“Investor Confidence falls to neutral zone for the first time in 8 months

Investors expect vaccine distribution to alleviate COVID-19 situation as well as fund inflow

Lingering COVID-19 spread and international conflicts weigh on sentiment”


                                                                       FETCO Press Release: Monday 5 July 2021

Paiboon Nalinthrangkurn, Chairman of the Federation of Thai Capital Market Organizations (FETCO), said “the FETCO Investor Confidence Index (FETCO ICI) in June, which anticipated the market condition over the next three months, is at 106.05, declining 16.1 percent from the previous month, and enters “neutral” zone for the first time in 8 months. The most supportive factor expected is COVID-19 vaccine distribution to help ease COVID-19 situation. Fund inflow and local economic recovery are respectively seen as the following supportive factors. However, lingering COVID-19 pandemic in Thailand, followed by international conflicts and the country’s economic retreat are the top three concerning factors.

Highlights of FETCO Investor Confidence Index surveyed in June 2021 are as follows;

  • Overall FETCO Investor Confidence index for the next three months (September 2021) is in “neutral” zone (80-119 of FETCO ICI Criterion), falling 16.1 percent to 106.05 from the previous month.
  • Confidence of institutional investors is in “bullish” zone while that of the remainder is in ‘neutral’ territory.
  • Most attractive sector to investors is Health Care Services (HEALTH).
  • Least attractive sector to investors is Fashion (FASHION).
  • Most influential factor driving the Thai stock market is vaccine distribution to ease COVID-19 situation.
  • Most important factor impeding the Thai stock market is the prolonged COVID-19 spread.

“The survey result in June 2021 shows that the confidence of retail investors declines 12.3 percent to 109.91. That of proprietary traders slides 44.4 percent to 83.33. Investor confidence of institutional investors rises 9.5 percent to 130.00 while that of foreign investors drops 17 percent to 100.00.”

During the first half of June 2021, weakened US dollar as a result of U.S. President Joe Biden’s stimulus policy triggered fund inflow to stock markets in Thailand and emerging markets. In addition, the acceleration of COVID-19 vaccination rollout since 7 June provided positive cue to the Thai stock market. However, the latter half of June saw higher market volatility as a result of uncertainty over vaccine delivery plan. The rising number of confirmed cases and death report as well as partial lockdown in Bangkok and areas in red zone intensified the tension. In addition, the Monetary Policy Committee’s downward revision of Thailand’s GDP in 2021 and 2022 to 1.8 percent and 3.9 percent respectively tarnished sentiment. SET Index at end-June then reversed earlier gains to close at 1,587.79, down 0.4 percent from the previous month.

External factors to monitor include the progress of U.S. President Joe Biden’s stimulus plan and proposed tax hikes and the proposal for global minimum tax on corporations at 15 percent to be discussed at the G20 Summit set on 9-10 July 2021. IMF is also set to announce its GDP forecast while international conflicts in several countries remain on the watch. The spread of new COVID-19 variant, especially in Asia countries, may impact Thailand’s exports. For internal factors, the lingering COVID-19 pandemic piles up pressure on Thailand’s public health crisis. Uncertainties over vaccine procurement and the speed of the vaccine rollout undermine foreign investors’ confidence whether Thailand could reopen the country within 120 days as planned. The kicking off of Phuket sandbox project in July and the government’s measures to aid those impacted from the epidemic will also be factored in.