Kiatnakin Phatra Securities (KKPS) maintains a cautiously constructive outlook for Thai equities in 2026, setting the SET Index year-end target at 1,330, which is slightly lower than the 2025 target of 1,360. This equates to a 15x P/E and suggests a limited potential upside of about 5%.
The 2026 SET ex-DELTA target is 1,135 on a 13x P/E basis, compared to 1,245 (15x P/E) in 2025, reflecting concerns that near-term optimism has peaked and that uncertainty will persist after the election.
KKPS expects the market to experience better sentiment leading up to the election, followed by weaker sentiment afterward, and to remain largely sideways as structural challenges play against short-term policy reactions.
Pre-election spending and campaign stimulus are expected to support the market in the first quarter of 2026, but uncertainty following the election could weigh on sentiment into the middle of the year. A clear government mandate could lift the outlook, while a weak coalition or renewed legal challenges against the government would likely drag on performance. The most bearish scenario could see the SET Index undershoot expectations, with the P/E ex-DELTA dropping to 10x, implying a level of 1,200.
KKPS forecasts GDP growth of 1.6% in 2026 and 2.1% in 2027, with a terminal policy rate of 1% and inflation below zero. Against this backdrop, market earnings growth is expected to be below 5%, with EPS unlikely to exceed THB 95 due to ongoing structural headwinds, including de-globalization, de-population, deleveraging, and deflation. The analyst’s strategy focuses on companies offering room for return on equity (ROE) improvement, given the limited growth outlook.
While policy support could eventually rescue the market, such measures are likely to be reactive rather than proactive, and may only be triggered by growth shocks or weak fiscal impulses. If effective policy coordination emerges, the brokerage firm sees potential for the SET to re-rate up to 16x P/E, as suggested by bottom-up models and regional precedents.
For 1Q26, KKPS emphasizes defensive sectors and selective tactical trades. The firm raises the ratings of the Telecoms (noting resilient ARPU growth and benefits from AI/data center trends), Banks (for yield support and delayed rate cuts), and Hospitals (strong growth in international patient revenues) sectors to ‘Overweight.’
Top-pick stocks include defensives such as ADVANC, KTB, KBANK, CPN, and BH, as well as stocks with earnings momentum (BA, CENTEL, TOP), beneficiaries of a Chinese tourist recovery (CRC, AWC, ERW), and stocks likely to benefit from pre-election activity (CPALL, SAWAD, GLOBAL).
