“FETCO ICI retreats to “bearish” zone

Editorial Staff

“FETCO ICI retreats to “bearish” zone

Sentiment undermined by political conflicts and economic slowdown”

Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organizations (FETCO), said “the FETCO Investor Confidence Index (FETCO ICI) in May 2023 (survey conducted from 22-31 May 2023), which anticipated the market condition over the next three months, is at 77.70, down 26.8 % from the previous month and slipping into “bearish” zone for the first time in the past eight months.

The new government formation after the election is the most supportive factor to boost confidence, followed by tourism recovery and local economic recovery. However, investors are most concerned about post-election political conflicts, local economic slowdown and financial transaction tax implementation on securities trades on the Stock Exchange of Thailand (SET).

Highlights of FETCO Investor Confidence Index surveyed in May 2023 are overall FETCO Investor Confidence index for the next three months (August 2023) is in “bearish” zone (40-79 of FETCO ICI Criterion), down 26.8 percent from the previous month to 77.70, confidence of proprietary and institutional investors is in “neutral” zone while that of retail and foreign investors is in “bearish” zone.

Most attractive sector is Banking (BANK), least attractive sector to investors is Petrochemicals & Chemicals (PETRO), most influential factor driving the Thai stock market is the formation of the new government after the election, and most important factor impeding the Thai stock market is the post-election conflicts

The survey results in May 2023 show that only proprietary investors are positive about the sentiment with the indicator rising 14.3 % to 100.00. Confidence of the remaining three types of investors is down, retail investors falling 24 % to 73.61, institutional investors declining 18.5 % to 91.67 and foreign investors dropping 40 % to 75.00.

During the pre-election in the first half of May, SET Index continued to rise, bucking global trend, which was shattered by worries over global economy and delay in raising public debt ceiling. However, the Thai benchmark index was the worst performer, dragged by concerns over the new government formation and direction of economic policy. Tension was eased later of the month after an MOU was signed by coalition parties. At month-end, SET Index closed at 1,533.54, up 0.3% from the previous month.

Foreign investors continued to unload Thai shares for fourth consecutive month with 33.04 billion baht worth of net selling. Year-to-date, they totaled net selling of 97 billion baht. The average daily trading was at 54.81 billion baht in May.

External factors to monitor include inflation situation in key economies as inflation may accelerate in the latter half of this year and may pressure central banks to raise their policy rates. This will consequently impact the global economic slowdown.

In addition, geopolitical conflicts remain while focus is also on how China’s slower-than-expected economic growth will be unfolded. Domestically, eyes are on the new government formation. The slower it is formed, the higher concern it will be as it will impact the approval of budget bill for 2024 fiscal year timeline. In addition, investors require clarity on economic policies that the winning party has announced. Those policies include stimulus package on consumption, minimum wage implementation and energy related direction such as electricity bill reduction, as well as tax related policy.