ICI surges to very bullish zone

Investors optimism on tourism recovery and fund inflow 

International conflicts and Fed’s interest rate hike policy hold back confidence


                                                                      FETCO Press Release:  February 9, 2023

Kobsak Pootrakool, Chairman of the Federation of Thai Capital Market Organizations (FETCO), said “the FETCO Investor Confidence Index (FETCO ICI) in January 2023, which anticipated the market condition over the next three months, is at 160.07, up 31.5 percent from the previous month, surging to “very bullish” zone. Investors view that tourism recovery is the most supportive factor, followed by fund inflow and domestic economic recovery. However, international conflicts, Fed’s interest rate hike policy and the announcement on the financial transaction tax on securities trades on the Stock Exchange of Thailand (SET) hold back confidence.

Highlights of FETCO Investor Confidence Index surveyed in January 2023 are as follows.

  • Overall FETCO Investor Confidence index for the next three months (April 2023) moves to “very bullish” zone (160-200 of FETCO ICI Criterion), jumping 31.5 percent from the previous month to 160.07.
  • Confidence of retail and foreign investors rises to “very bullish” zone while that of proprietary and institutional investors is “bullish” zone.
  • Most attractive sector is Tourism & Leisure (TOURISM).
  • Least attractive sector to investors is Paper & Printing Materials (PAPER)
  • Most influential factor driving the Thai stock market is tourism recovery.
  • Most important factor impeding the Thai stock market is international conflicts.

            “The January 2023 survey results show that ICI of investors across investor types rises with retail investors up 29.8 percent to 166.67; proprietary investors up 60.4 percent to 137.50; institutional investors up 42.1 percent to 150.00 and foreign investors up 28 percent to 160.00.

In January 2023, SET Index moved in tight 1,663.86 – 1,691.41 range. Supporting factors comprised of trend of Fed’s slowing down its pace of policy rate hike; cooling down of inflation in several key economies; and China’s reopening. As a results, worries over economic recession has been eased. Domestic catalyst, especially tourism recovery, was also supportive. However, Russia-Ukraine conflicts, which has taken place for over a year, coupled with lower than expected earnings of listed companies and worries over tax measure to be implemented over securities trading, undermined sentiment. At month-end, SET Index closed at 1,671.46, up 0.2 percent from the previous month. Foreign investors remained as net buyers, accumulating THB 18,997 million in the first month of the year.

External factors to monitor include hawkish trend of interest rate as inflation remains above Fed’s target range. Therefore, rate cut in 2023 is likely off the table. Eyes are also on spread of job cuts in technology sector; geopolitical risks, which may impact international stability; and China’s economic recovery on the back of continued COVID-19 infection situation. Local factors to watch are the economic recovery boosted by tourism revival with the return of tourists from China as particular driver; growth in private consumption; exports, which is expected to slow down in line with declining demand from trading partner countries; manufacturing relocation opportunity as companies are moving their production base from China; and Thailand’s house dissolution and upcoming general elections, of which the impact to the Thai economic direction shall be seen in the second half of 2023.”