baht, from 37 baht/coin to 36 baht/coin.

The money flow has a chance to head towards Asian stock markets. Thailand more so, which has helped support the SET index to stand above 1300 points and is expected to head towards 1400 points in the coming period.