Confidence index drops for 3rd month
Investor confidence for the next three months has dropped into neutral territory for the first time in nine months as a result of concerns over US monetary policy tightening and geopolitical anxiety, says the Federation of Thai Capital Market Organisations (Fetco).
The Fetco investor confidence index (ICI) for the next three months, surveyed in April, fell by 22.9% to 92.65, dropping from 120.17 into neutral territory.
The index declined for a third straight month, marking the first time in nine months the ICI has fallen into neutral territory, said Fetco chairwoman Voravan Tarapoom.
“The top three factors pulling down investor confidence are external elements including [tightening] US monetary policy, capital inflows and outflows, and geopolitical conflicts,” said Mrs Voravan.
The confidence level of institutional investors, both local and foreign, is bearish for the first time in nine months.
Foreign investors’ confidence fell to 75 from 133.33, while the confidence of local institutional investors fell to 72.33 from 107.14.
On the other hand, domestic factors, including listed company earnings, domestic economic growth, and robust tourism are issues bolstering investor confidence, she said.
Retail investors, brokerage firms, and local institutional investors believe domestic economic conditions are the most influential factors driving investor confidence and the stock market outlook.
Foreign investors, however, believe that listed companies’ performance is the most influential factor driving investor confidence.
Tisco Securities chief executive Paiboon Nalinthrangkurn said global financial markets remain concerned over on the US bond yield curve, whereby the gap between two-year and 10-year yields is narrow at 0.5%.
Historically, the gap has been around 1.50%, he said.
Such concerns have caused capital outflows from emerging markets and many asset classes as the narrow yield gap has induced expectations of an inverted yield curve, prompting expectations of the economy entering a recession, said Mr Paiboon.
He believes Thailand’s stock market is at the end of a bull run as an upside outlook is not clearly foreseeable, but economic fundamentals remain sound as the country’s current account surplus will help absorb risks in case of capital outflows.
Mr Paiboon will become the next chairman of Fetco, effective from June 1.
According to the latest Stock Exchange of Thailand (SET) index survey, respondents believe the US policy interest rate direction is the most pessimistic factor for the Thai bourse because of the impact on fund flows, said Sombat Naravutthichai, secretary-general of Investment Analysts Association.
The survey comprises opinions from 23 brokerage firms, six asset management companies, one investment consulting company, and one gold futures company.
More than half of them expect the SET index will move sideways in the short term, standing at an average of 1,785 points.
The average for support of the SET index is projected at 1,703 points this year, while the resistance is forecast at 1,885.
The bourse’s year-end closing is anticipated at 1,860 points.
Average market earnings per share (EPS) for this year are expected at 110.74 baht and the average EPS growth at yearend is projected at 11.1%.