“June 2020 FETCO ICI survey places confidence in Neutral Zone as investors are hopeful about domestic economic growth and government policy while being concerned about listed company performance and recovery of domestic economy.”

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FETCO Press Release: Tuesday 2 June 2020

 Paiboon Nalinthrangkurn, Chairman of the Federation of Thai Capital Market Organizations (FETCO), commented on the June 2020 FETCO Investor Confidence Index (ICI) as follows: “The Investor Confidence Index for the next three months remained neutral as in the previous month.  Investors are encouraged most by anticipated domestic economic growth followed by government policies and listed company earnings in the second quarter as well as the mitigation of the COVID-19 epidemic situation and the discovery of a vaccine.  At the same time, concern over listed company performance is the biggest drag on investor confidence followed by worries about the recovery of the domestic economy and tourism, and a second COVID-19 outbreak.”

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

FETCO Investor Confidence Index (ICI) for the next three months (through August 2020) for all groups of investors increased 21% to 96.93, residing within the neutral zone (index range 80–119).

  • ICIs for retail investors, local institutional investors, and foreign investors were in the neutral zone.
  • Proprietary trader ICI dropped into bearish territory.
  • The Food & Beverage (FOOD) sector drew the most investor interest.
  • Tourism & Leisure (TOURISM) was the least attractive sector for investors.
  • Domestic economic growth was the factor boosting the Thai stock market the most.
  • The performance of listed companies was the biggest drag on the Thai stock market.

“May 2020 FETCO ICI survey results show all investor groups’ ICIs rising but still in the neutral zone, except that for proprietary traders who fell into the bearish zone.

During May, the Stock Exchange of Thailand (SET) Index increased over April due to the cabinet allotting THB 400,000 million for economic recovery after the virus has been mitigated.  Foreign factors impacting the SET Index included the U.S. and European announcements of quantitative easing (QE) measures, resulting in more capital inflows into emerging markets.  In the first half of the month, the SET Index moved within the range 1,257 – 1,299 points.  Subsequently, the SET Index moved up as lockdowns were eased, which was seen as supporting the recovery of economic activities.  At the end of May 2020, the SET Index closed at 1,342.85.

Investment trends for the next three months show investors placing their hopes on domestic economic growth as well as government policies, listed company earnings in the second quarter, mitigation of the pandemic situation, and discovery of a COVID-19 vaccine.  However, the performance of listed companies is also the biggest drag on investor confidence followed by domestic economic growth and the tourism sector which has yet to recover as well as concerns over a second COVID-19 outbreak.

Economic factors which warrant monitoring include the economic growth of major trading partners, controlling the spread of COVID during the easing of economic activity going forward, the effects of monetary and fiscal measures, and the U.S.–China trade war.”

 Interest Rate Expectation Index for June 2020

 Results from the Interest Rate Expectation Index show the market expects that the policy interest rate will likely be maintained at 0.5% at the Bank of Thailand’s Monetary Policy Committee (MPC) meeting in June.  Meanwhile, yields on 5-year government bonds and 10-year government bonds are likely to remain unchanged in the next eleven weeks as the MPC had just lowered the interest rate at their previous meeting and will likely evaluate economic conditions after the easing of the lockdown.  However, yields may increase in the second half of the year after the issuance of government bonds for use in economic stimulus measures.

Ariya Tiranaprakij, Deputy Managing Director of the Thai Bond Market Association, commented on the Interest Rate Expectation Index for June 2020 with the following details:

  • The Interest Rate Expectation Index for the next Bank of Thailand MPC meeting being held in May increased to 43, higher than the previous report and rising into the unchanged range. This reflects the market sentiment that the MPC meeting in June should maintain the policy interest rate at 5 percent due to the negative economic growth, the trending decline in global interest rates, and the net capital outflow of foreign investments.
  • The Interest Rate Expectation Indices for 5-Year and 10-Year Government Bonds through the Bank of Thailand MPC meeting in August 2020 (about 11 weeks out) are still within the index’ unchanged range.  These levels reflect the market view that 5-year and 10-year bond yields will remain stable at the 76% and 1.17% levels respectively (as of the survey date of May 21, 2020).  Factors supporting these outlooks include demand in the bond market, the slowdown of the domestic economic growth rate, trends in global interest rates, and the supply of government bonds which may increase from the issuance of bonds to stimulate the economy.

 

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