Researchers at InnovestX Securities (INVX) reveal that in the third quarter of 2025, the global economy will continue to face persistent risks from trade wars.
The U.S. economy is expected to decelerate due to tariff impacts, with the Federal Reserve (Fed) unlikely to cut interest rates, and inflation anticipated to increase to 3.6%. In China, although economic momentum may be slowing, government stimulus measures are expected to provide support.
However, Thailand faces several threats, especially from the Reciprocal Tariff, which poses a significant downside risk to the country’s GDP forecast for the year at 1.4% (assuming a 15% Reciprocal Tariff).
The US-Vietnam trade agreement signed on July 2, 2025, may serve as a benchmark for Thailand’s own trade negotiations. Under such a scenario:
1) Thailand may be required to reduce import tariffs from the U.S. to 0%, mirroring Vietnam’s terms.
2) Thailand would need to substantially increase its imports of U.S. goods if negotiations succeed.
If tariffs can be lowered to 15-20%, GDP could expand by 1.1%-1.4% in 2025 (30% probability). However, if tariffs remain at 21-28%, GDP growth may stall at 1.0%-0.0% (50% probability). In a worst-case scenario, should tariffs increase to 29-36%, Thailand’s GDP might contract by 0.1% to 1.1% (20% probability).
INVX sees limited downside risks but also little upside for the Thai stock market in 3Q25. While trade war tensions between the U.S. and key trading partners have begun to ease, volatility may remain due to the possibility of sudden policy shifts.
Thailand’s domestic economy continues to face pressure from various factors: trade uncertainties, sluggish tourism, vulnerability in the agricultural sector, ongoing political instability, high household debt, and a lack of recovery in private sector investment.
As a result, the Bank of Thailand is likely to cut interest rates two more times this year to support the economy. Amid these headwinds, diversifying investments into quality assets remains paramount, given limited market upside and elevated volatility.
INVX maintains its 2025 SET Index target at 1,250 points, viewing levels below 1,100 as attractive entry points. Market recovery still depends on supportive monetary policy, accelerated public investment, and stable system liquidity.
For Q3, INVX recommends selective stock-picking—identifying companies with strong fundamentals, diversified income streams, reasonable valuation, and the ability to benefit from domestic and global investment megatrends. INVX spotlights the following stocks that meet their five key assessment criteria: BCH, CPF, DIF, MTC, and SCC.
On the international front, INVX advises investors to diversify into sectors with stable growth outlooks, increase exposure to the defense sector, reduce holdings in technology and semiconductor that are beginning to lose momentum, and focus on domestic themes—especially in Asia, where China continues to recover thanks to government stimulus. Top global picks include:
- U.S. market: AMD, Constellation Energy, Goldman Sachs, Microsoft, Netflix, RTX
- Europe: BNP Paribas, Deutsche Telekom, Iberdrola, Rheinmetall, SAP, Siemens
- China: CATL, China Mobile, Hong Kong Exchange, SMIC, Tencent, Trip.com
INVX noted that the principal strategy for 3Q25 is disciplined, balanced portfolio allocation, diversifying across asset classes and geographies to mitigate risks amid ongoing global economic uncertainties, including geopolitical factors, monetary policies, and U.S. interest rate directions.
In the safe-haven asset class, gold continues to look attractive, underpinned by strong central bank buying and U.S. dollar weakness. In fixed income, short-duration bonds (less than 2 years) are recommended for their flexibility and stronger inflation resilience compared to longer-term instruments.
In equities, INVX still favors emerging markets (EM) and ex-U.S. stocks, particularly Vietnam and China for their attractive valuations and recovery prospects, and also recommends watching European stocks due to signs of recovery in both this year’s economy and next year’s earnings.
INVX’s highlighted funds for international diversification with growth potential in 3Q25:
- UOBSG-H: invests in SPDR Gold Shares ETF with currency-hedging
- DAOL-CHINATECH: focuses on Chinese leading tech names like Xiaomi and Tencent
- PRINCIPLE VNEQ-A: Thailand’s first fund focused on quality Vietnamese equities
- LHHEALTH-A: global healthcare fund; fundamentally strong with attractive valuations
- DR HSHD23: invests in 50 leading Chinese stocks based on the Hang Seng High Dividend Yield index, offering high annual yields of 6-8%, providing both growth and volatility protection over the long term.
