Investor confidence at 14-month low
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CAPITAL MARKET investor confidence in Thailand has dropped significantly for the coming three months due mainly to the economic slowdown, said the Federation of Thai Capital Market Organisations (FETCO), prompting it to downgrade the investment conditions
The survey found that the FETCO NIDA investor sentiment for the three months starting in August had dropped to 57.27 from 98.28 in the previous survey.
All groups of investors – foreign institutional, proprietary, retail and domestic institutional – agree that the markets will turn bearish over the next three months.
The index measures the confidence of all four types of investors and ranges from 0-200 points, with lower than 80 bearish, 80-120 neutral and more than 120 bullish.
The confidence of securities firms has dropped by 71.43 per cent, which means it is now at a 14-month low.
There is 28.57 points on the index, indicating an extremely bearish mood, while the confidence of foreign institutional investors experienced the least plunge – 12.5 per cent to stand at 62.5 points.
Investors said contractions is the best place to invest in the next three months and the worst place is steel, while the news having the most positive impact on capital markets is the government’s economic measures. The worst news is the current status of the economy.
Amornthep Chawalla, director of the research centre at CIMB Thai, said the economy will continue to recover slowly as the drop in export means it has a chance to expand less than 3 per cent this year.
Domestic consumption is still weak from low purchasing power while the private sector is still waiting for the government’s investment in mega-infrastructures projects, meaning the tourism sector is the only hope left for growth in the remaining months of 2015, he added.
Amornthep said the baht has a chance to reach Bt36 per US dollar by the end of the year from the expected strengthening of the dollar but it could appreciate in |the short term from a US interest rate |hike.
He said Thailand’s policy interest rate is expected to be maintained at 1.5 per cent for the whole year to support the economy.
“If there is a technical recession, the Bank of Thailand’s Monetary Policy Committee might move to lower the benchmark lending rate once again and that could depreciate the baht even further than expected,” he concluded.
The UOB Global Economics and Markets Research team expects the US Federal Reserve to raise interest rates in September while it believes China’s stock market roller coaster could continue in August but is unlikely to pose systemic risk to the global financial system.
The research team maintains a neutral allocation on equities on a valuation and a lack of catalysts basis.
