The past three years have presented considerable challenges for the Thai equity market, but CLSA analysts suggest 2026 could bring a potential turnaround, contingent largely on the outcome of the national election in early 2026.
While structural headwinds, modest earnings growth, and only mild GDP expansion are already priced in, CLSA forecasts that government stimulus—particularly around domestic consumption and infrastructure spending—will dominate election themes and provide a boost to consumer-related sectors. Thailand’s GDP grew just 1.2% year-on-year in Q3, undershooting consensus. Weakened exports, government spending, household consumption, investment, alongside softer tourist arrivals, have all dampened growth. Weak domestic demand, low inflation, and flood impacts further increase the odds of negative GDP growth in Q4.
CLSA expects the government to roll out the second ‘half-half co-payment’ scheme and predicts the Bank of Thailand will cut interest rates by 25bps at its December 17 meeting. Economic growth for Thailand is forecast at 1.9% in 2025 and 2.0% in 2026, buoyed mainly by a gradual improvement in tourism and moderate private consumption.
Despite current weakness, most Thai consumer stocks are trading at historically cheap valuations, suggesting that weak earnings growth is already factored in. Catalysts including additional stimulus and a revival in foreign tourism could drive upside surprises and spark a sector rerating. Nevertheless, CLSA maintains a cautious view on property stocks due to high household debt and moderate consumption. Industrial land demand may improve seasonally in Q4, but concerns remain over potential tariffs and the likelihood that land sales have already peaked.
The general election, expected early next year, is set to be a significant event for market sentiment, with extensive fiscal stimulus likely to follow. Consumer-linked sectors stand to benefit most from these policy initiatives and CLSA sees scope for a short-term expansion in valuation multiples.
Maintaining its cautious stance, CLSA has trimmed its 2026 SET index target to 1,340—down from 1,355—based on expected market EPS of THB 82.3 and a 16.3x price-earnings multiple. The chosen multiple mirrors valuation levels in previous election years (2019 and 2023). Defensive, high-quality stocks and selected tactical trades remain at the core of CLSA’s strategy, with Bangkok Dusit Medical Services (BDMS), CP All (CPALL) and Central Pattana (CPN) as top picks. Osotspa (OSP) and Home Product Center (HMPRO) stand out for their dividend yields.
