“Investor Confidence Index survey results drop into bearish zone.  Though investors remain hopeful about domestic economic growth and US monetary policy, they remain concerned about the domestic political situation and economic slowdown.”


FETCO Press Release: Monday September 14, 2020

Paiboon Nalinthrangkurn, Chairman of the Federation of Thai Capital Market Organizations (FETCO), commented on the FETCO Investor Confidence Index (ICI) as follows:  “The August survey showed the Investor Confidence Index for the next three months dropping 21% into bearish territory.  The major factor boosting investor confidence was domestic economic growth followed by US monetary policy, capital inflows/outflows, and anticipation of a COVID-19 vaccine.  Factors pulling down investor confidence included the domestic political situation, the Thai economic slowdown, and the U.S. and European economic situations.”

Results of the FETCO Investor Confidence Index for August 2020 are summarized below:

  • FETCO Investor Confidence Index (ICI) for the next three months (through November 2020) for all groups of investors dropped 21% to 67.52, falling into the bearish zone (index range 40–79).
  • While confidence levels for three of the investor groups were neutral, the foreign investor ICI dropped into the very bearish zone.
  • The Food & Beverage (FOOD) sector drew the most investor interest.
  • The Banking (BANK) sector was least attractive for investors.
  • Domestic economic growth was the most important factor buoying the Thai stock market.
  • The domestic political situation was the biggest drag on the Thai stock market.

“August 2020 FETCO ICI survey results found foreign investor confidence to be very bearish at 25.00 while the other three investor groups’ ICIs were in neutral territory.  Retail investor ICI rose slightly to 90.63; proprietary trader ICI was up to 100.00; and the local institutional investor group dropped to 87.50.

In the first half of August 2020, the Stock Exchange of Thailand (SET) Index moved in a narrow range between 1,321.23–1,346.69 points as economic activity pointed towards a gradual recovery.  Subsequently, the SET Index fell after the announcement that Q2 2020 GDP contracted -12.2% from the same quarter of last year.  Additional negative factors included the domestic political situation after the protests during the third week of the month; concerns about a second wave of COVID-19 in the country; and the poor performance of listed companies for the second quarter of 2020 with their lackluster profits.  However, the economy was still supported by government expenditures, both from budgeted disbursements and measures to assist those who are affected by the economic downturn.  As of the end of August 2020, the SET Index closed at 1,310.66, slightly decreased from July.

Investor hopes are boosted by domestic economic growth, U.S. monetary policy, capital flows, and anticipation of a COVID-19 vaccine.  Factors dragging down investor confidence include domestic politics, the Thai economic slowdown, and the U.S. and European economies.

Global issues that bear monitoring include the second wave of the COVID-19 pandemic in many countries, which will delay the economic recovery, and the U.S. presidential election.  Domestic factors that warrant watching include the uncertainty surrounding the renewal of government support measures which are set to expire; the risk of higher rates of unemployment and business closures; and the increasing political unrest.”


Interest Rate Expectation Index for September 2020

The Interest Rate Expectation Index for September 2020 reflects the market forecast, which remained the same as that for the previous meeting and suggested the Monetary Policy Committee (MPC) would maintain the policy interest rate at 0.5% at the September meeting.  Meanwhile, the 5-year and 10-year bond yields at the end of 3Q2020 are not likely going to change much (from the survey as of August 31, 2020), although they may rise in 4Q20 as the government looks set to issue more bonds to raise fund to support the economic stimulus package.

Ariya Tiranaprakij, Deputy Managing Director of the Thai Bond Market Association (ThaiBMA), said that the Interest Rate Expectation Index for September 2020 showed that:

  • The MPC’s Policy Interest Rate Expectation Index for September 2020 was at 50, which is the same as last time and in the “Unchanged” range. This mirrors the market’s view that the MPC would keep the benchmark rate stable at 0.5% at its September meeting because the current rate is already low, while the government’s plan to introduce more economic stimulus measures is making it less necessary to lower the policy interest rate.
  • The 5-Year and 10-Year Bond Yield Expectation for 3Q20 remains within the “Unchanged” range even though there was an upward adjustment from last time. This shows the market’s view that 5-year and 10-year bond yields should stabilize at around 0.92% and 1.51%, respectively, on the date of the survey (August 31, 2020). Factors that have impacted the forecast include the country’s economic slowdown trend and the likely increase in the supply of government bonds due to new issuances for the economic stimulus plan.