Bangkok: UOB Kay Hian Securities warns that the situation in the Middle East may be prolonged, urging attention to rising energy costs and potential plastic stock shortages in Q2 2026.
According to Thai News Agency, UOB Kay Hian Securities indicates that the situation in the Middle East may be prolonged, even though oil prices have begun to slow down, as the risk remains high. They warn that Thai refineries will bear increased transportation costs, while the plastics sector may run out of raw material stock by April. They advise investors to hold 30% in cash and wait for a market correction.
Kittiphan Prapaisalkit, Deputy Managing Director of UOB Kay Hian Securities, stated on the "Investment Minute" program on Channel 9 MCOT HD that the situation in the Middle East still faces a high risk of being prolonged, even though the overall picture seems to show signs of backing down from the US and Israel. Previously, Brent crude oil prices surged to $119 per barrel following attacks on infrastructure, before retracing to around $107 after US President Donald Trump and Israeli leader Netanyahu signaled a halt to attacks on energy facilities. However, this situation may not end easily, as Iran has the power to dictate the game and may intentionally prolong the conflict to build bargaining power, as the US will face higher economic costs in the long run.
While Thailand is beginning to see the impact on its supply chain, particularly the energy and refinery sectors, even though alternative crude oil sources can be found, this comes at the cost of higher raw material and transportation costs, as well as changes in the refined yield. If this situation persists, the impact on profits will become more pronounced. Furthermore, the plastics and packaging sector is facing a natural gas shortage. Currently, factories are drawing on their existing stockpiles, which are expected to support production for only 1-2 months, or until April. A severe raw material shortage is projected to occur in May or during the second quarter onwards. Therefore, the overall industry faces a high downside risk in the second quarter.
Investor Advice: Although the market has performed well over the past five years, it is currently in a period of assessing and pricing in risks, which may negatively impact stock prices in the short term. Stocks in the energy and petrochemical sectors remain attractive, as they offer good returns in this environment. However, it is recommended to hold 30% of your portfolio in cash to wait for a market correction due to these risks. This will allow investors to select and purchase stocks in various sectors that have seen price declines, achieving a competitive long-term cost basis.