Investor mood ebbs, remains in neutral gear

Fetco index stabilising after recent declines

Investor confidence for the next three months remains in neutral territory for the second straight month as uncertainty about the general election’s timing and fund flow volatility keep a lid on confidence, says the Federation of Thai Capital Market Organisations (Fetco).

Fetco’s investor confidence index (ICI) for the next three months, based on a survey in May, fell to 91.66 from 92.65 registered earlier.

A figure below 80 points is considered bearish, 80-120 is neutral and over 120 is bullish.

The ICI has slipped for four months in a row from February’s reading of 143.09.

The confidence in May of brokerage firms and retail investors, respectively, fell to 80 from 112.50 and 89.13 from 105.12.

But the survey said the confidence of foreign investors jumped to 100 from 75 in May, while institutional investors’ confidence rose to 90 from 72.33.

Retail investors, brokers and institutional investors see Thailand’s economic recovery as the main supporting factor for the stock market, while foreign investors view government policies and tourism as factors propelling confidence.

Factors affecting foreign investors’ confidence for the next three months include the domestic political situation, inflation and the European Central Bank’s monetary policy decisions.

On the other hand, fund flow volatility is the most negative factor for institutional investors, while domestic political uncertainty warrants the highest concern among retail investors and brokerage firms.

“The ICI is starting to stabilise after a steep decline,” said Fetco chairman Paiboon Nalinthrangkurn. “It is possible that the stock index is nearing its correction, while foreign investors are more likely to invest in Thai equities again if given a clear announcement on the general election date.”

The meeting between US and North Korean leaders is not expected to affect the Thai bourse substantially, as investors are more concerned with the global trade war because Thailand is an important trading partner with China, Mr Paiboon said.

Despite ebbing investor confidence and foreign net selling of domestic equities, Thailand’s stock market remains healthier than some peers, he said, noting that Philippine shares have dipped 10% year-to-date and Thai stocks’ price-to-earnings ratio is still supported by demand from institutional investors.

Sombat Naravutthichai, secretary and managing director of the Investment Analysts Association, said a poll of 33 investment analysts put the Stock Exchange of Thailand index at 1,860 points for this year.

Some 63.6% of the analysts expect Thailand’s general election to take place by next May, with the rest seeing an election after May, Mr Sombat said.