Globlex Securities wrote that as the end of 1Q26 approaches, global markets remain firmly locked in a stagflationary environment. The ongoing Middle East conflict has continued to drive up global energy prices, significantly limiting the U.S. Federal Reserve’s ability to pivot toward more dovish monetary policies.
As a result, the “higher for longer” interest rate regime is now entrenched, solidifying the US Dollar’s position as the ultimate safe haven. This enduring dollar strength has led to a severe liquidity drain from Emerging Market equities, compelling global investors to maintain a fundamentally defensive stance.
On the domestic front, Thailand is grappling with the effects of Brent crude prices consistently above $90 per barrel, which is straining the country’s macroeconomic stability. The higher energy import costs have weakened Thailand’s Current Account, forcing the Bank of Thailand (BOT) to adopt a defensive, hawkish posture aimed at shielding the baht from imported inflation.
Meanwhile, the government’s fiscal resources, under the Bhumjaithai-Pheu Thai coalition, are increasingly being diverted away from growth-driving infrastructure toward the Oil Fuel Fund. This is necessary to subsidize retail diesel prices and provide relief to consumers, but comes at the expense of Thailand’s immediate growth agenda, effectively paralyzing much-needed economic stimulus.
The current environment spells trouble for the SET Index, which is experiencing what the analyst calls “flow starvation,” as foreign capital remains scarce. The lack of cyclical, growth-oriented catalysts means that the market’s upside is severely capped, and trading activity has become dominated by localized defensive plays.
The index’s heavy concentration in large-cap energy and banking stocks is providing a meaningful structural floor, preventing a dramatic market breakdown. Nevertheless, this resilience is underpinned more by the geopolitical risk premium than by genuine economic expansion.
Looking ahead to the first quarter earnings season, pronounced sectoral divergence is expected. Exporters, particularly those reliant on global trade and raw materials, are likely to face acute margin compression due to softening global demand and high input costs.
In stark contrast, Upstream Energy companies and Complex Refiners stand alone as clear beneficiaries in the current climate, able to capitalize on elevated energy prices and substantial inventory gains. Large-cap banks are also expected to report stable and protected Net Interest Margins (NIM), as the BOT’s policy options remain highly constrained.
In response to these conditions, Globlex recommends maintaining ‘Overweight’ to the Energy Complex, including names such as PTTEP, PTT, TOP, SPRC, and BCP, to capitalize on high crude prices and Q1 inventory windfalls. Large-cap banking stocks, particularly BBL, are favored as a defensive, high-yield anchor, with a ‘Hold’ rating.
The brokerage maintains a strong recommendation to ‘Avoid’ aviation stocks like AAV, as well as exporters with heavy raw-material exposure, due to inescapable margin pressures. Exposure to large-scale contractors such as STEC and CK should also be limited, pending clearer parliamentary approval for new infrastructure spending.
