AI-driven “high investment” growth has been the key driver behind the US stock market’s continued push to record highs. However, should Treasury yields continue to rise, investors should note potential pressure on AI capex, and from already high stock valuations. Additionally, as the positives from earnings revision from the current round of corporate earnings releases has temporarily subsided, we expect the Taiwan stock market to consolidate at high levels near-term. Investors should remain cautious at these elevated levels. For June, we expect the KOSPI to trade with a neutral-to-positive bias within the 8,000?9,500pt range. Unless a compelling argument emerges that undermines the global big tech AI capex expansion cycle, the current market trend is likely to continue, with earnings and export momentum centered on domestic large-cap memory semiconductor names continuing to drive the upper end of the index.

A gradual de-escalation of Middle East military conflicts will help the global stock markets including Hong Kong. The weak May performance was mainly caused by sizeable presence of tech stocks in the Index. By contrast, international fund flow were moving towards Taiwan and Korea markets given wide choice of tech hardware stocks. After the hefty index gains in Taiwan and Korea markets, it is likely that the profit taking activities in those markets will come. That will benefit the HK market in June. The upcoming US Fed meeting on 16-17 June, the first meeting chaired by Chairman Warsh, will shed lights into the US interest rate direction and will exert influence on HK market. Our current base case Hang Seng Index target is 27,212 for 2026. We replace NIO and Shenzhou International with BYD Company and Alibaba in our top picks following our recent launch of research coverage, and also given their attractive risk reward profiles.

Thailand’s SET Index (SET) ended May at 1,568.37 points, marking an increase of 5.00% from the end of April. The gain was primarily supported by stock rallies across key sectors, namely Banking (+5.83% MoM), Electronic Components (+12.19% MoM), Tourism & Leisure (7.93% MoM), and Transportation & Logistics (+6.64% MoM), spurred in part by the de-escalation of Middle East tensions (as Iran and the US entered peace talks in May). Despite expecting that the rally of the Electronic Components sector would slow down alongside the Magnificent 7 stocks in the US, it is expected that SET will move in the range of 1,540-1,635 points range in June as the rally of stocks in domestic-consumption-related sectors (such as Banking and Food & Beverage) and the rally of power plant stocks (such as GULF and GUNKUL) could offset the impact. Vietnam’s VNI has traced out a triple-top in the first five months of the year, and we are retaining our full-year VNI target of 1898 points. We think an upside breakout is unlikely in the near term as 1) liquidity conditions are tightening; 2) the macro impact of the Iran war is starting to impact growth areas such as manufacturing and construction; 3) domestic sentiment is subdued for many reasons, including policy-related ones; and 4) it’s rarely wise to bet against the “sell in May and go away” seasonality impact, at least for the June-August doldrums (but be aware that FTSE’s upgrade starts in September).

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