Thai stocks are beating peers amid volatility, as analysts warn passive Asean investing is ‘punishing’

[SINGAPORE] Major Asean indices have seen mixed performance since the start of 2026, reacting to global geopolitical tensions with varying levels of intensity.

While some, such as Indonesia’s IDX Composite, have been hard hit by fiscal fears driven by the Iran conflict, others such as Singapore’s Straits Times Index (STI) have seen a more muted impact due to a capital flight to safety.

Analysts told The Business Times that factors such as the US’ monetary policy path and the spending on artificial intelligence infrastructure could have an impact on these indices in the months ahead.

A mixed bag

Data from Bloomberg showed that Thailand’s SET Index took the lead across major Asean indices, in terms of year-to-date (YTD) returns. It saw an outsized performance and was up by more than 18 per cent YTD as at Thursday (Apr 30), with its SET50 Index – representing the exchange’s top 50 stocks – up by 14.6 per cent over the same period.

Domestic factors were cited to be at play, such as the country’s general election on Feb 8 this year which broke the index’s logjam, noted Oriano Lizza, sales trader at CMC Markets Singapore.

“The Bhumjaithai Party’s decisive victory triggered an approximate 3.5 per cent single-day surge on turnover of 102 billion baht (S$4 billion) – the heaviest session in 17 months,” he told BT.

The analyst noted that at an 11.3 times price-to-earnings ratio, the index remains among the cheapest in the region relative to the Asean composite at around 13 times, suggesting the rerating could extend if the new government delivers on fiscal stimulus.

In contrast, Indonesia’s IDX Composite saw the greatest loss, with its returns down by 19.5 per cent YTD.

“The primary reasons include fiscal fears that the government would have to breach its GDP (gross domestic product) deficit ceiling to fund fuel subsidies, as well as capital outflows from the Indonesian rupiah,” said Zane Aw, research manager at Phillip Securities Research.

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The MSCI’s Jan 27 freeze on new index additions wiped roughly US$80 billion off Indonesia’s market value in two days. As at Tuesday, the Indonesian rupiah hit a record low near 17,400 per US dollar.

Lizza said: “Foreign investors have net sold over 39 trillion rupiah (S$3 billion) in the year to date, reflecting continued caution.”

Analysts noted that Singapore’s STI and Malaysia’s KLCI have seen limited impact, with STI’s returns gaining nearly 6 per cent YTD and KLCI’s advancing by 2.5 per cent YTD, as at Thursday.

“The KLCI’s resilience could be attributed to Malaysia being a net exporter of crude oil and LNG (liquefied natural gas), with higher energy prices bolstering heavyweights like Petronas Chemicals and energy-related services,” pointed out Aw.

He added that the STI has also seen a limited drawdown due to capital flight to safety, benefiting the local banks.

Meanwhile, returns from the Vietnam Ho Chi Minh Stock Index (VN-Index) is about 3.9 per cent higher YTD. The Philippine Stock Exchange Index’s returns, on the other hand, declined by 3.6 per cent YTD.

2025 performance

The VN-Index recorded the highest one-year return of 51.2 per cent as at Thursday, with a 2025 full-year return of 40.9 per cent.

The latest figure comes as the country’s exports grew 18.3 per cent on the year in the first two months of 2026, reaching about US$76.4 billion, added Lizza.

Indonesia’s IDX Composite may have performed poorly YTD, but its return was up 22.1 per cent for the full year in 2025, and 2.8 per cent on the year as at Thursday.

Lizza noted that MSCI’s June review of Indonesia’s emerging market status could affect its performance in the near term. “A retention could trigger a relief rally, while a downgrade can drive further losses.”

Singapore’s STI meanwhile recorded a 28.2 per cent gain in returns on the year as at Thursday, and a 22.7 rise for the full year in 2025.

Positive performance from counters such as ST Engineering (up 27.5 per cent YTD) and Wilmar International (up 23 per cent YTD) demonstrate how the rally extends well beyond banks, added the CMC Markets analyst.

“Safe-haven capital flows into Singapore and an accelerating data-centre supercycle in Malaysia, where Microsoft, Google, AWS and Nvidia have all expanded commitments, have insulated both markets and offered relative stability for investors,” he said.

Outlook

Various analysts have said that passive Asean allocation can be “punishing” in 2026. Investors who treated these six markets as a homogenous bloc have paid a steep price, they noted.

“Country selection has now become the defining skill,” said Lizza.

Looking ahead, several factors such as AI infrastructure spending, adjustment of US Federal Reserve rates and oil price volatility amid the war in the Middle East will affect broader Asean indices.

“If rates were to remain higher for longer in the US, this could trigger capital outflows from Asean emerging markets,” Aw said. “Incremental capital expenditure spending by the US hyperscalers is likely to feed into the supply chain, too.”

Singapore and Malaysia names supporting AI infrastructure such as data centres, energy cooling systems and semiconductor component manufacturing will likely benefit from this phenomenon, added the analyst.

Net energy importers such as the Philippines and Vietnam can expect to be affected due to oil price volatility amid the US-Iran conflict, while a weaker US dollar would support regional rate cuts and attract investment into Asean.