Investor confidence plunges amid rising political unrest
published : 14 Sep 2020 at 15:03
Investor confidence in Thailand for the three months to November has sunk into bear territory amid a sluggish economic recovery and flaring domestic political tensions.
The investor confidence index (ICI) fell 21% to 67.5 from July’s 85.3, according to a monthly survey by the Federation of Thai Capital Market Organisations (Fetco) released on Monday.
An index below 80 points is considered bearish, 80-119 is neutral and over 119 is bullish.
Foreign investor confidence plunged deep into bear territory at 25, while the other three investor groups’ ICIs were in the neutral zone. Retail investors’ ICI rose slightly to 90.63, proprietary traders' ICI edged up to 100 and confidence of the local institutional investor group dropped to 87.50.
The food and beverage sector drew the most interest from investors, while banking was the least attractive.
Factors pulling down investor confidence include the domestic political situation, Thailand’s economic slowdown and uncertainty over the economic recovery in European countries and the US, said Fetco chairman Paiboon Nalinthrangkurn.
Mr Paiboon said domestic economic growth is the most important factor buoying the Thai stock market, while the political situation was the biggest drag on the bourse.
Additional negative factors include the domestic political situation around the Sept 19 protest, concerns about a second wave of Covid-19 in the country and the poor performance of SET-listed companies in the second quarter, he said.
Domestic factors warranting a close watch include the uncertainty surrounding the renewal of government support measures which are set to expire, the risk of higher rates of unemployment and business closures, and increasing political unrest.
“In the short term, we are waiting for the new Finance Minister to announce new measures to boost the economic recovery and speed up disbursement of the government budget, especially urgent spending of 400 billion baht on projects to shore up economic growth, as well as the Bank of Thailand’s soft loan measure to support SMEs, which has granted loans of only around 100 billion baht out of 500 billion in total,” said Mr Paiboon.
Major factors boosting investor confidence are comprised of domestic economic growth followed by US monetary policy, capital flows and an anticipation of a Covid-19 vaccine, he said.