The Federation of Thai Capital Market Organizations' (Fetco) investor confidence index (ICI) plunged to a five-month low and returned to the bearish zone in October, weighed down by the Israel-Hamas conflict and capital outflows.
The October survey, which was conducted during Oct 20-30 and gauges market conditions for the next three months, showed the ICI dropped by 31.5% from the previous month, slipping into the bearish zone from neutral.
Foreign investors' confidence declined 16.7% from the previous survey, while confidence among retail, brokers and institutional investors dropped by 45.3%, 34%, and 31.6%, respectively.
"The ICI had shown a relative improvement for a couple of months but last month it slipped into the bearish zone for the second time this year as the Middle East conflict erupted," Fetco chairman Kobsak Pootrakool said on Wednesday.
The last time the ICI resided in the bearish zone was early this year due to the US and European banking turmoil, he added.
"As of now, it remains very uncertain whether the war would intensify or not and whether other countries like Yemen, Lebanon, Iran and the US would take part. That is the most negative factor hurting investor confidence," he said.
Thailand's main stock index has fallen about 15% so far this year, with foreign investors selling about 175 billion baht (US$4.93 billion) of Thai shares. The highest outflow was seen in October, when the Stock Exchange of Thailand (SET) index slipped below the 1,400 level to finish at 1,381.83 points, down 6.1% from the previous month.
Nonetheless, a positive factor has emerged in terms of exports which have stabilised since September while inflation remains low. Even though the recovery of the tourism sector has been weaker than expected, the government is likely to introduce additional measures to stimulate the growth of this sector next year, said Mr Kobsak.
Factors to monitor include government policies, particularly in terms of hiking the minimum wage and the 10,000-baht digital wallet scheme, which is possibly going to be delayed until September 2024, hurting the GDP growth outlook for 2024. In addition, the levels of household debt and public debt, which have reached 90.07% and 61.7% of GDP, respectively, have raised concerns this might negatively affect the country's credit rating.