Investor confidence for the three months into August remains in neutral territory as bullish hopes based on government stimulus are weighed down by listed companies' performance and ambiguous economic recovery.
The Investor Confidence Index (ICI) for May rose by 21% to 96.93 from April's 80.40, according to the monthly survey by the Federation of Thai Capital Market Organisations (Fetco).
An index below 80 points is considered bearish, 80-120 is neutral and over 120 is bullish.
Investors were encouraged most by anticipated domestic economic growth from government policies and listed companies' earnings in the second quarter, as well as the mitigation of the Covid-19 pandemic and progress in development of vaccines, Fetco chairman Paiboon Nalinthrangkurn said on Tuesday.
"At the same time, concerns over the performance of listed companies are the biggest drag on investor confidence, followed by worries about the recovery of the domestic economy and tourism, and a second Covid-19 outbreak," Mr Paiboon said.
The survey indicated the food and beverages sector drew the most interest from investors, while tourism and leisure was the least attractive.
Fetco's survey showed the ICIs for all investor groups rose, but confidence still remained in the neutral zone, except for proprietary traders whose confidence fell into the bearish territory.
Economic factors warranting further monitoring included the economic growth of Thailand's major trading partners, controlling the spread of Covid-19 during the easing of lockdown measures, effects of monetary and fiscal stimulus measures and the US-China trade war, Mr Paiboon said.
The Interest Rate Expectation Index for June showed market participants expect the policy interest rate to be maintained at 0.5% when the Monetary Policy Committee (MPC) next meets on June 24, said Ariya Tiranaprakij, senior executive vice-president at the Thai Bond Market Association.
Yields of 5-year and 10-year government bonds were likely to remain unchanged over the next 11 weeks as the MPC had lowered the interest rate at the previous meeting and would likely evaluate economic conditions after the easing of the lockdown, Ms Ariya said.
Bond yields may, however, increase in the second half after the issuance of government bonds for funding of economic stimulus measures, she said.
Factors supporting this outlook included demand in the bond market, the slowdown of the domestic economic growth rate, trends in global interest rates and the supply of government bonds, which may increase from the issuance of bonds to stimulate the economy.