“ICI rises to ‘bullish’ zone

Investors anticipate on clarity of government formation and economic stimulus measures

 China’s economy and local political situation during government transition weigh”

 

                                                                      FETCO Press Release: 6 September 2023

 

Kobsak Pootrakool, Chairman of the Federation of Thai Capital Market Organizations (FETCO), revealed that the FETCO Investor Confidence Index (FETCO ICI) in August 2023 (conducted during 21-31 August 2023), which anticipated the market condition over the next three months, is at 141.27, surging 69.3 percent from the previous month, returning to “bullish” zone. Investors expect the government formation to be the most supportive factor, followed by the new government’s economic stimulus measures and tourism recovery. However, concerns over China’s economy weigh on investors’ confidence the most, followed by local political situation during government transition and the announcement on financial transaction tax implementation.

 

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

  • Overall FETCO Investor Confidence index for the next three months (November 2023) is in “bullish” zone (120-159 of FETCO ICI Criterion), up 69.3 percent from the previous month to 141.27.
  • Confidence of retail investors rises to “very bullish” while that of institutional and foreign investors moves to “bullish” zone. Proprietary investors’ confidence remains in “neutral” zone.
  • Most attractive sector is Commerce (COMM).
  • Least attractive sector to investors is Fashion (FASHION).
  • Most influential factor driving the Thai stock market is the clarity of government formation.
  • Most important factor impeding the Thai stock market is China’s economy.

 

“The survey results in August 2023 show that proprietary investor’s confidence remains unchanged at 112.50 while retail investors jumped 75.6 percent to 165.00, institutional investors increased 47.1 percent to 147.06 and foreign investors rose 87.5 percent to 125.00.

 

SET Index movement experienced high volatility during the first half of the month of August due to uncertainty over the government formation after the general elections, and weakening earnings of listed companies, especially energy sector, which were dragged by drastic drop of oil price, and rising sales and management costs on the back of economic recovery. Sentiment was also hurt by weakening China’s economy and its real estate crisis as well as Fitch Rating downgrading the US long-term rating from AAA to AA+. However, the SET Index bounced back to positive territory during the last two weeks after the Thai parliament voted Srettha Thavisin as Thailand’s 30th prime minister, which was translated as a trend of political stability. At month-end, the SET Index closed at 1,565.94, up 0.6 percent from a month earlier. Average daily trading volume in August was at THB 58,579 million. Foreign investors remained as net sellers of THB 14,755.28 million, marking it as seventh consecutive month of the sell-off. Foreign net selling totaled THB 132,936 million in Jan-Aug.

 

External factors to monitor include monetary policy of major central banks after the U.S. Federal Reserve raised its policy rate to 5.25—5.50percent while the European Central Bank raised its benchmark rate to 3.75 percent, which matches the highest rate since the launch of the euro currency in 1999. Eyes will also be on China’s economy following the impact of its real estate crisis triggered by China Evergrand’s bankruptcy. Locally, investors are keen to monitor the new government’s policies that will support the economy and capital market, the continuity of export contraction due to global economic slowdown, and challenge on household debts, which touch 90.6 percent of the country’s GDP.