Tisco Financial Group expects the global economy to face mounting challenges in the second half of 2026, warning that stagflation risks, elevated energy prices and geopolitical tensions could create a more volatile environment for investors.
Paiboon Nalinthrangkurn, chief executive of Tisco Securities, said higher-for-longer interest rates, slowing economic growth and ongoing geopolitical conflicts are likely to weigh on financial markets and corporate earnings, making portfolio diversification increasingly important.
The global economy is not heading towards a severe recession, but risks from trade disputes, geopolitical uncertainty and rising energy costs continue to undermine growth prospects and investor confidence, he said.
Komsorn Prakobphol, head of the Economic Strategy Unit at Tisco Economic Strategy Unit, said recent economic indicators increasingly point to a stagflationary environment. US inflation has accelerated to 4.2%, the highest level in more than two years, driven largely by elevated energy prices.
Tisco ESU has identified three major risks for investors in the second half of the year: a potential oil shock stemming from escalating tensions in the Middle East, persistent pressure from elevated US Treasury yields, and stagflation that could negatively affect both corporate earnings and equity valuations.
The firm also noted that global trade growth has slowed as protectionist measures and trade restrictions increasingly weigh on cross-border commerce.
Against this backdrop, Tisco expects inflation to remain elevated even as economic growth slows, creating a difficult environment for risk assets.
Higher inflation and elevated interest rates could pressure the cash-flow valuations of large-cap technology companies, potentially making their returns less attractive relative to bonds.
Consequently, Tisco recommends a diversified investment strategy with an overweight position in commodities, energy and consumer staples, sectors that historically perform better during stagflationary periods.
Gold is also becoming increasingly attractive as a hedge against inflation and geopolitical uncertainty. Tisco recommends maintaining exposure to multiple asset classes to reduce portfolio volatility and improve risk-adjusted returns.
REGIONAL PROSPECTS
Amid global uncertainty, Tisco remains constructive on Thailand's investment outlook.
Mr Paiboon said Thai equities are expected to maintain an upward trajectory in the second half of 2026, supported by improving investor sentiment and the prospect of rising foreign direct investment (FDI). Investors are closely watching which sectors attract incoming FDI, as successful investment inflows into high-value industries could help lift Thailand's GDP growth towards the 3-4% range over the medium term.
He added that both the global and Thai economies remain more resilient than many investors anticipate and could recover more strongly than expected despite geopolitical and policy-related uncertainties.
Thailand's stock market is also viewed as attractive from a valuation perspective, with share prices remaining below historical averages. The market is further supported by improving corporate earnings and government-led stimulus measures.
Thai equities are regarded as one of the region's standout opportunities, supported by the market's "old economy" structure, which is generally more resilient in a slow-growth, high-inflation environment than many regional peers, he noted.
AI GROWTH STORY
While taking a more selective approach to technology investments, Tisco Asset Management remains positive on artificial intelligence and robotics as long-term structural growth drivers.
Managing director Saharat Chudsuwan said AI adoption is expected to continue supporting earnings growth through 2026 and 2027 as companies increasingly use the technology to improve productivity and efficiency.
Investment opportunities are expanding beyond software and data applications into physical AI and robotics, which are becoming more deeply integrated into manufacturing and industrial operations.
Tisco believes investors should focus on diversification, maintain exposure to energy and income-generating assets, and selectively invest in AI and robotics to build resilient portfolios amid rising stagflation risks and geopolitical uncertainty in the second half of 2026, Mr Saharat said.
