Asia Pacific equities

18 September 2026, 11:15 UTC Chief Investment Office GWM Investment Research

Pulse on ASEAN: What do higher oil prices mean for ASEAN markets? Asia Pacific equities Authors: Clement Chen, Head CIO Equities APAC; Wen Ching Lee, CIO Equity Strategist, UBS AG Singapore Branch; Xueqiong Huang, Equity Strategist, UBS AG Singapore Branch

• Southeast Asian (ASEAN) equity markets have been surprisingly resilient despite the rise in oil prices. Governments have helped cushion the economic impact through fuel subsidies, price controls, and inventory restocking.

• That said, some markets are more affected than others. Singapore and Malaysia appear more resilient, while Thailand and Philippines are more vulnerable because of their reliance on imported energy and weaker fiscal buffers.

• While markets have held up so far, a prolonged disruption to oil supplies or persistently high energy prices could pose headwinds to economies and equity Source: Shutterstock markets in the region.

Renewed tensions between the US and Iran have driven Figure 1 - Brent crude oil price Brent crude oil prices above USD 100 per barrel. The Sep 2025 - current ceasefire that began on 8 April 2026 proved short-lived, with fighting in the Strait of Hormuz resuming in July and escalating further since. As experienced earlier this year, Southeast Asian (ASEAN) economies remain vulnerable to oil price shocks given their reliance on imports and limited alternative energy sources. However, this time around, ASEAN markets have been resilient. In fact, the MSCI ASEAN Index is up 4.4% since the ceasefire ended.

What is driving this resilience? Are investors being complacent, or are ASEAN economies better prepared this time around? Source: Bloomberg, UBS as on Sep 2026

This report has been prepared by UBS AG Singapore Branch. Please see important disclaimers and disclosures at the end of the document.

Figure 2 - Major ASEAN markets have risen despite the 61 days in early March when the conflict first began. the rise in oil prices Fuel inventories for the Philippines have hovered around its Total returns since oil started climbing again in July (in USD) late March levels of approximately 40-50 days. The only country where inventories may have been partially drawn down is Indonesia, where fuel inventories for some products are down to 14-20 days of cover, versus the 20-25 days in April.

Is there still room for fiscal support? Table 1 - Policy responses across ASEAN

Source: UBS Research Source: Bloomberg, UBS as on Sep 2026 Impact of fiscal responses to GDP The MSCI ASEAN Index tumbled 8% when oil prices jumped in March this year. This time around, however, the index has risen 4.4% despite higher oil prices. Part of this resilience could be attributable to markets already pricing in higher energy prices following the previous oil shock. It may also UBS as of September 2026 reflect the coincident timing of a broader rotation into global financials as yields rose. In addition, ASEAN economies have Of the ASEAN countries, Indonesia and Malaysia provide taken steps to better prepare for higher energy costs by the highest fiscal support in terms of subsidizing fuel rebuilding oil inventories and seeking alternative energy prices. Thailand offers some support via its Oil Fuel Fund, sources. but the fiscal burden is comparatively less. Malaysia is a net importer of oil but exporter of liquefied natural gas, so Figure 3 - Major ASEAN markets tumbled when oil higher oil prices will help to cushion the fiscal burden of prices rose in March subsidies and hence the likely impact on growth. Indonesia Total returns, 1 March 2026 - 31 March 2026 (in USD) is likely to face the greatest strain on its fiscal budget, and this may impact its economic growth and currency outlook.

So, while the impact from the previous spike in crude oil prices was cushioned by various government policies, the concern going forward will be whether oil prices remain high for an extended period of time. Many of these governments have been cautious in committing further incremental fiscal support, particularly given the toll on economies that have not been able to offset this higher fiscal burden.

Macroeconomic –…