“Investor Confidence sustains in bullish zone

Investors anticipate brighter COVID-19 outlook on vaccination rollout plus fund inflow

Rising new COVID-19 cases and international conflicts undermine sentiment”

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                                                                       FETCO Press Release: Thursday, 4 March 2021

 

Paiboon Nalinthrangkurn, Chairman of the Federation of Thai Capital Market Organizations (FETCO), revealed investor confidence in February 2021 showed that “the FETCO Investor Confidence Index (FETCO ICI) for the next three months rose to 152.19, or a 14.8 percent increase from the previous month, hovering in “bullish” zone for the third consecutive month. Investors anticipated the rollout of the first COVID-19 vaccine batch to be the most supportive factor, followed by fund inflow and the country’s economic recovery. However, the rising number of COVID-19 infection tarnished confidence the most, followed by worries over international conflicts and local economic retreat.

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

  • FETCO Investor Confidence indices across investor types for the next three months (May 2021) is in “bullish” zone (120-159 of FETCO ICI Criterion), increasing 14.8 percent to 152.19 from the previous month.
  • Investor confidence of foreign investors moved in “very bullish” zone. Retail and institutional investors shared sentiment in “bullish” zone while proprietary traders were more cautious in “neutral” territory.
  • Most attractive sector to investors was Tourism and Leisure (TOURISM).
  • Least attractive sector to investors was steel (STEEL).
  • Most influential factor driving the Thai stock market was improving COVID-19 situation following vaccination rollout.
  • Most important factor impeding the Thai stock market was the rising number of COVID-19 infection.

 

“The results of February 2021 survey showed that investor confidence of retail investors slipped 2.3 percent to 140.74. Proprietary traders declined 8.6 percent to 114.29. Institutional Investors rose 10 percent to 129.41 while foreign investors shot up 46.7 percent to 183.33.

 

The most attractive sector to investors was Tourism and Leisure, followed by Banking and Energy while Steel, Fashion and Property Development sectors were the least attractive ones.

 

In February 2021, SET Index moved in tight range of 1,478.05–1,523.11. The National Economic and Social Development Board announced that Thailand’s 2020 gross domestic product contracted 6.1 percent from a year earlier as a result of COVID-19 impact that weakened the country’s overall export and service sectors. Foreign investors continued their selling spree whereas FTSE Russell weighed down Thai securities in its index calculation. However, the cloudy sentiment was partially offset by the U.S. Federal Reserve’s continued Qualitative Easing program and the arrival of the first batch of Sinovac vaccine. Newly listed PTT Oil & Retail Business pcl making trading debut on 11 February 2021 also helped cushion the downside as it attracted almost 100,000 new investors to actively engage in the market. At the end of February, SET Index closed at 1,496.78, up 2.03 percent from the previous month.

 

Eyes are on coming steps to ease lockdown measures in several countries in Europe and the United States after the vaccination rollout starts to reflect positive impact to the economy. Investors also monitor the White House trying to get the US stimulus bill through the Congress and the meeting results of 3 key Central Banks (Fed, ECB and BoJ) after bond yields increased in several markets. Local factors to watch include vaccination distribution process, the government’s continued economic stimulus package and tourism recovery outlook. The result of third readings of the proposed charter amendment is also crucial as it could trigger political turmoil to re-emerge.”

 

Interest Rate Expectation Index for March 2021

 

The Index reflected market’s expectation that Bank of Thailand’s Monetary Policy Committee (MPC) will keep its policy rate unchanged at 0.5% at its meeting in March, in line with previous anticipation in the past month. According to the survey conducted on 19 February 2021, yields of 5-year and 10-year government bonds at the end of the first quarter are expected to rise with a large number of survey respondents anticipating that the rise is likely to be in accordance with the recent spike of US Treasury yields while worries over COVID-19 outbreak has been subsided. In addition, extensive vaccination rollout has increased risk appetite for investors to leave safe haven assets like bonds for riskier investment alternatives. However, some respondents challenged that yields of 5-year and 10-year government bonds could decline as the recent surge was beyond fundamental value while possible intervention by the Bank of Thailand is foreseen should the rise is overheating.

 

Ariya Tiranaprakij, Deputy Managing Director of the Thai Bond Market Association, revealed highlights from Interest Rate Expectation Index for March 2021 as follows;

 

  • The Interest Rate Expectation Index for March on MPC’s policy rate rose to 47 from the previous survey and remained in “Unchanged” zone. It reads that the MPC is expected to keep its policy rate unchanged at 0.5% at its meeting in March given to the already low interest rate level while the BOT continues to monitor the country’s economic growth and will factor in the upcoming fiscal measures in its policy rate decision afterward.

 

  • The Interest Rate Expectation Index on yields of 5-year and 10-year government bonds at the end of the first quarter moved to “Increase” zone. The significant rise was driven by a large number of respondents anticipating that the yields will increase with yields of 5-year and 10-year government bonds likely to rise to 89% and 1.50% respectively, according to the survey conducted on 19 February 2021. Main factors anticipated include demand and supply in fixed-income market, global interest rate trend and foreign fund inflow.