“ICI retreats to bearish zone

Hope pinned on tourism boost and economic recovery

While Fed’s hawkish stance and fund outflow undermined”


                                                                       FETCO Press Release: Wednesday, 5 October 2022

Kobsak Pootrakool, Chairman of the Federation of Thai Capital Market Organizations (FETCO), said “the FETCO Investor Confidence Index (FETCO ICI) in September, which anticipated the market condition over the next three months, is at 67.83, down 41.8 percent from the previous month, drawing back to “bearish” zone. Tourism recovery is expected to be the most influential driver boosting the confidence, followed by local economic recovery and Thai Central Bank’s interest rate hike. However, Fed’s interest rate hike policy dampens sentiment the most, followed by fund outflow and international conflicts, respectively.

Highlights of FETCO Investor Confidence Index surveyed in Sept 2022 are as follows.

  • Overall FETCO Investor Confidence index for the next three months (December 2022) is in “bearish” zone (40-79 of FETCO ICI Criterion), down 41.8 percent from the previous month to 67.83.
  • Confidence of retail and foreign investors retreats to “bearish zone” while that of institutional and proprietary investors is in “neutral” zone.
  • Most attractive sector to investors is Tourism and Leisure (TOURISM).
  • Least attractive sector to investors is Petrochemicals and Chemicals (PETRO).
  • Most influential factor driving the Thai stock market is tourism recovery.
  • Most important factor impeding the Thai stock market is Fed’s interest rate rise

In September 2022, ICI of most types of investors retreated. Retail investors fell 39.3 percent to 77.33. Proprietary investors dropped 28.6 percent to 100.00. Foreign investors declined 60% to 40.00 while local institutional investors rose 6.2 percent to 113.33.

In the first week of September, SET Index tracked an upward trend in global stock markets. However, the benchmark index gradually extended global rout on mounting pressure such as Fed’s interest rate hike, bearish 2023 global economic outlook following the World Bank’s forecast, and escalating tension on Russia – Ukraine conflicts as Russia ordered more troops to Ukraine. In addition, FTSE reducing weight of Thai big cap stocks effective on 16 September 2022d dampened sentiment. As a result, in September, SET Index moved in tight 1,589.51—1,665.74 range and closed at 1,589.51 at the end of the month, which was 3 percent lower than a month earlier. Foreign investors turned to net sellers of THB 24,279 million for the month but remained as net buyers of THB 146,465 million year to date.

For external factors, investors are cautious about Fed’s tightening monetary policy and its next rate move to tame still high inflation as well as global central banks’ monetary policy move to tackle volatility in foreign exchange market. Other factors to monitor include global economic recession outlook and soaring tension in Russia-Ukraine conflicts after Russian proclaimed annexation of four Ukrainian regions. Locally, investors are following the development of Thailand in rising interest rate landscape after the Bank of Thailand raised its policy rate for the second time, bringing the benchmark rate to 1%. Other factors include Thailand’s economic outlook boosted by tourism recovery and local political situation as the general election is expected in the second quarter of 2023.”