Knight Asia Newsletter January 2026
Asian equity markets began the year well with the MSCI Asia Ex Japan up +8.2%, the Thai SET TR Index (USD) up +5.0%, the MSCI AC ASEAN Index up +3.4%, and the Hang Seng Index up +6.9%.
Global markets extended their positive momentum through January, although the real direction may reveal itself after the 17 February 2026 start of the 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 showed little commonality. On the negative side, Thailand had military coups in 2014 and one week after the Year of the Horse ended in 1991. By comparison, 2002 was a good year for Thailand with Thaksin’s reforms in full swing.
The AI bubble has already started to deflate somewhat, especially manifested in Bitcoin’s -20%+ YTD decline. So far, rotational allocations shifting from tech to value with NASDAQ slightly down on the year Dow Jones +4%, and from DM to EM is generally positive for ASEAN markets, but so far the largest gains have been in Latin America, Africa and the Middle East. Worries about Indonesia being downgraded by MSCI for having insufficient free-float spoiled the party, although Indonesia’s -4% loss has been Thailand’s +7% gain (in Baht). 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 probably grow much more this year, as wealthy families and governments continue to repatriate money from the US tech bubble. Most Asian countries have interest rates far below the US and EU, so the returning liquidity may eventually enter the stock market where share yields are either double or triple that of bonds, and 10x bank deposit rates. Returning Thai money and new foreign institutional flows should more than offset the loss of scam centre flows from kingpin puppets. Many observers are puzzled as to why Xi Jinping waited several years to crack down on scam centres operating in border areas of Cambodia and Myanmar targeting mainly Chinese citizens. He can’t have been happy about this, so the only logical explanation is that he was biding his time before challenging a rival or a rogue power group in China. Recent changes in the PLA leadership are presumably just a coincidence.
Our old favourites, gold and silver rose rapidly in January, but then sold off between -20-40% in early February, presenting re-entry points at $4,000/oz and $60/oz respectively. US military adventurism will likely continue to scare investors away from the US$, although we think Iran may be Trump’s last major initiative, as he becomes increasingly preoccupied by domestic challenges with mid terms fast approaching in November. Loss of Republican control of Congress in the mid-terms would frustrate his remaining two years in office. 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 at 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, the February 8th election went smoothly, with PM Anutin Charnvirakul’s Bhumjaithai Party coming first in terms of elected MPs with 193/500, followed by the People’s Party led by Natthaphong Ruengpanyawut (derived from the dissolved Future Forward and Move Forward parties) winning 118/500 seats, 33 less than 2023 and winning 6m fewer votes. Total votes were approximately 18m PP and 16m BJT. Thaksin’s Pheu Thai Party came 3rd with 74/500 seats and is likely to join the BJT coalition. Klatham Party won 58 seats and the Democrat Party made something of a comeback winning 22 seats on 5.6 million votes (2.5m more than 2023).
The clear cut victory by BJT could trigger a wave of optimism and foreign investment, under the perception of stable government with strong pro-growth business-friendly policies. This Thai government may focus on big power balancing, and within Asia tend to look south to the quazi-democratic old ASEAN bloc. The newer Mekong countries Myanmar, Laos and Cambodia will shift ever closer to China. However, we do expect relations between Cambodia and Thailand to normalize post the Thai election, and the 1 million Cambodian who left Thailand to gradually return. Border trade between Thailand and the GMS countries will also resume. Wealthy Burmese and Cambodian businessmen will continue to enjoy Bangkok services, including healthcare, international schools & universities, shopping, and second homes.
We hope that the new government plays to Thailand’s strengths: promoting lifestyle services, tourism, food processing, automotive, whilst re-invigorating domestic spending and medium/low cost residential property. Somehow actual consumer interest rates need to come down from 20-50% in-unofficial lending, 18% for credit cards, 10%+ for SMEs and 6%+ for mortgages. The Central Bank rate of 1.25% really only benefits a handful of large corporates. Liberalization of banking controls and financial services also needs to occur domestically and vis-à-vis foreigners, and immigration needs to be digitized so Bangkok can truly become the London or Dubai of east Asia. BJT’s policy agenda doesn’t mention legalization of casinos, but it is the big prize, and we expect it will be addressed sooner rather than later.
Elsewhere in our region, Myanmar held a general election December through January. Although it took place in just 60% of the country, and was effectively boycotted by the main opposition parties, any election is better than none. Unsurprisingly, the military backed USDP won 339/420 available seats, +166 automatically allocated to the military, giving them a total of 505/586 or 86% of the total. The remaining 81 seats were won by various provincial parties. Despite the unusual nature of the election, we still expect re-engagement from Japan, South Korea, Taiwan, Singapore and Thailand (at a corporate level). China will also continue to expand its economic and geopolitical presence there, especially in the North. A China/Myanmar business forum has already been created, Chaired by U Aung Ko Win of KBZ, with the aim of bringing in US$ 500 billion in investment. Even 1/10 of that would transform the Myanmar economy. 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