By PHUWIT LIMVIPHUWAT
Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organisations (Fetco), said the drop in the Investor Confidence Index (ICI) stems largely from the lack of clarity on the political landscape.
However, Paiboon said that 2019 would mark a stronger year for the Thai stock market than was seen in 2018. He predicts the Stock Exchange of Thailand (SET) will reach 1,782 points by the end of 2019, citing a weakening US dollar and increased foreign investment as key factors.
“The political uncertainty in Thailand is the largest concern for investors because of its unpredictable nature,” Paiboon said. “Unlike economic risks such as the trade war, oil prices or rising interest rates which can be analysed and predicted by economists, our insight on the upcoming political situation is much less clear.”
Paiboon said that the apparent postponement of the oft-delayed general election, most recently slated for February, has damaged investor confidence.
But he said that if a clear election date is released in the near future, and that this falls within the timeframe set by the constitution, investor confidence will recover.
“Another political concern is whether the next government, which is likely to be a mixed government without a strong majority, can swiftly be formed and push out new economic policies,” Paiboon said.
The plunge in the ICI for the next three months dragged down the gauge to 92.75 points in March, according to Fetco. Of all the investor categories, retail and proprietary traders took the biggest hit, falling by 10.84 per cent and 12.49 per cent, respectively. Paiboon attributed this to their profile of being short to medium-term investors.
In contrast, the ICI reading for long-term investors, such as local institutions, increased 4.17 per cent.
In addition to the uncertain political situation, investors are also concerned about the US-China trade war and the shutdown of the US government, said Prinn Panitchapakdi, the country head of CLSA Securities, Thailand.
Prinn, sharing Paiboon’s view that the stock market will do better this year, pointed to an expected increase in the number of Chinese investors in the Thai market as a key factor.
“The Chinese One Belt, One Road (OBOR) initiative is likely to show impacts in 2019, with many Chinese investors looking to find local investment partners in Thailand,” he said.
Prinn said Chinese investors have shown interest in the energy and infrastructure sectors.
Paiboon said: “Another promising trend in 2019 is the weakening dollar, which has weakened due to the signalling of the US Federal Reserve to only hike US interest rates once in 2019.
“When the US dollar weakens, emerging markets such as Thailand will perform better.”