Thailand's equity market is expected to come under pressure as surging diesel prices raise concerns over economic growth and corporate earnings, although easing geopolitical tensions may help cushion downside risks, analysts say.
Piriyapon Kongvanich, head of equity research at Bualuang Securities (BLS), maintains a "cautiously optimistic" approach on Thai equities, projecting the Stock Exchange of Thailand (SET) index to trade within a range of 1,400-1,500 points in April.
Geopolitical risks appear to have passed their peak, he said, noting signs of negotiations pointing towards a potential de-escalation phase in the Middle East war.
"This could shift investor focus back to domestic stimulus measures, including 'Thai Help Thai Plus' and fast-track investment approvals under the Board of Investment [BoI] framework."
However, rising energy costs remain a key short-term risk, Mr Piriyapon noted. Domestic diesel prices have surged by about 69% month-to-date to around 50.54 baht per litre, intensifying cost pressures across the economy.
Under a base-case scenario, if diesel prices remain elevated at 50-55 baht per litre for one month, economists estimate that Thailand's 2026 GDP growth could be dragged down by 0.4-0.5 percentage points, lowering expansion to 1.3-1.4%.
At the same time, earnings per share (EPS) of SET-listed companies could decline by 1.2-1.5%, to around 92-92.5 baht, implying modest growth of just 0.5-1%.
In a more adverse scenario, where high diesel prices persist for two months, the Thai index could face a downside risk towards 1,340.
On average, analysts forecast that for every 10% increase in diesel prices above 50 baht, GDP could fall by 0.1%, while SET EPS may drop by 0.3-0.4%, Mr Piriyapon added.
The Office of the National Economic and Social Development Council estimates that every 1 baht increase in diesel prices could shave 0.02 percentage points off Thailand's GDP. A prolonged conflict lasting more than two months could drag the country's economic growth below 1%, raising recession risks.
Asia Plus Securities (ASPS) warned that the oil price shock is compounding an already fragile economy. The International Energy Agency has assessed the current supply disruption as more severe than the oil crises of the 1970s, while the Russia-Ukraine war remains a threat.
The Bank of Thailand is expected to hold its policy rate at 1% in the first half of 2026, as inflation pressures are largely driven by energy costs, while analysts caution that rate hikes would do little to address supply-side inflation and could "further weaken an already slowing economy".
Amid near-term volatility, selective opportunities across four key themes are recommended. The first is infrastructure and digital economy plays, focusing on stocks benefiting from accelerated foreign direct investment and BoI incentives, particularly in data centre value chains.
The second theme is defensive domestic earnings, involving companies with strong cash flows, low energy-cost exposure, and pricing power, supported by government stimulus. The third, dividend leaders, targets high-yield stocks likely to attract inflows from tax-saving instruments such as stocks linked to the Thailand Individual Savings Account.
The final theme is post-war recovery plays, recommending stocks that have been over-penalised and may see re-rating once tensions ease.
As oil prices ripple through the economy, ASPS sees the trajectory of diesel costs as a critical determinant of Thailand's growth outlook and corporate profitability in the months ahead.
