The Federation of Thai Capital Market Organizations' (Fetco) Investor Confidence Index (ICI) remained in the neutral zone for a fourth consecutive month in May, attributed to international conflicts, inflation and baht fluctuation.
Fetco chairman Kobsak Pootrakool said the May ICI, which anticipates market conditions over the next three months, was 100.72, as the confidence of retail, proprietary and foreign investors is in the neutral zone, while institutional investors are bullish.
The confidence of retail investors rose by 26.7% to 96.88, proprietary investors gained 28.6% to 100, institutional investors dipped 0.7% to 122.22, and foreign investors were steady at 100, he said.
The government's stimulus measures were the most positive factor increasing confidence, followed by the US Federal Reserve's monetary policy and the local economic recovery.
The major impediment to local investor sentiment was international conflicts.
"The Stock Exchange of Thailand [SET] moved in a tight range in May as the market looked for fresh cues. The latter half of the month saw the Thai index track regional peers' downward trend on concerns the Fed may leave its policy rate at a high level," said Mr Kobsak.
In addition, foreign investors were sellers ahead of MSCI's weighting adjustment to mitigate their exposure risk. The local political situation and ongoing conflicts in the Middle East dampened sentiment further, he said.
The most attractive sector on the SET is food and beverage, while the least attractive sector is fashion, said Mr Kobsak.
At the end of May, the SET index closed at 1,345.66 points, down 1.6% from the previous month with an average daily trading volume of 45.6 billion baht. Foreign investors were net sellers of 16.6 billion baht and their year-to-date selling totalled 81.6 billion.
External factors to monitor include a global economic recovery as a result of easing monetary policy, a Chinese rebound following stimulus in the second half of the year, and uncertainty about conflicts in the Middle East.
Domestically, investors are watching baht volatility, the government's digital wallet scheme, and expectations the Bank of Thailand may cut its policy rate later this year. Local political stability also remains a concern for foreign investors, he said.