The Investor Confidence Index (ICI) returned to the bullish zone last month amid optimism over the recovery of tourism and the domestic economy, but uncertainties related to US interest rate policy and global Covid-19 infections are still weighing on the outlook.
Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organizations (Fetco), said the November ICI, which anticipates market conditions over the next three months, rose 14.3% from the previous month and returned to the bullish zone at 124.42.
A reading higher than 120 indicates the market is bullish.
Investors said the tourism recovery was the most important reason for their optimism, followed by the domestic economic recovery and the US Federal Reserve's seemingly slower pace of rate hikes.
However, uncertainty surrounding the Fed's next move has clouded sentiment the most, followed by Covid-19 infections and the introduction of the financial transaction tax on securities trades at the Stock Exchange of Thailand (SET).
The survey found retail investor confidence is in the neutral zone, while proprietary, institutional and foreign investors are bullish. The ICI of retail investors has fallen 3.7% to 109.2, while that of proprietary investors rose 28.6% to 142.86.
Local institutional investor confidence declined 0.5% to 129.41, while that of foreign investors surged 40% to 140.
The SET Index moved in a tight range last month as the Fed slowed its pace of rate hikes amid tamer inflation figures. Thai GDP expanded 4.5% in the third quarter, reflecting an acceleration of growth in the second half of the year.
Kobsak: Investors keen on tourism
However, sentiment was pared back by concerns that the overall economy may continue to be impacted by Covid-19 infections, especially in China.
The Thai government's plan to finally enforce the financial transaction tax on securities trades in 2023 also weighed on investor confidence.
The SET Index closed at 1,635.36 at the end of November, up 1.7% from the previous month, with foreign investors net buyers of 30.1 billion baht worth of shares. Year-to-date foreign investors have been net buyers of 184 billion baht worth of Thai shares.
Fetco said external factors to monitor include China's Covid-19 restriction measures following widespread protests against the zero-Covid policy. Although the pace of US inflation has slowed, it remains above target, which will influence the Fed's decision to continue robust rate hikes longer than the market earlier anticipated.
European economies may face a recession soon, mainly driven by the Russia-Ukraine war that has led to an energy crisis and surging inflation.
Local investors in Thailand are paying attention to an anticipated general election next year and planned stimulus measures.