Bourse faces downside risks as tensions rise

Few sectors likely to withstand long crisis

- NUNTAWUN POLKUAMDEE NAREERAT WIRIYAPONG

Thai equities still have downside risk amid heightened volatility as escalating tensions in the Middle East threaten global energy supply routes, with strategists warning only a handful of sectors are likely to withstand a prolonged crisis.

Piriyapon Kongvanich, head of equity research at Bualuang Securities (BLS), said the conflict has intensified beyond an initial blockage of the Strait of Hormuz, a chokepoint that carries roughly 20-25% of global oil and gas supply. Iran has reportedly shifted focus towards targeting regional oil and gas infrastructure, significantly raising the risk of broader supply disruption.

Although the US has pledged to ensure safe maritime passage through the strait, Mr Piriyapon said such a pledge may offer limited reassurance if physical infrastructure becomes a direct target. However, one positive is the conflict has not yet involved China or Russia directly, he said.

Kitpon Praipaisarnkit, vice-president of UOB Kay Hian Securities, said yesterday's decline on the Stock Exchange of Thailand (SET) index is likely to be the largest during the Mideast war, though there is still room for further weakness.