Global stock markets faced volatility in July due to a number of factors, among them:
- Renewed hostilities between the United States and Iran following the end of the ceasefire;
- Rising oil prices, fuelling renewed concerns about inflation and the increased likelihood of a US interest rate increase in September;
- Selling pressure on technology and artificial intelligence (AI) stocks due to concerns that higher costs will impact earnings;
- The US announcing new tariffs on 60 countries.
Even the release of second-quarter earnings reports by listed companies, while mostly better than expected, could not offset the aforementioned risks.
In the Middle East, President Donald Trump warned that if the Iran-backed Houthi rebels attack ships in the Bab al-Mandeb Strait again, the US would retaliate with a heavy offensive against Iran and the Houthis.
He is seriously considering a return to large-scale military operations against Iran, potentially including attacks more severe than "Epic Fury", the joint US-Israeli campaign that began in late February. However, Trump said he has not made a final decision on the matter.
On the trade front, a new round of tariffs has been announced on imports from 60 countries, at rates between 10% and 12.5%. Thailand is subject to the 12.5% rate. Washington claims it enforced the levies because the countries have not done enough to combat forced labour, either in their domestic markets or in countries that supply materials used in their exports, which creates an unfair competitive advantage.
We believe the impact of the new tariffs is minimal as they simply replace the previous 10% global import tariff under Section 122 of the 1974 Trade Act, which was a temporary fix after the US Supreme Court ruled earlier that Trump's "reciprocal" tariffs were unconstitutional.
We expect factors influencing asset prices this month to include the following:
Whether tensions in the Middle East will ease. If negotiations resume, it would lower oil prices and reduce inflation concerns, positively impacting global stock markets;
- The Federal Reserve's interest rate hike outlook;
- Second-quarter earnings. Positive earnings and better-than-expected future profit outlooks would provide significant support. We recommend gradually accumulating shares in the US, Chinese and Vietnamese stock markets, while we continue to recommend accumulating gold at a price level of $4,000 an ounce.
AUGUST OUTLOOK
In August, the SET index is expected to find continued support from a stabilising macroeconomic backdrop, characterised by easing inflation concerns and expectations that ongoing geopolitical conflicts are unlikely to escalate significantly.
This more favourable external environment is driving a strategic fund flow rotation into domestic economy-linked equities and low-volatility stocks, as investors increasingly reallocate capital away from highly volatile, tech-exposed assets.
Despite this defensive anchor, market fluctuations are expected to heighten as the second-quarter earnings season winds down. Consequently, we place significant weight on adopting a highly selective investment strategy during this reporting period.
Individual corporate results will likely trigger substantial sector rotation, necessitating a strict stock-picking focus on companies demonstrating robust, visible earnings delivery to effectively navigate the market. Our picks for August are Bangchak Corporation (BCP), True Corporation (TRUE) and Bumrungrad Hospital (BH).
- BCP (target price 61 baht): Earnings are expected to grow steadily from 2026–29, supported by a strong gross refining margin, contributions from the sustainable aviation fuel business, and profit recognition from the Hong Kong oil retail business starting in the third quarter of 2026. Meanwhile, the impact of lower oil prices is expected to be limited, given the relatively small earnings contribution from the exploration and production business. The stock remains a laggard among refinery peers, trading at just 0.6 times price/book value and 6 times price/earnings. We also expect solid earnings in the second and third quarters, with potential upside from the reinstatement of the share buyback programme.
- TRUE (target 16 baht): Second quarter-core profit is projected to rise 56% year-on-year and 1% on the quarter, driven by continued growth in mobile and fixed broadband revenue, alongside lower network costs, spectrum expenses and interest costs. For full-year 2026, earnings are expected to grow 35%, significantly outpacing the projected 12% for ADVANC, while the stock continues to trade at a more attractive valuation than its peer.
- BH (target 225 baht): The hospital operator will be a key beneficiary of the recovery in Middle Eastern patient volumes, which account for 23% of its total revenue. Combined with strong cost control, we expect earnings to deliver a 2026–28 compound annual growth rate of 5%, outperforming the sector average of 2.6%.
