“ICI remains to neutral zone

Investors expect local elections and fund inflow to boost sentiment

Fed’s hawkish policy and election situation among top concerns”

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                                                                      FETCO Press Release:  9 May 2023

 

Kobsak Pootrakool, Chairman of the Federation of Thai Capital Market Organizations (FETCO), said “the FETCO Investor Confidence Index (FETCO ICI) in April 2023, which anticipated the market condition over the next three months, is at 110.09, up 15.1 percent from the previous month, though hovering in “neutral” zone. Investors see local general elections as the most supportive factor, followed by expectation on fund inflow and local tourism recovery. However, investors are most concerned about the Fed’s hawkish monetary policy, political situation during the elections and inflation.

 

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

  • Overall FETCO Investor Confidence index for the next three months (July 2023) is in “neutral” zone (80-119 of FETCO ICI Criterion), up 15.1 percent from the previous month to 110.09.
  • Confidence of retail, proprietary and institutional investors is in “neutral” zone while that of foreign investors is in “bullish” zone.
  • Most attractive sector is Tourism and Leisure (TOURISM).
  • Least attractive sector to investors is Petrochemicals & Chemicals (PETRO)
  • Most influential factor driving the Thai stock market is local general elections.
  • Most important factor impeding the Thai stock market is the trend of Fed’s interest rate hike.

 

              “The survey results in April 2023 show that only foreign investors’ confidence is positive, rising 66.7 percent to 125.0 while that of other types of investors are down, retail investors down 13.6 percent to 96.83, proprietary investors down 12.5 percent to 87.50 and institutional investors down 14.3 percent to 112.50.

 

In April, SET Index declined 5 percent from the previous month to close at 1,529.12, hurt by several factors, including slower-than-expected economic recovery in several countries, which included Thailand, where its Fiscal Policy Office revised down the country’s 2023 GDP forecast to 3.6 percent from 3.8 percent projected earlier. Other factors include worries over trend of hawkish policy rate moves by Fed and European central banks to curb inflation; and US-China tension over relevant Taiwan and Russian matters. In April 2023, foreign investors remained as net sellers of THB 7,901 million, accumulating THB 63,960 million worth of net selling year-to-date with average daily trading of THB 14,134 million.

 

External factors to monitor include financial system stability in the U.S. and Europe, trend of slowing U.S. economy and weakening US dollar, which will impact exports of Thailand and other countries, whose trade is denominated in US dollar. The matter may also hurt listed companies’ earnings, which may consequently impact the stock market. In addition, monetary policy of key central banks in a move to tame inflation and escalating tension between the U.S. and China are also on the radar. Domestically, eyes are on the results of general elections, which will take place on 14 May 2023 and the newly formed government, which will impact the government’s disbursement. Also, investors follow up on Thailand’s tourism recovery and expansion of private consumption, which will support the growth momentum of the Thai economy, as well as the trend of interest rate hike by the Monetary Policy Committee, of which the next meeting is set on 31 May 2023.