By ERICH PARPART
OVERALL investor confidence for the next three months has declined by 14.17 per cent as the sluggish domestic economy has pulled down domestic sentiment, but foreign investors' confidence has risen by 30.01 per cent on the increased tangibility of infrast
The survey found the FETCO NIDA Investor Sentiment Index for the three months starting in June had dropped to 88.16 from 102.72 in the previous month’s survey. Confidence of proprietary, retail, and domestic institutional investors decreased by 36.36, 15.19 and 14.98 per cent respectively.
However, the sentiment of foreign institutional investors went from “bearish” at 76.92 points to “neutral” at 100 points in the same period. Confidence of proprietary, retail and domestic institutional investors was 77.77, 88.17 and 73.68 points respectively.
The index measures the confidence of all four types of investors and ranges from 0-200 points, where lower than 80 is bearish, 80-120 is neutral and more than 120 is bullish.
“Foreign investors always look for things in the long term, and the increased tangibility in the government’s infrastructure projects has contributed to the increase in their confidence in the Thai capital market for the next three months,” Voravan Tarapoom, chairwoman of FETCO and chief executive officer of BBL Asset Management, said yesterday.
The survey also found that investors believe petrochemical stocks are the most interesting for the Stock Exchange of Thailand while investment in banking is the least desirable.
“The confidence of domestic investors has declined mainly because of the economic slowdown led by weakened domestic consumption, which is a result of high household debt and tightening purchasing power. Nevertheless, BBL Asset expects the economy to be better in the second half as exports are expected to pick up from the depreciation of the baht along with the expected improvement on the consumption side,” she said.
Voravan said domestic consumption should improve in the next three to six months as the level of personal debts such as credit cards should be lower by then and middle-income purchasing power should be able to resume. Meanwhile improved government spending should continue to support the economy in the next period.
BBL Asset has maintained its estimate that gross domestic product will expand by 3-3.5 per cent this year, while expecting the Bank of Thailand’s Monetary Policy Committee to hold the benchmark interest rate at 1.50 per cent at its meeting tomorrow.
Kampon Adireksombat, chief economist and strategist at Deutsche Tisco and Tisco Financial Group, said government spending in the first quarter of this year was 30-40 per cent more than in the same period in 2014. The increase in the government budget deficit from Bt250 billion in fiscal 2014 to Bt390 billion in fiscal 2015 is supporting the economy, while domestic consumption and exports are picking up, though unevenly.
He said consumption of non-durable goods was recovering, up by 1.3 per cent in the first quarter when compared to final quarter of 2014. However, consumption of durable goods contracted by 2.3 per cent in the same period.
Non-commodity exports declined but less than before, by just 0.3 per cent, as export of automobiles and hard-disk drives is expanding, but export of commodity products contracted by 6.4 per cent when compared with the previous quarter.
“The recoveries vary across sectors but there are definitely signs that things are improving on the domestic consumption and export fronts,” he said.
Tisco Financial Group expects GDP to expand by 0.8 per cent in the second quarter, 1 per cent in the third, and 1 per cent in the fourth after expansion of 0.4 per cent in the first quarter of this year.