SKN | UBS Raises Thailand to Overweight as Technology Investment Supports Recovery Outlook

Key Points

• UBS upgraded Thailand to Overweight, citing stronger foreign direct investment, exposure to the global technology cycle and more attractive equity valuations.
• Rising investment in electronics, technology and digital infrastructure could support economic recovery, with planned data centre developments potentially increasing Thailand’s capacity to approximately five times its current level.
• Corporate earnings remain uneven, while subdued consumer confidence and higher operating costs continue to weigh on parts of the domestic economy.

UBS Sees Improving Investment Conditions in Thailand

UBS has raised its rating on Thailand to Overweight, reflecting a more constructive assessment of the country’s investment outlook and its potential to benefit from the global technology cycle.

The upgrade is supported by stronger foreign direct investment, increasing exposure to technology-related industries and equity valuations that have become more appealing following a prolonged period of market weakness. UBS also sees artificial intelligence and digital infrastructure investment as potential sources of support for an economic recovery, despite subdued domestic consumption.

The revised assessment forms part of the bank’s broader positive outlook for emerging markets. UBS set its MSCI Emerging Markets targets at 1,780 for 2027, implying approximately 15% upside, and 1,938 for 2028. It forecasts emerging-market earnings per share growth of 27% and 18%, respectively. South Korea and Taiwan account for more than three-quarters of the anticipated earnings growth.

Equity Valuations and Investor Sentiment Improve

Within Thailand, UBS analysts’ combined Buy and Sell recommendations indicate their strongest level of optimism in approximately 10 years.

The improved sentiment comes as concerns surrounding artificial intelligence and DELTA have contributed to market uncertainty. Excluding the electronic components manufacturer, Thai equity valuations are trading near their lowest levels in a decade, potentially creating more attractive entry points for investors assessing the market’s longer-term prospects.

However, the valuation opportunity must be considered alongside the country’s uneven corporate earnings performance and the broader economic challenges facing domestic businesses.

Technology Investment Creates a New Growth Opportunity

Investment activity provides another important foundation for UBS’s upgraded outlook. A significant increase in applications to Thailand’s Board of Investment (BOI), particularly across electronics, technology and digital infrastructure, points to a potential new investment cycle.

Data centre construction is already underway, while additional planned developments could increase Thailand’s overall data centre capacity to approximately five times its current level.

This expansion could strengthen the country’s position within the regional digital infrastructure landscape and create opportunities linked to artificial intelligence, cloud computing and technology services. It also provides a potential channel through which foreign investment could support economic activity beyond traditional industries.

Corporate Earnings and Domestic Demand Remain Uneven

Despite improving investment prospects, company results highlight differences in the strength of Thailand’s business environment.

CENTEL reported strong performance, while earnings above expectations at CPF, TOP and LH were largely driven by gains outside their core businesses. These results suggest that stronger reported profitability has not necessarily translated into broad-based improvement across operating segments.

THAI also faced pressure from higher operating costs and softer passenger yields, leaving its earnings substantially below UBS’s forecast. WHA’s results similarly fell short of expectations by 18%.

Consumer confidence remains subdued, presenting another challenge to a recovery driven by domestic spending. Nevertheless, UBS believes tourism and the wider economic benefits of increased investment could help Thailand approach the final phase of its recovery.

Closing Insights

UBS’s upgrade reflects a shift in the investment narrative surrounding Thailand, with foreign capital, technology infrastructure and more attractive valuations becoming increasingly important drivers of market expectations.

The expansion of data centre capacity and rising BOI investment applications offer potential long-term support, particularly as demand for digital infrastructure and artificial intelligence capabilities increases. However, uneven corporate earnings and weak consumer confidence indicate that the recovery remains incomplete.

For international investors, Thailand’s outlook will depend on whether announced investment translates into sustained economic activity, stronger corporate profitability and broader improvements in domestic demand. The balance between these structural opportunities and near-term operating challenges will remain central to the market’s performance through 2027 and beyond.

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