ICI climbs back to “neutral” zone

Chatrudee Theparat

ICI climbs back to “neutral” zone
Local government formed and tourism recovery to boost confidence,
uncertainty on government establishment and international conflicts still cloud sentiment”

Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organizations (FETCO), said “the FETCO Investor Confidence Index (FETCO ICI) in June2023 (survey conducted from 22-30 June), which anticipated the market condition over the next three months, is at 81.62, up 5.1 % from the previous month and moving back to “neutral” zone. The most supportive factor is pinned on the new government formation after the elections, followed by tourism recovery and local economic recovery. However, investors are most concerned about the uncertainty over the government formation, followed by international conflicts and fund outflow.

Kobsak Pootrakool

Highlights of FETCO Investor Confidence Index surveyed in June 2023 are overall FETCO Investor Confidence index for the next three months (September 2023) is in “neutral” zone (80-119 of FETCO ICI Criterion), up 5.1 percent from the previous month to 81.62; confidence of retail and proprietary investors is in “bearish” zone while that of institutional and foreign investors is in “neutral” zone; most attractive sector is Banking (BANK); least attractive sector to investors is Steel and Metal Products (STEEL); most influential factor driving the Thai stock market is the formation of the new government after the elections and most important factor impeding the Thai stock market is uncertainty over the government formation.

“The survey results in June 2023 show that only foreign investors’ confidence is up, rising 33.3 % to 100.00. Retail investors’ confidence falls 10.6 % to 65.81 while that of proprietary and institutional investors decreases 50 % to 50.0 and 6.5 % to 85.71 respectively.

SET Index moved up during the first half of June 2023, tracking global market gain as sentiment was upbeat by FED’s slowing pace of its interest rate hike, However, the latter half saw the benchmark index underperformed global markets dragged by uncertainty over the government formation, Stark Corporation’s fraud that hurt investor’s confidence and foreign investors’ continued selloff.

In addition, concern over global interest rate direction arose after FED signaled it would raise its policy rate two more times while the Bank of England raising its policy rate 50 bps, triggered SET Index to fall below 1,500, hitting the lowest level in two years before hovering back to close at 1,503.10 at month-end, which was a 2 % drop from the preceding month. Average daily trading in June was at 47.62 billion baht with foreign investors unloading Thai shares worth of 8.61 billion baht for the month. Year-to-date, foreign investors’ net sell totaled 105. 62 billion baht.

External factors to monitor include FED’s hawkish move to curb inflation, other interest rate moves in key economies including European Central Bank and Bank of England, lingering Russia-Ukraine conflicts, US-China trade barrier and China’s economy that tends to be weakened. Locally, eyes are on the prime minister vote and selection of the House speaker. Additional factors include the stability of the government formation, which will have a direct impact to the country’s administration and economy, and Thailand’s exports, which has continued to be contracted.