Asia Plus Securities has provided an assessment of the ongoing conflict between the United States and Iran, which has now extended into its 34th day. Most recently, U.S. President Donald Trump issued a warning of potential severe military action against Iran in the next two to three weeks. This led to a significant surge in crude oil prices, with West Texas Intermediate (WTI) May 2026 futures climbing by 11.4%, hovering above $111 per barrel.
Despite mounting concerns, global equity markets have yet to experience sharp declines. U.S. stock markets have remained relatively stable, while Asian markets, such as South Korea (+2.8%) and Japan (+1.4%), posted gains Friday morning. This may suggest that investors have grown somewhat accustomed to daily developments and are possibly hopeful for a near-term resolution to the conflict.
Supporting factors include a call from the UN Secretary-General to end hostilities and the formation of a 40-nation coalition to facilitate the reopening of the Strait of Hormuz. Additionally, Bloomberg data shows a steady decrease in search activity for the term “WAR,” a leading indicator that tensions may be easing.
However, the expensive oil crisis is further aggravating already fragile economic conditions. The International Energy Agency (IEA) has noted that the current disruption to oil supplies is even more severe than the two oil crises of the 1970s, exacerbated by the ongoing Russia-Ukraine war. Diesel prices in Thailand have recently seen an increase of 3.50 baht per liter, pushing the cost above 47 baht per liter—compared to pre-war levels below 30 baht per liter.
According to the National Economic and Social Development Council (NESDC), every 1-baht rise in diesel prices results in a 0.02% reduction in Thailand’s GDP. Should the conflict persist beyond two months, there is potential for economic growth to fall below 1%, with a significant risk of recession.
From a monetary policy perspective, the brokerage expects that the Monetary Policy Committee (MPC) will maintain the policy rate at 1.0% in the first half of 2026, as current inflation is largely attributed to higher energy costs (cost-push inflation). Raising interest rates would not resolve supply-side issues and may further dampen the slowing economy.
In terms of investment strategy, Asia Plus recommends holding 30% of portfolios in cash and selectively accumulating high-dividend stocks, particularly those likely to benefit from inflows from the Thailand Individual Savings Account (TISA) funds. Four main investment themes are highlighted:
- Stocks benefiting from a tighter monetary policy: KTB, BBL, KBANK
- Stocks poised to gain from the high season and the football World Cup theme, particularly power plant operators GULF and BGRIM
- Alternative energy equities: GUNKUL
- Commodity-linked stocks experiencing price increases: CPF, NER, OR, and PTT; with Daily “Prime Picks” include CPF, ERW, and CBG.
For international investments, Asia Plus suggests EXPE06, referencing shares of Expedia Group, which could benefit from a decline in oil prices and a resolution to the conflict, leading to a resurgence in international travel.
PINGAN80, which is tied to shares of Ping An Insurance, stands to benefit from reduced imported inflation if oil prices do not reach new highs; this, combined with the potential for higher bond yields, would favorably impact insurance portfolios that hold bonds as high as 70-75% of their assets.
