Knight Asia Newsletter April 2026
Asian equity markets rallied in April. The MSCI Asia Ex Japan +16.2% (YTD +14.5%), the Thai SET TR Index (USD) +4.3% (YTD +18.1%), the MSCI AC ASEAN Index +1.2% (YTD -1.1%), and the Hang Seng Index was up +4.0% (YTD +0.6). Thailand remains the best performing market in South-East Asia in 2026. The Thai market can be expected to rally strongly if there is a peace treaty between the US & Iran. The upswing should be sustained for 12-24 months.
Asian markets moved higher in April, despite ongoing uncertainty with regards to the durability of the US / Iran ceasefire. When the US announced a blockade of Iranian ports, this effectively sabotaged truce negotiations. Iran responded by again blocking the Straits of Hormuz, driving oil futures above US$ 110 per barrel. Despite this, both sides continued backchannel and multi-point exchanges mediated largely by Pakistan, probably with China in the background. We may be overly optimistic, but we do expect a breakthrough soon, with the first step being the cancelling of reciprocal blockades. Oil futures are suggesting a pull-back to US$ 70 per barrel in a few months time. However, another element is the growing polarization between Saudi allies/proxies and UAE allies/proxies, manifested most obviously by UAE’s withdrawal from OPEC. How this might play out is anyone’s guess, but it may maintain uncertainty in the Gulf long after the Iran war is over.
Asian governments are scrambling for alternative oil & gas suppliers, with Australia, the USA and Russia the primary beneficiaries. Many Asian countries are far behind China as the sustainable energy leader, and must try to catch up. China generates 11% of its electricity from wind power alone. Thailand may focus on solar energy, finally enabling private solar panel owners to sell their surpluses back to the grid. This is long overdue, and no quick fix. Short-term conservation is the best solution, also not easy in the hottest season. Traffic in Bangkok is much reduced as commuters either work from home or take public transport.
Worldwide, inflation is raising its head again. Interest rate cuts are over and rates should now rise. Government deficits are rising in Asia to cover transportation fuel subsidies. In the US, rather than cutting bloated military spending, they are actually looking to increase military spending by US$ 500 billion to 1.5 trillion per year. If this is passed by Congress, we expect US interest rates to spike. Another cloud on the horizon is US private debt markets, where the default rate has risen to 9.2% (mainly in the software sector), and many funds have halted redemptions.
The new Thai government coalition is trying hard to mitigate the effects of the energy crisis, and have contained the immediate effect on transportation costs. Tourism in Thailand remains resilient, with tourist arrivals and revenue only falling about -3.4% YTD. This includes a +32% increase in visitors from China in April year-on-year from a low base, and a decline of -22% from the UK. As expected, PM Anutin has begun reaching out to core ASEAN countries such as Philippines and Malaysia.
Encouragingly Anutin is also prioritizing relations with Myanmar whose economy is essentially joined at the hip with Thailand. Over 5 million Burmese now work in Thailand, primarily in construction, manufacturing, and hospitality. Remittances from these workers are the lifeblood of the Myanmar economy. Relations between Thailand and Cambodia, however, remain cool despite some encouragement from the US & China to patch things up. Thailand recently revoked the maritime MOU 44 with respect to disputed waters (but maintained MOU 43 regarding the land border).
Meanwhile the former Myanmar military leader, now President Min Aung Hliang has been making some conciliatory moves to appease the international community. Including releasing the former NLD President, and moving Daw Aung San Suu Kyi to house arrest in Naypidaw. I will visit business contacts there later this month, and expect good news on cement margins generating soaring profits for the time being. I will also visit BRM Agro Cambodia mid May where fertilizer prices are causing temporary consternation.
With Best Regards
JEREMY