Bangkok: Krungthai CIO has observed signs of a global stock market recovery, attributing it to advancements in AI and recommending that investors consider increasing their investment weighting through the Core Portfolio. The recovery is taking place amid ongoing volatility from US bond yields and fluctuations in the Japanese yen but is supported by robust fundamentals and corporate earnings.
According to Thai News Agency, the Krungthai Chief Investment Office (CIO) analyzed the investment outlook for the week of August 3-7, 2026. They noted that global stock markets are showing signs of recovery, predominantly led by US technology stocks bolstered by strong earnings from cloud businesses. The increasing revenue streams from AI are enhancing the medium-term outlook for risky assets. While European stock markets experienced only modest gains, markets in Japan, South Korea, and other regions with significant semiconductor stock exposure remained volatile. This trend indicates a heightened market focus on selecting stocks based on earnings quality, cash flow, and fundamental factors.
In the bond market, the yield on the 10-year US Treasury bond increased by about 6 basis points and remained high following the Federal Reserve's decision to keep its policy interest rate unchanged. Despite this, three committee members expressed support for raising interest rates, prompting the market to demand a risk premium due to concerns over inflation and policy uncertainty. Additionally, Brent and WTI crude oil prices declined due to a reduction in supply risks, despite the ongoing fragile situation in the Middle East. Gold prices also weakened slightly under the pressure of rising bond yields but continue to serve as a diversification asset within investment portfolios.
For the current week, Krungthai CIO recommends the strategy "Stay Invested, Add Risk with Discipline," advising investors to maintain their investments to capitalize on profit trends while increasing risk exposure in a disciplined manner through three strategic approaches:
1. Enhance the Core Portfolio's weighting to diversify investments across various asset classes, countries, and industries, thereby seizing market recovery opportunities and mitigating the impact of volatility in stocks, AI, bond yields, and the Japanese yen.
2. Prioritize investments in the US stock market through a Satellite Portfolio, leveraging strong earnings trends and fundamentals. This involves selecting companies with strong earnings visibility, cash flow, and financial stability. There is also an opportunity to gradually accumulate technology stocks driven by cloud, software, digital platform, and AI infrastructure businesses.
3. Maintain the current investment weighting in the Semiconductor sector. Despite the positive medium-term outlook driven by demand for AI and data centers, the sector's price volatility necessitates maintaining the current investment allocation to evaluate market stability before gradually increasing weighting. Continued price recovery could further bolster the technology sector and related investment portfolios.
Key risks to monitor include the rapid appreciation of the Japanese yen, which may prompt a reduction in Yen Carry Trade positions, and the trajectory of US bond yields, which remain constraints on the valuation of growth stocks.
Crucial factors to watch this week include US labor market statistics (Nonfarm Payrolls, unemployment rate, and JOLTS), ISM PMI manufacturing and services indices, earnings reports from major technology companies such as AMD, SanDisk, and SpaceX, Thailand's Consumer Price Index (CPI), the Reserve Bank of India (RBI) meeting, and developments concerning the Middle East and energy transportation to assess the direction of risky assets in the near future.