The artificial intelligence (AI) trend is expected to create selective buying opportunities for Thai stocks in the second half of 2026 as market volatility escalates, analysts say, advising investors to increase cash holdings to 20-25% of their portfolio.
Thailand’s stock market is projected to face increased volatility in July, with Bualuang Securities (BLS) forecasting a correction of around 100 points or 5-8% before conditions become more favourable for long-term investors.
The expected pullback will likely be driven by a correction in global technology stocks, slowing corporate earnings, tighter global liquidity and domestic political uncertainty, said Chaiyaporn Nompitakcharoen, managing director of sales and trading business at BLS.
The brokerage highlighted Delta Electronics (Thailand) (DELTA) as the key risk for the Stock Exchange of Thailand (SET) index. With DELTA accounting for about a quarter of the SET’s capitalisation, every one-baht move in its share price shifts the benchmark index by about one point.
As the Nasdaq is expected to correct by 8-10% after a strong rally, DELTA could face similar selling pressure, weighing heavily on Thai equities. The brokerage also believes technology stocks have become stretched relative to fundamentals, while rising volatility indicates institutional investors have started taking profits.
BLS expects the SET’s corporate earnings growth to slow in the second half as companies face higher energy costs, the impact of El Niño and weak domestic purchasing power squeeze profit margins.
Global monetary policy remains another major concern, as markets continue to monitor the Federal Reserve’s hawkish stance and the possibility of additional interest rate hikes, which could reduce liquidity and pressure global equity markets, said Mr Chaiyaporn. The continuity of major investment policies, particularly the Eastern Economic Corridor, may also weigh on investor confidence.
Given these risks, BLS recommends investors temporarily hold 20-25% of portfolios in cash before gradually re-entering the market later in July. For defensive positioning, the brokerage favours banking stocks because of their stable earnings outlook and attractive dividend yields.
Despite near-term volatility, both BLS and Krungthai XSpring Securities (KTX) remain positive on the long-term outlook for AI-related investments. BLS believes Thailand could become a regional hub for AI infrastructure and data centres as global technology manufacturers continue relocating production to Southeast Asia.
KTX described the third quarter as a “bumpy road ahead”, citing persistent inflation, Fed policy uncertainty and elevated market speculation. As a consequence, investors should focus more on stocks with earnings growth than valuation expansion.
Rather than concentrating on large-cap technology companies, KTX recommends investing across the broader AI infrastructure, including semiconductors, memory, networking, cooling and energy management companies supporting AI data centres.
The brokerage is bullish on the Taiwanese, South Korean and Japanese markets because of their strong positions in the global AI supply chain, while a more selective approach should apply for Chinese stocks. Thais seeking overseas exposure can invest in depositary receipts in those nations, which should benefit from expansion in global AI infrastructure, noted KTX.