Stock investor sentiment at 8-month low
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Stock investor sentiment at 8-month low

Protracted uncertainty over government formation the main cause, capital market survey finds

Uncertainty over the formation of a new government has dragged investor confidence in the country’s stock market to an eight-month low, a capital markets group said on Wednesday.

The Federation of Thai Capital Market Organisations (Fetco) said its overall investor confidence index fell to 77.70 from 110.09 in May, slipping into the “bearish zone” for the first time in eight months.

Foreign investor confidence was also in the same zone, as they have sold a net 102.4 billion baht worth of Thai shares so far this year, and 31 billion baht in May alone.

In the first half of May, before the election in which the Move Forward and Pheu Thai parties won a combined 292 seats, the Stock Exchange of Thailand (SET) index had continued to rise, bucking a global trend, Fetco said.

But, post-election, the index was the “worst performer among global markets due to concerns over the new government formation and its economic policies”, Fetco chairman Kobsak Pootrakool said in a statement.

The SET index has fallen 8.6% so far this year, the most in Asia.

Prime ministerial frontrunner Pita Limjaroenrat of Move Forward has formed a coalition with seven other parties but faces an uphill battle in wooing members of the unelected Senate to back him in a vote for premier, which is expected in early August.

Investors are monitoring the economic policies of the election winners, including stimulus measures, wage increases and tax plans, Mr Kobsak said.

“The slower it is formed, the higher the concern will be,” he said, referring to the next government.

In a related development, the Joint Standing Committee on Commerce, Industry and Banking left its economic growth forecast for 2023 unchanged at between 3% and 3.5%, saying that while the tourism sector has gathered strength, exports remain sluggish.

Exports are forecast to be flat or fall by 1% this year, while 30 million foreign tourists are expected, the committee said. The economy expanded 2.6% in 2022.

While the economy remains on its recovery path, slowing global growth continues to affect exports, which have contracted for seven straight months, the group said in a statement.

“If exports don’t recover, other related industries will also be hit,” it said.

The business sector is also concerned about higher interest rates and inflation, particularly if wages are raised in the future, the group said.

A hike in the daily minimum wage to 450 baht promised by the Move Forward Party would increase inflation by 0.82 percentage points, the group said. Current minimum wages range from 328 to 354 baht a day depending on the province.

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