Fetco forecasts bullish sentiment to hold steady

Investor confidence over the next three months will remain in bullish territory as expectations for global capital flows and the local economy are positive, says the Federation of Thai Capital Market Organizations (Fetco).

Fetco’s investor confidence index (ICI) for the next three months through June stands at 120.07, staying within the ICI’s bullish range of 120-160, but falling 16.0% from 143.09 in the previous month.

The banking sector is seen as providing the most attractive investments, while the steel industry has drawn the least interest among investors.

“The key factor driving investor confidence is capital inflows, while concerns over US monetary policy has dampened investor sentiment,” said chairwoman Voravan Tarapoom.

The ICI is positively affected by domestic economic conditions, while some decline is attributed to investors’ apprehension over a US interest rate hike and concerns related to its trade barriers and an international trade war, said Mrs Voravan.

The Stock Exchange of Thailand (SET) index in March reflected wide price swings, with the benchmark hovering between 1,761 to 1,825 points, although most closings skirted the 1,800 mark.

Investment risks and market volatility will heighten given that a full-blown trade war between the US and China will spill over into other countries, hurting global trade and Thailand’s economic outlook, she said.

Besides the external uncertainties, the domestic political situation and a delay in Thailand’s general election are keeping a lid on investor confidence, she said.

“The market from now will be more volatile and the SET range for this year will be narrow, so that short-term trading will generate less returns. We see the SET upside this year at around 5%, while other countries like Vietnam have returns of up to 19% from earlier in the year, so investors should keep cash on hand to buy when the market makes a correction,” said Mrs Voravan.

Sombat Narawuttichai, president at the Investment Analysts Association, said analysts have forecast the SET will be in a range of 1,703-1,909 points this year, with year-end closing expected at 1,879 points. The bourse’s earnings per share is projected at 111.93 baht and EPS growth is anticipated at 11.9%.

KTB Securities executive chairman Win Udomrachtavanich said the impact from a decline in banks’ fee income is expected to dent their net profits by 1-2%, prompting securities firms to cut their net profit forecast for this year to 5-7% from 7-9%.

Separately, the SET declined by 2.9% month-on-month in March, as share prices for the energy, utility and banking sectors dropped by a combined 6.2%.

Foreign investors were net sellers of 11.22 billion baht, in line with the foreign sell-off trend seen among other regional bourses, said the SET.