Chain of risks from prolonged war. The quarter's theme traces nearly every macro pressure back to the unresolved US–Iran war. Prolonged conflict keeps oil prices elevated, feeding inflation and pushing up policy-rate expectations, financing costs, and pressure on the Thai baht. Escalating defense spending and a US$40trn US public debt load (120% of GDP) continue to drive bond yields higher. This chain is reversible: an enduring ceasefire or the reopening of the Strait of Hormuz would quickly unwind it.
Research
4Q26 Outlook – Seven Wonders
3 key changes with 3 scenarios for Fed. We have revised our baseline assumptions across three main shifts. First, Brent's 2026 forecast rises from US$82 to US$90/bbl as the war drags on, settling near US$80/bbl in 2027 still well above the pre-war baseline of ~US$70/bbl. Second, both the BOJ and ECB show room to hike more than previously assumed, tracking toward roughly 2% and 3%, respectively. Third, the Fed moves from a single "hold" baseline to a more hawkish bias across its scenarios.
2% growth for Thai economy. We hold our Thai GDP forecast at 2.0% for both 2026 and 2027 (bull case 2.5% in 2026), decelerating from 2.4% in 2025. The 2026 profile is K-shaped, driven by private investment (+11%, a 54-quarter high) and exports (+12.5%) that rely heavily on intermediate imports (+24.2%), flipping the current account into a deficit of -2.2% of GDP. In 2027, growth rebalances toward public spending and private consumption, though the deficit widens to -2.7% of GDP.
Strong micro, fragile macro. Corporate fundamentals stay resilient so far. Global sector earnings broaden across Technology and Industrials, while Thai EPS has been upgraded for a fifth straight quarter (+8% in 3Q26). Yet the macro backdrop is brittle: high oil, rising bond yields, mounting debt, and policy-error risks could quickly erode demand amid US midterm election uncertainty.
7 Wonders. Seven rising forces frame 4Q26 including oil prices, bond yields, political and election risks, a severe El Niño, sovereign debt, earnings growth, and AI demand. Together, they pit resilient micro momentum against fragile macro conditions, keeping markets defensive through the US midterms.
Exhausted bull. War-driven oil and inflation pressures keep monetary policy tighter, lifting yields and financing costs that weigh on the investment landscape. Meanwhile, AI strength—with capex reaching US$905bn by 2027 is largely priced in. Fundamentals hold, but the bull is running out of breath as headwinds mount.
Limited upside, waiting for bargain level. Our 2026 SET Index target is raised to 1,700 from 1,600 on stronger-than-expected 2Q26 growth, investment, and stimulus. External risks remain volatile; our primary entry point is 1,550.
Stay defensive and domestic first. We focus on companies with strong balance sheets, limited exposure to external shocks, and high earnings visibility. This yields our 4Q26 top picks: AMATA, CENTEL, CRC, KTB, and PR9.