Asian and Thai equity markets experienced their most significant weekly declines since the March 2020 pandemic onset, primarily fueled by escalating conflict in the Middle East and surging global energy prices.

While the Thai government has implemented emergency measures to stabilize fuel costs and monitor economic risks, the region faces persistent threats from oil price volatility, potential tourism declines, and trade disruptions, leading analysts to recommend cautious investment strategies centered on defensive sectors.

Key Points

• The MSCI Asia Pacific Index fell 6.4% and the Stock Exchange of Thailand (SET) index dropped 7.7% over the week, marking a historic period of volatility.
• Global oil prices recorded their largest weekly surge since 2022, with Brent crude rising 18% to $85 per barrel following tensions between the U.S. and Iran.
• Thailand’s market hit a circuit-breaker during a mid-week plunge of 125 points, driven by panic selling in power utility stocks due to rising Liquefied Natural Gas (LNG) costs.
• The Thai government has frozen retail fuel prices for 15 days and established a “war room” to manage impacts on energy, supply chains, tourism, and macroeconomics.
• China set its 2026 GDP growth target at 4.5% to 5%, the lowest on record, and announced a 300 billion yuan injection into state banks to combat systemic risks and deflation.

Thai tourism officials warned of a worst-case scenario involving a 25% decline in arrivals if the Middle East conflict extends beyond three months.

The Thai baht faces increased volatility with predictions it could slide beyond 33 to the U.S. dollar, while domestic gold prices could reach record highs.

Financial experts advise investors to adopt a “wait and see” approach or focus on defensive domestic sectors such as healthcare, ICT, and commerce to mitigate external geopolitical risks.

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