Volatile, oil prices still at high level

Today's highlights
• Brent surged toward US$110/bbl after Iran escalated attacks on vessels in the Strait of Hormuz, while the Houthis launched strikes on Saudi Arabia and Ukraine prepared to resume attacks on Russian refineries. This is short-term positive for energy stocks (PTTEP) but negative for anti-oil stocks (AAV, BA, GPSC, BGRIM).

• MSCI is preparing to downgrade Indonesia’s stock market status to "Standalone" due to a lack of progress in resolving shareholding structure transparency issues, with results to be announced by June 30, 2027. If downgraded, passive funds globally are expected to rebalance, while the Thai stock market is expected to capture a limited inflow share of around 1%.

• Fed Chairman Kevin Warsh declined to offer forward guidance on rate hikes for the Oct 27–28 meeting, despite September CPI and PPI coming in higher than expected. Consequently, the market reduced the probability of a rate hike to 17% (from 30%), easing short-term financial market tightness and offering positive sentiment for finance stocks (MTC, SAWAD, TIDLOR).

• The Ministry of Energy is preparing five key measures to sustain the liquidity of the Oil Fuel Fund, whose deficit has surpassed Bt100bn. Measures include excise tax adjustments, a review of biofuel subsidies, and refining margin monitoring. This is positive for biofuel stocks (BBGI, UBE, GGC), but signals of government intervention in refining margins, overhang for refineries.

• The Ministry of Finance plans to submit a proposal to the Cabinet within two weeks to raise excise taxes on imported electric vehicles, effective Jan 1, 2027, to accelerate establishing domestic manufacturing plants, which is long-term positive for industrial estates (WHA, AMATA) and automotive stocks (SAT, AH, STANLY).

Strategy today
In the near term, we expect the SET to continue trading sideways, as the market lacks significant fresh catalysts. On the domestic front, attention is focused on the rolling release of 3Q26 earnings from the banking sector, with the market zeroing in on net interest margin (NIM) trends, loan loss provisioning, and NPL management. On the external front, bond yields and US economic data warrant close monitoring to gauge the Fed’s rate policy direction at its October meeting, while ongoing Middle East geopolitical tensions continue to pressure oil prices and cap the upside for risk assets. The investment strategy is therefore “Selective Buy”.

Trading today
We view the SET as likely to trade sideways, lacking fresh catalysts. On the domestic front, attention remains on 3Q26 banking sector earnings, while externally, US bond yields and economic data warrant close monitoring to gauge the Fed’s rate direction at its October meeting, with ongoing Middle East tensions continuing to pressure oil prices and cap the upside for risk assets. Our investment strategy is therefore “Selective Buy” with an emphasis on “Buy on Dip” across 4 trading ideas with specific positives as follows:

1. Earnings momentum plays — Stocks expected to report strong 3Q26 earnings growth over the next two weeks with Outperform ratings: YoY growth picks include KKP, DELTA, PTTEP, GLOBAL, SCGP; and QoQ growth picks include KTB, BBL.

2. FDI & new economy plays — Stocks expected to benefit structurally from Thailand’s hosting of the IMF-World Bank meetings, which showcased the country’s potential to attract FDI, alongside the government’s New Economy policy drive: digital banking (KBANK, KTB, BBL), industrial estates (WHA, AMATA), electronics (DELTA, HANA, KCE), clean energy (GULF, GPSC, GUNKUL), and technology & cybersecurity (TRUE, SECURE).

3. Defensive domestic plays — Stocks tied to domestic consumption with stable revenue streams and resilience to external volatility: retail (CPN, CRC), including post-flood construction material retail (HMPRO, GLOBAL), healthcare (BCH, PR9), and telecommunications (TRUE).

4. High-season tourism & flood relief plays — Stocks set to benefit from easing flood concerns as the situation passes its peak and Thailand enters the 4Q26 tourism high season: tourism (ERW, CENTEL, AOT) and retail (CPN, CRC).

Daily Top Picks
BCH: Short-term catalyst from positive expectations regarding the upward revision of Social Security reimbursement rates, which is expected to reach a conclusion this month. If approved, it is estimated to provide an upside to our 2027 earnings projections. Meanwhile, the business faces limited risk from external factors and protracted geopolitical issues. Short-term TP is Bt11.50.

GULF: Short-term catalyst from declining government bond yields. The company has continuous business expansion plans through capacity increases and future opportunities aligned with Data Center growth, PDP2026, and Direct PPA measures. 2026F core profit is projected at Bt38bn, representing growth of 33% YoY. Short-term TP is Bt63.00.