Knight Asia Newsletter July 2026
Asian markets were mixed in July amid the Western summer holiday season with selling on tech heavyweights affecting larger markets and rotational buying favouring emerging markets. The MSCI Asia Ex Japan fell -3.5% (YTD +20.8%), the MSCI AC ASEAN Index gained +7.3% (YTD +6.4%), the Hang Seng Index +13.1% (YTD +1.0%), and the Thai SET TR Index (USD) rose slightly +1.4% (YTD +25.0%), Thailand remains the best performing market in South-East Asia in 2026, seeing net foreign inflows of over Baht 70 billion YTD (much of it probably Thai money via Singapore). Given its relative undervaluation these inflows can be expected to continue and should positively drive a re-rating over the next 12-24 months. The Indonesian stockmarket bounced back +10% last month, but it remains -25% YTD at a bargain hunting level. The FTSE Vietnam fell -6.5% (YTD -5.9%) presenting a buying opportunity on this dip.
Global tech shares continued to lose ground last month, particularly dragging on the South Korean and Taiwan markets, but also benefiting South-East Asian markets by rotation. We expect this trend to continue for 1-2 years. However, at the direct investment level AI investment continues at a pace. Thailand saw a +80% increase in FDI applications in 1sthalf 2026, with the majority of this being data centres under Singapore holding companies. Thailand is encouraging data centres to have their own solar power sources to avoid starving the under-utilized Thai grid for lack of fuel supply. To address Middle-East disruptions, Thailand is re-engaging with Myanmar to secure more natural gas supply and may yet (under China’s instigation), do a deal with Cambodia on their disputed claims in the Gulf of Thailand. The Thai government also started allowing Thai homeowners to install solar panels on their roofs and to sell back to the national grid. Welcome as it is, this is really a panic measure. Some would say it’s too little, too late and it doesn’t even include off-take surpluses from commercial enterprises, but it is a step in the right direction.
Many governments such as Thailand are also far behind the curve on sustainable energy. Clearly China is the world leader, enabling it to ride out the Middle-East conflict with limited impact. Western countries and Japan lack the budgets to invest or subsidize alternate energies, after running up their sovereign debt during the misguided covid lockdowns. Now Europe and Canada are plagued by vast summer forest fires most running out of control, and drought decimating crop yields.
External factors continue to bedevil Asian economies, with the outcome of the Israel/US vs Iran war and consequent obstruction of the Straits of Hormuz. As everyone knows, and Presidents Trump and Putin are painfully aware, wars are a lot easier to start than to finish. With Ukraine hitting deeper and deeper into Russia, we fear that Putin will at some point go all out. The Iran War is a war of attrition, mayhem, and brinksmanship with American firepower insufficient to “cow” the hardliners in Tehran. Some players may be happy to see perpetual war, but the impact on energy prices and flow-through inflation of everything from fertilizer to food affects the general economy worldwide. The best efforts of Pakistan and Oman have so far failed to produce a conclusion. With the Red Sea increasingly at risk from the Yemeni Houthis, high oil prices may be here to stay. In the short-term Asia must continue diversify supply sources to those within the region such as from Australia, Indonesia and Russia.
Thailand’s attempt to set up a financial hub would be welcome, provided Bank of Thailand allows sophisticated private banking services free of forex controls. Recent SEC tightening of “fly-in” non-solicitation rules may be intended to support local private banking operations for Thai customers. Indonesia has pre-empted Thailand’s initiative by announcing the establishment of their own offshore banking centre, but is unlikely to lure much money away from the main centres. However, even without onshore free flow private banking, Thailand does offer most other lifestyle preferences for wealthy foreigners: including high/mid-end accommodation, international gourmet restaurants, premium retail/shopping, excellent healthcare, top quality international schools, beautiful resorts/beaches, and relative safety from either crime or war. Many retired or semi-retired expats choose to live in Thailand, but may continue to keep their money in Singapore & Hong Kong.
I recently took a trip to Myanmar, where things are ticking over better than non-observers might imagine. Roads and restaurants are quite busy, and real estate prices are rising strongly. Flights to-and-from Yangon are full, with the 15 daily flights arriving from Bangkok being half of the total. Probably Burmese working in Thailand make up the bulk of the passengers, but business interaction between Thailand and Myanmar is also increasing, although hotel occupancy and room rates remain low. Low cost factories have been re-locating to Myanmar where there is still a remaining labour force who haven’t yet moved to Thailand.
For the wealthier Burmese, Bangkok has started to edge out Singapore as a healthcare and shopping destination. At the reception desks in Bumrungrad Hospital these are normally four languages: English, Thai, Arabic and Burmese. Recently President Min Aung Hliang made a state visit to Thailand, with both Thailand and Myanmar recognizing that they need each other. On the labour side, both countries need to facilitate the legalization of Burmese workers in Thailand. Normalization of ASEAN’s relations with Myanmar is also ongoing, and recently the International Red Cross was permitted to meet 81 year old Aung San Suu Kyi.
Our cement investments in Myanmar did well last year, but are now facing more competition from the large Mandalay plants as they come back on line after completing 2025 earthquake repairs, and energy cost escalation is also a negative factor. In terms of the Yangon stock market, I understand that Daiwa Securities has withdrawn its management team, although for the time being still maintains its 49% stake in the stock market entity. There could now be an opportunity for a more dynamic young Burmese team to grow the market rapidly. Although there are currently only eight stocks listed, more than sixty “public companies” are waiting in the wings.
I also visited Cambodia, where I found quite a lot of European tourists in Siem Reap. More than 300 were up in time for sunrise at Angkor Wat. We stopped at BRM Agro in Kampong Thom, halfway between Siem Reap and Phnom Penh to visit our rice mill investment. It was the quiet season in between harvests, but the mills were running with accumulated dried paddy rice. I learned that BRM has secured a US$ 10m working capital loan from a local bank, which will enable it to now fully utilize its existing 44,000 tonnes per year annual milling capacity. We are migrating the holding company from Canada to Hong Kong, in order to facilitate a major trading hong to buy a strategic stake in 12-18 months.
Upon reaching Phnom Penh, we found it generally vibrant with local resident activity, but bazaars were bereft of foreign tourists, as was the nice new “Techo Airport”. Cambodia is doing better than expected without Thai support, but a re-opening of the borders, labour flows and tourism cooperation is overdue.
With Best Regards
JEREMY