Knight Asia Newsletter December 2025
Asian equity markets finished the year well with the MSCI Asia Ex Japan up +2.6% (YR25 +29.7%), the Thai SET TR Index (USD) up +2.3% (YR25 +2.2% although the SET Index -9% YR25 in local currency), the MSCI AC ASEAN Index up +1.8% (YR25 +12.0%), and the Hang Seng Index down -0.9% (YR25 +27.8%).
Global markets are likely to extend their positive momentum through January before the real direction reveals itself after 17th February 2026 Chinese New Year. The Year of the Horse is generally supposed to be a good year, especially for those born in the year of the tiger, dog and pig. However, 1990, 2002, and 2014 show little commonality. On the negative side, Thailand had military coups in 2014, and one week after the Year of the Horse ended in 1991, 2002 was a good year for Thailand with Thaksin’s reforms in full swing.
After February, we can expect the AI bubble to deflate somewhat, with rotational allocations perhaps shifting from DM to EM, and tech to value. There are still incredible non-tech bargains in HK, Thailand, and the Philippines in more traditional areas such as agribusiness, banking and property, healthcare and tourism. Thailand is at an average 8.6X PE, and the Philippines at 9.6X so both could see substantial upticks.
Liquidity in Asia will grow further this year, as wealthy families and governments continue to repatriate money from the US bubble. Most Asian countries have interest rates far below the US and EU. The returning liquidity will likely enter the stock market where share yields are either double or triple that of bonds, and 10x bank deposit rates.
Gold and silver may rise again in 2026 with the increasingly erratic US military adventurism scaring investors away from the US$. We expect opportunities in the oil and gas sector too, with Venezuela and possibly even Iran and Russia re-entering the mainstream markets and no longer needing to sell below market prices. Russia may seek to re-empower OPEC, although President Trump would oppose this. Oil majors will be able to pursue new concessions and joint ventures in these three countries.
In Thailand, campaigning is well underway for the February 8th election, now assured if the ceasefire holds on the Thailand/Cambodia border. Polls are indicating that the People Party lead by Natthaphong Ruengpanyawut (derived from the dissolved Future Forward and Move Forward) will win the most seats, but less than an overall majority. PM Anutin Charnvirakul’s Bhumjaithai is expected to come second, followed by Thaksin’s Pheu Thai Party; and with the Democrat Party making a comeback, especially in the South. However, we don’t agree with the polls, and suspect that the People Party will win a landslide victory with their fresh approach. This may come about as a result of BJT and Pheu Thai splitting the upcountry constituency vote.
However, most pundits expect PP to fall short of an outright majority, and even if they achieve one, they would still need 1-2 coalition partners in order the placate the very nervous Thai establishment. As a wild card we could see them teaming up with the pro Royalist, but western leaning Democrat Party back under the leadership of Abhisit Vejjajiva and Korn Chatikavanij. Pheu Thai may then also join a PP and Democrat led coalition. The key question would be who to choose as prime minister. Unless PP chooses a neutral person acceptable to the establishment then their government could be short-lived. Bear in mind also that the political ban on Thanathorn Juangroongruangkit, founder of Future Forward, expires towards the term limit of the next government.
A clear cut victory by either BJT or PP could trigger a wave of optimism and foreign investment, under the perception of stable government with strong pro-growth business-friendly policies. Either a PP or BJT led government would tend to look south to the quazi-democratic old ASEAN bloc, even as the newer Mekong countries shift ever closer to China.
Myanmar held a general election beginning on 28 December and lasting through January. Although it took place in just 60% of the country (no 95% rule there), and was boycotted by the main opposition parties, any election is better than none. Re-engagement from Japan, South Korea, Taiwan, Singapore and Thailand could be enough to kick-start the economy. China will also continue to expand its economic and geopolitical presence there, especially in the North. Even the US has recently become less hostile, possibly in the (vain) hope of buying rare earths from Kachin and Shan States. Post election, our various cement investments there should gain in value and liquidity.
In Cambodia, our rice company continues to develop nicely ( BRM Agro: Transforming Cambodia’s Rice Industry ). Sales are mostly to Europe and the US, and as BRM is located on the east side of Ton Le Sap Lake, it was unaffected by Thai/Cambodia border friction. BRM aims to expand milling capacity to over 50,000 tonnes per year this year and to 100,000 tons per annum by the end of 2027, ahead of a public listing or partial strategic sale.
With Best Wishes for The Year of the Horse !
JEREMY