JPMorgan Sees Thai Stocks Outperform Amid Regional Challenges, Cuts Philippines

ASEAN equities have staged an impressive recovery, climbing 11% since early June, according to JPMorgan’s latest ASEAN Equity Strategy note. The rally was fueled by positive developments including the announcement of a US-Iran peace deal, declining oil prices in the second quarter, diminishing inflation concerns, attractive valuations, and selective foreign inflows. However, the tide may be turning. JPMorgan highlights three pivotal near-to-medium-term risks that could undermine the region’s prospects. Firstly, there is the threat of renewed conflict in Iran, which has already ignited fresh pressure on global energy prices. Secondly, higher US interest rates and a strengthening US dollar under President Trump’s administration could prompt further monetary tightening by ASEAN central banks through the second half of 2026. The third concern is the rising likelihood of a “Super El Niño” event, which may hamper corporate earnings and dampen investor sentiment across the region. Reflecting these concerns, the regional earnings outlook has deteriorated. JPMorgan notes that consensus earnings per share (EPS) estimates for ASEAN equities in 2026 have been revised down by 4% and 6% over the past three and six months respectively. Despite these headwinds, JPMorgan notes that Thai equities appear relatively well-positioned. The Thai market stands out due to its robust growth momentum, greater leverage to AI-related themes within ASEAN, potential for energy-linked earnings, and competitive advantages in tourism and exports. Conversely, the Philippines is likely to face intensifying challenges. JPMorgan warns that Philippine equities may struggle amid weaker economic growth, rising interest rates, and a scarcity of catalysts to drive valuations higher. Taking these dynamics into account, JPMorgan has upgraded Thai equities to “Neutral,” signaling improved prospects. Meanwhile, Philippine equities have been downgraded to “Underweight,” reflecting a more cautious stance amid the growing risks.