Investor outlook very bullish
The investor confidence index (ICI), which considers investor sentiment over the upcoming three-month period, rallied to 161.41, representing a surge of 161% over the previous month, reaching the "very bullish" zone for the first time in two years, according to a survey by the Federation of Thai Capital Market Organizations (Fetco).
Paiboon Nalinthrangkurn, chairman of Fetco, said the domestic economic recovery, the direction of the US Federal Reserve's monetary policy and progress in the development of Covid-19 vaccines helped to support the momentum.
However, investor sentiment has been heavily disrupted by local political unrest, followed by a domestic economic slowdown and international conflicts.
In November, the SET index bounced back following a series of positive catalysts, including success stories in the development of Covid-19 vaccines and Joe Biden's victory in the US presidential election that helped lift market sentiment.
Domestic catalysts include the better than expected third-quarter GDP figure, a contraction of 6.4% year-on-year, bolstered by the government's stimulus package aimed at boosting domestic consumption and a 24% spike in listed companies' earnings after the easing of the lockdown.
The Thai stock market saw heavy foreign inflows in November, resulting in it becoming the first month in 2020 that saw foreign investors as net buyers, driving the SET index up to 17.9% from the previous month.
The most attractive sectors were energy and utilities and banking, while the least attractive were tourism and property.
Mr Paiboon forecast SET listed firms' net profit this year to drop by 40% from last year to around 500-550 billion baht.
It anticipates these firms' net profit should increase 40% next year.
The SET target for 2021 is 1,580 points, which is the pre-pandemic level.
Meanwhile, foreign investors should remain net sellers even though there were net inflows of about 32 billion baht last month, he said.
Overall, the Thai economy is still expected to contract by around 6-7% this year.
Ariya Tiranaprakit, deputy managing director of the Thai Bond Market Association, said the interest rate expectation index in December for the Monetary Policy Committee's policy rate slightly declined, but remained in the "unchanged" range.
This range reflects the market's view that the group will hold the rate steady at 0.5% for its December meeting as the rate is already low, said Ms Ariya.
The Bank of Thailand may need to maintain this rate and cut the policy rate if the Thai economy doesn't recover and baht measures have little impact.