Investor confidence remains in neutral territory for a fourth straight month as fund flow volatility, global trade barriers and the monetary policies of major central banks dampen prospects.
Despite the Federation of Thai Capital Market Organizations (Fetco) investor confidence index (ICI) for the next three months climbing for a second straight month, confidence stayed in neutral territory, said Paiboon Nalinthrangkurn, chairman of Fetco.
The ICI rose 6.7% to 108.11 in August, staying in a neutral range of 80-120. A figure below 80 points is considered bearish, 80-120 is neutral and over 120 is bullish.
Foreign investor ICI rose slightly from the previous month but remained in the bullish zone.
ICIs for proprietary traders and domestic institutional investors increased slightly, while retail investor confidence fell slightly, but all remained within the neutral zone.
Survey results show how investor confidence is buoyed by domestic economic conditions, a decline in net equity sales by foreign investors and the performance of SET-listed companies, Mr Paiboon said.
The banking sector is viewed as the segment with the most interesting investment opportunities among investors, while steel draws the least interest.
Investors, however, remain concerned about global capital flows and the potential impact of trade and investment barriers taking a toll on global trade and global economic growth, Mr Paiboon said.
Inflation rates and interest rate policies, meanwhile, are risk factors that investors are watching closely, he said.
Although the International Monetary Fund has estimated that the global economy will continue to grow at 3.9% this year, there are concerns that the trade war could affect global economic growth in 2020, Mr Paiboon said.
Other factors identified as headwinds for global economic growth include Brexit negotiations, the European Central Bank signalling that its interest rate will be maintained throughout this year and Japan's monetary policy, which may be subject to change.
The impact of a trade war on the Chinese economy could prompt Chinese authorities to ease monetary and fiscal policies, with the yuan's value poised to depreciate as a result, Mr Paiboon said, adding that this could have a spillover impact on regional economies.
Ariya Tiranaprakit, senior executive vice-president of the Thai Bond Market Association, said the interest rate expectations survey index in June indicated that the Bank of Thailand's Monetary Policy Committee is likely to stand pat on the 1.5% policy interest rate at tomorrow's meeting because inflation remains within the targeted range.