Political clarity could unlock valuation multiples

THAILAND’S stock market is set up for a potentially constructive phase over the next year, with valuation support, limited earnings downside and political catalysts shaping expectations into 2026.

The outlook hinges on a mix of domestic politics, sector rotation and longer-term structural themes that are already influencing capital flows.

As Maybank Investment Bank Research (Maybank IB) sees it, the balance of risks is skewed to the upside rather than the downside.

“We maintain our end-2026 Stock Exchange of Thailand (SET) Index target of 1,370,” the investment banking group says.

That target is presented alongside a view that earnings growth, while modest, is sufficient when combined with current valuations

“Despite a modest 7% 2025 earnings per share (EPS) growth, we think downside risks to earnings look limited and the SET Index remains attractively valued at 11.5 times price-to-earnings ratio (PER) (ex-Delta Electronics), making it the second-cheapest market in Asean,” it explains.

Valuation is a central pillar of the argument. The SET Index is trading below its long-term average on a forward basis, and stripping out a single heavyweight stock makes the discount even more pronounced.

Attractive valuation

According to Maybank IB, the SET Index is trading at 13.1 times 2026 PER which itself is already quite low compared to the historical average of over 15 times.

The comparison becomes starker when exclusions are applied.

“If we exclude Delta Electronics, we estimate SET Index PER to be only 11.5 times,” it says.

Within the regional context, Thailand stands out for price rather than pace.

The research house notes that this pricing puts the market one of the cheapest markets in Asean, just behind the Philippines.

Earnings growth is not leading the pack, but it is not an outlier either.

“The SET Index EPS growth at 7% in 2026 is not far behind growth in Malaysia, Singapore and the Philippines,” the banking group says, while also acknowledging it cannot compare to the high-growth markets such as Vietnam and Indonesia.

Politics is another major variable, and the bank leans heavily on the prospect of an election-driven re-rating.

“We see a high likelihood of an election rally as we expect a stable government post the election,” Maybank IB says.

Political uncertainty has weighed on sentiment since the previous vote, and the research house argues that clarity could unlock valuation multiples.

“Given political uncertainty has been a key overhang for the Thai market since the last election in May 2023, a stable government would go a long way towards unlocking multiples for the SET Index in the near term,” it argues.

That political view feeds directly into timing and strategy.

It states: “We recommend investors ‘buy’ early in the year as we see potential for an election rally.”

Historical data is used to support this approach, with the note that market statistics back to 1992 suggest the best way to play an election rally is to buy one-month pre-election and sell one-month post-election.

The same dataset shows that this strategy maximises potential return at 4% on average during this two-month period.

Cyclical factors

Macroeconomic conditions provide a softer, but still relevant, backdrop.

Maybank IB forecasts slower growth before a rebound.

It pegs its gross domestic product (GDP) growth at 2.1% in 2025, before declining to 1.7% in 2026, due to slow consumption growth and decelerating export growth.

“Growth is likely to pick up to 2.5% in 2027 as private consumption growth improves and export growth re-accelerates,” it says.

Beyond cyclical factors, the research house leans into themes expected to dominate 2026.

Maybank IB sees investment in artificial intelligence (AI)/data centres and foreign direct investment (FDI) as key themes for Asean in 2026.

These trends are described as positive on multiple fronts.

On exports, it says, the AI investment boom globally is supportive of regional electronics exports, highlighting strong growth across the region, adding that Thailand’s rose 35%.

Domestic investment is another channel of impact.

“Asean economies also benefit from investment in AI and data centres locally, with Malaysia and Thailand, in particular, seeing the largest influx of new investments,” it says.

Thailand’s position in the regional capacity pipeline is detailed, with the country ranking second (behind Malaysia) in terms of new capacity under development and third in terms of planned capacity.

FDI outside the technology space is also expected to recover.

The research house points to 21% year-on-year (y-o-y) growth in investment applications in the first 10 months of 2025, and flags upside given greater clarity on the tariff front.

Policy support matters here, with the government’s FastPass policy highlighted as a way to accelerate FDI approvals, which should pave the way to unlock private investment in Thailand.

Trade agreements are treated as a medium-term catalyst rather than an immediate boost.

The research lists the Thailand-European Free Trade Association free trade agreement (FTA), the Thailand-European Union FTA and the Thailand-Korea Comprehensive Economic Partnership Agreement as drivers that could boost Thai GDP growth by 1.9 percentage points in the near term, first via investment and later through trade flows.

Stock selection

Sector positioning reflects this mix of political and structural drivers.

“We maintain our ‘positive’ call on the telecommunications, utilities, property and industrial estate sectors,” the research house says, while also noting upgrades.

“We have upgraded three sectors from ‘neutral’ to ‘positive’: finance, tourism and food and beverage as we see these as key beneficiaries of the upcoming election.”

At the same time, caution remains in other areas, with continued “negative” views on petrochemicals, commerce and electronics.

Autos and electronics receive a more nuanced treatment.

“We see a positive outlook for two major sectors in the Thai economy: autos and electronics,” Maybank IB says.

In autos, it argues that the worst is likely past.

“Thailand’s auto production has likely bottomed out in July/August 2025 and we have seen strong recovery in September-October 2025,” it notes.

The shift towards battery electric vehicles is highlighted, with production now approaching 10,000 units per month, a level described as up more than 10 times from the same period of last year.

On exports, earlier fears appear to have eased.

“We had previously feared that exports would decline substantially towards the latter part of 2025 but that has not yet been the case,” it says.

Electronics exports are still growing at a 30% to 40% y-o-y pace, and the bank notes that underlying demand looks real even after adjusting for transshipment.

Stock selection ties the themes together. For an election rally, it sees five stocks as key beneficiaries of the upcoming election.

These are Muangthai Capital, Bangkok Bank, True Corp, Minor International, and AP.

For longer-term themes, the focus shifts.

It picks five stocks as exposure to its broad themes for 2026, naming WHA Corp, Amata Corp, ITC Corp, CCE Technology and Gulf Energy Development as direct plays on data centres, FDI and trade growth.