“ICI remains in “neutral” zone

Investors expect government formation and tourism to support sentiment

 Uncertainty over new government establishment and announcement on financial transaction tax implementation undermine confidence”

 

                                                                      FETCO Press Release: 10 August 2023

 

Kobsak Pootrakool, Chairman of the Federation of Thai Capital Market Organizations (FETCO), revealed that the FETCO Investor Confidence Index (FETCO ICI) in July 2023 (conducted during 20-31 July 2023), which anticipated the market condition over the next three months, is at 83.45, up 2.2 percent from the previous month, hovering in “neutral” zone. Investors expect the government formation to be the most supportive factor, followed by tourism recovery and fund inflow. However, investors are most concerned about the uncertainty over the government establishment, followed by the announcement on financial transaction tax implementation and international conflicts.

 

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

  • Overall FETCO Investor Confidence index for the next three months (October 2023) is in “neutral” zone (80-119 of FETCO ICI Criterion), up 2.2 percent from the previous month to 83.45.
  • Confidence of retail, proprietary and institutional investors is in “neutral” zone while that of foreign investors is in “bearish” zone.
  • Most attractive sector is Tourism and Leisure (TOURISM).
  • Least attractive sector to investors is Banking (BANK)
  • Most influential factor driving the Thai stock market is the formation of the new government after the elections.
  • Most important factor impeding the Thai stock market is uncertainty over the government formation.

 

“The survey results in July 2023 show that only foreign investor’s confidence is down, falling 33.3 percent to 66.67 while confidence of other investor types is up, retail investors rose 42.7 percent to 93.94, proprietary investors jumped 125.0 percent to 112.5 and institutional investors increased 16.7 to 100.00.

 

SET Index was fluctuated throughout July 2023, hit by uncertainty over the government formation, delay in prime minister selection and continued foreign net sell. Sentiment was dampened further as Thailand’s 2023 GDP forecast was revised down to 3.5 percent from previous forecast of 3.6 percent in April, as a result of lower revenue generated from tourism sector. Moreover, exports continued to contract for six consecutive months. At month-end, the SET Index closed at 1,556.06, up 3.5 percent from a month earlier. Average daily trading in July 2023 was at THB 46,002 million. Foreign investors continued their sell-off for six straight months, cashing out THB 12,558 million in July and THB 118,181 million for the first seven months of this year.

 

External factors to monitor include Fed’s monetary policy, where investors anticipated that Fed is still far from turning to dovish move as growing U.S. economy may trigger inflation return. China’s economic slowdown, which hurts Thailand’s exports and tourism is also on the watch. Domestically, eyes are on the prime minister selection and government formation. Any further delay may impact the economic growth and 2024 fiscal budgeting. Unfavorable sentiment is also hinged upon political conflicts, which may lead to unrest, slowing exports as a result of stronger Baht, sluggish economies of trading counterparties, that are trying to weather through inflation pressure and high level of interest rate environment. Sagging confidence may further be dented by slower-than-expect tourism expansion.”