Stock investor sentiment for the three months to July rose from last month's survey, buoyed by persistent capital inflows and government measures to revitalise the economy.
The Fetco Investor Confidence Index for the three months advanced to 102.74, up 6.86% from April's 96.14, said Kanate Wangpaichitr, president of the Federation of Thai Capital Market Organizations. A figure below 80 points is bearish, 80-120 is neutral and over 120 is bullish.
The Bank of Thailand's Monetary Policy Committee said on Wednesday downside risk to this year's growth was increasing because of heightening internal headwinds. The central bank trimmed its GDP growth forecast to 3.1% from 3.5% after it cut the export value outlook to a 2% contraction from zero growth.
Mr Kanate said the construction sector was the most attractive for stock investors while steel remained the least attractive. The survey found the confidence of all investor types improved, with foreign investor confidence surging the most at 26.98% from the previous survey.
"Foreign investors believe government policies are the key factor bolstering the stock market. Capital flows, tourism and the monetary policy of the US Federal Reserve are other boons to the Thai stock market," he said.
Retail investors cited capital inflows as the main reason for their improved confidence, followed by domestic economic growth and government policies, said Mr Kanate.
However, Thailand's sluggish economy dented investor confidence and the magnitude of the drought will intensify, taking a toll on the farm sector and exports, he said.
"Investors remain concerned about the slow recovery of Thailand's economy and global economic stagnation, especially China's slowdown," said Mr Kanate.
The SET index gained 1.22% yesterday to finish just shy of the 1,400-point level, propelled by the oil price rising to its highest level in six months at US$46.24 a barrel.
Buying in Thai shares intensified in the afternoon session, closing at 1,399.31 points, up 16.9 points, in brisk turnover of 43.17 billion baht. Energy and petrochemical large caps were at the centre of the buying spree.
PTT Plc added 13 baht to 305 baht, PTT Exploration and Production Plc (PTTEP) advanced 3.50 baht to 75.75 baht, PTT Global Chemical (PTTGC) gained 3.75 baht to 61.50, and IRPC Plc (IRPC) surged 20 satang to five baht. Charoen Pokphand Foods Plc (CPF) rose two baht to 28 baht after its first-quarter earnings beat analysts' forecasts.
Chai Chirasevenupraphund, a strategist with Capital Nomura Securities, warned that investors should be cautious as the SET is likely to retreat following yesterday's surge.