Global Stock Markets Rally on Peace Deal Hopes; Experts Recommend Accumulating AI and Clean Energy Stocks
Krungthai Bank's Chief Investment Office reports global stock markets recovering strongly, driven by solid technology earnings, easing geopolitical concerns, and expectations of U.S. interest rate cuts later in 2025. The bank recommends investors build positions in AI and clean energy stocks while maintaining a balanced portfolio through diversified funds and gold holdings.
Krungthai's Chief Investment Office (CIO) analyzed the week of May 11-15, 2025, finding global investment markets experiencing a notable recovery led by semiconductor and memory chip stocks following strong earnings reports from major technology companies. The recovery reflects continued growth in the technology and AI sectors, bolstered by investor expectations of a U.S.-Iran peace agreement that could reopen the Strait of Hormuz and President Donald Trump's diplomatic approach to easing geopolitical tensions.
On the U.S. economic front, while non-farm employment figures came in better than expected, they show signs of slowdown compared to the previous month, with wage growth still not accelerating. This has driven down government bond yields in both the U.S. and Thailand, as investors anticipate the Federal Reserve may not need to maintain high interest rates for much longer and could begin cutting rates by late 2025.
Despite many stock markets trading near record highs, Krungthai CIO believes valuations remain reasonable relative to strong earnings growth trends, particularly in AI-related and energy infrastructure sectors. The firm recommends investors employ three strategies: investing in core portfolios through diversified funds like KTWC, gradually accumulating quality stocks especially those benefiting from AI trends and increased electricity demand from data centers, and balancing risk with stable assets.
Krungthai CIO maintains a positive outlook on technology, semiconductor, and healthcare stocks, alternative energy themes, and markets in Japan and China. The firm also recommends Thai REITs for attractive dividend opportunities and suggests holding gold as a portfolio stabilizer. Investors should monitor upcoming meetings between Trump and Xi Jinping, Fed policy signals from incoming chair Kevin Warsh, and U.S. inflation data as key factors for near-term market direction.