The Federation of Thai Capital Market Organizations (Fetco) said the economy will recover in the second half, expecting the Russia-Ukraine conflict to be resolved and oil prices to decline.
Fetco maintained its forecast for the SET Index at 1,800 points. Foreign funds of around 112 billion baht reportedly entered the bourse during the first three months, the highest in 15 years.
Fetco chairman Paiboon Nalinthrangkurn said analysts downgraded their annual forecast for GDP growth from 3.71% in January to 3.09% in March, considering the pandemic flare-up, the Russia-Ukraine conflict, rising energy prices, high inflation and the global economic slowdown.
Analysts may revise and raise the figure in the second half of the year if tourism recovers. GDP has a chance to grow 4% or more next year, Mr Paiboon said.
He said the SET Index may hit 1,800 points in the second half thanks to capital inflows.
The stock market is expected to remain muted in the second quarter because many downside risks still persist, especially the war between Russia and Ukraine.
The stock market may still see capital inflows but they won't result in a rally.
However, investors can expect positive sentiment in the second half if the war situation improves, causing oil prices and inflation to drop.
The decrease in inflation will allow the government to use funds for infrastructure projects to support economic growth instead of fuel subsidies, he said.
Mr Paiboon said the Covid outbreak is still a concern but if no new strain emerges, the tourism industry will likely recover.
The Ministry of Finance's decision to postpone imposing tax on stock trading also pleased long-term investors and the capital market should take full advantage of the positive sentiment to further develop the market and attract foreign fund inflows, he said.
The Fetco Investor Confidence Index (Fetco ICI) in March, which anticipates the market condition over the next three months, is at 117.92, up 4.3% from the previous month and remains in the neutral zone.
The most supportive factor is listed companies' first quarter earnings, followed by hopes that the Russia-Ukraine conflict will ease and fund inflows.