Asia Plus Securities has provided an assessment of the investment market outlook, noting that although the war between the United States and Iran has extended into its tenth week, signs of conflict have significantly eased.
This view is supported by the price movement of Brent crude oil, which has failed to reach new highs and has gradually declined—a pattern reminiscent of previous energy crises, such as the Gulf War in 1990 and the Russia-Ukraine War in 2022.
The brokerage forecasts that over the medium term (the next 3–6 months), as the conflict subsides, oil prices will likely continue trending lower. Nevertheless, global equity markets are expected to remain volatile and trade sideways as investors await further clarity on the transmission of higher oil costs to the broader economy and listed company earnings.
Market sentiment may only improve substantially when oil prices stabilize at normal levels. According to the BECO SHOK model, the drag from elevated oil prices is expected to reduce economic growth (GDP) in Europe, the UK, China, and Japan by approximately 0.3–0.4 percentage points for the remainder of 2026.
Attention is now focused on a new risk factor: “Unwind Yen Carry Trade,” which could bolster the Thai baht. This risk arises as funds are repatriated in anticipation of more attractive yields elsewhere. Market expectations are building around a potential rate hike by the Bank of Japan (BOJ) during its June 2026 meeting, which is causing the bond yield spread between the U.S. and Japan to steadily narrow.
Moreover, last week brought further signs of Japanese government currency intervention, amounting to over $34.5 billion, strengthening the yen by 1–2% almost daily between 11:00 AM and 1:00 PM. Since the yen comprises 14% (ranking second) of the US dollar basket, a stronger yen is putting pressure on the US dollar, which in turn supports the upward trend of the Thai baht and helps sustain fund inflows into the Thai equity market.
The Thai stock market (SET Index) has demonstrated remarkable regional resilience. Since the onset of the war (from March 1 to May 6, 2026), the index has declined by only 0.3%. This outperformance can be attributed to the composition of the market, where technology (ETRON, ICT) and commodity-related sectors (energy, petrochemicals, food, and agriculture) collectively account for 57% of market weight. These sectors benefited directly from elevated oil prices.
An additional key factor is the strong 1Q26 earnings performance from listed companies. Of the 46 companies that have reported thus far, aggregate profits have positively surprised the market by 10.7%. Historically, such earnings surprises have served as a significant market catalyst. Headline inflation (CPI) in Thailand for April 2026 surged by 2.89% year-on-year—the highest in 38 months—mainly due to higher global oil prices.
Against this backdrop, it is anticipated that the Monetary Policy Committee (MPC) will maintain the policy interest rate at 1.0% through the end of 2026, with greater reliance on fiscal measures such as the Thai Help Thai Plus program, energy transition initiatives, and the TFFIF Fund to support economic growth.
For investment strategy, Asia Plus recommends portfolio rotation. Investors are encouraged to take profits in stocks that have rallied strongly during the war and benefited from a weaker baht, notably PETRO (+24%) and ETRON (+16%). Proceeds should be rotated into laggard sectors or stocks poised to benefit from economic stimulus policies and a strengthening baht. These focus areas include:
- Tourism: ERW, CENTEL, MINT
- Healthcare: BH, BDMS
- Retail, food, and beverage: CPALL, BJC, CPAXT, COM7, CBG, OSP, ICHI
- Power producers (which benefit from a stronger baht, reducing costs): GULF, GPSC, BGRIM
Notably, DELTA, CENTEL, and GULF are highlighted as the prime picks of the day.
