KKP recommends diversifying portfolios to navigate a polarized world, highlighting 'electricity grid funds and US small-cap stocks' to benefit from AI.

KKP views the world as entering a fully polarized economic era, amidst geopolitical risks, supply chain issues, and potentially prolonged high interest rates. They advise investors to diversify their portfolios into assets that benefit from structural changes, highlighting power transmission network funds supported by the growth of data centers and AI, along with US small-cap stocks benefiting from the relocation of manufacturing bases back to the home country, to enhance return opportunities and reduce long-term volatility.

30 July 2569 – Mr. Thaweesak Paopallop, Head of Economic and Investment Analysis, Kiatnakin Phatra Securities Public Company Limited revealed inKKP 2026 Mid-Year Review Seminar: Building Resilient Wealth in a Fragmented World That...The world is transitioning into a fully polarized economy, which aligns with the view of KKP economists who assess that geopolitical vulnerabilities will lead to more frequent supply chain disruptions.

“Although we estimate that crude oil prices may stabilize around $80 per barrel by the end of this year if major powers avoid a full-scale war, we agree that the situation in the Middle East remains a risk that could quickly erupt and impact markets. This persistently high energy risk will cause core inflation to fall slower than the target and force the Federal Reserve (Fed) to keep interest rates high for longer than the market expects. Investors therefore need to prepare for volatile monetary policy directions, especially under the new Fed chairman who has reduced forward-looking signals regarding interest rate direction, making market assessments more difficult.”

Regarding investment in AI, the market is beginning to question its cost-effectiveness and commercial viability. It is estimated that although the practical application of AI models in the business sector to generate tangible profits may take another 2-3 years to prove, as KKP's economists previously warned, from an investment perspective, this may not be the end of the bull market. It could even be a transition from opportunities in infrastructure stocks in the initial phase, spreading to other sectors in the subsequent phase.

However, the next era of AI technology, where systems can think and collaborate automatically, will drive the demand for computing power many times over. Therefore, even though competition among model developers will intensify, companies that provide the 'infrastructure' for these systems still have growth potential. Furthermore, the driving force of the global stock market going forward will not be concentrated solely on large-cap technology stocks, but will be diversified to companies with genuine profit growth and reasonable valuations. Any potential market correction will therefore be an opportunity to gradually accumulate stocks in sectors that indirectly benefit from this.

To cope with a world full of risks, KKP recommends that investors diversify their investments into assets with different correlations and profit trends than large-cap stocks and typical bonds. It emphasizes two investment themes aligned with structural changes: Grid ETFs, which directly benefit from the massive energy demand of data centers and AI, moving beyond the risk of success dependent on any single model developer towards investing in highly stable infrastructure.

Furthermore, small-cap US stocks, particularly those with attractive price levels, are key beneficiaries of the policy to relocate manufacturing back to the home country to mitigate risks from trade wars and global supply chain issues. This is a growth theme that performs well in a polarized economic climate.

“Today’s world is highly uncertain in every dimension, from war and interest rates to technological transitions. But that doesn’t mean we should stop investing. A well-diversified portfolio, choosing to invest in quality assets that benefit from structural changes, is key to ensuring KKP’s clients’ portfolios remain strong and grow in the long term.” Mr. Thavisak said.

Read news related to both Thai and international stock markets here.