The Federation of Thai Capital Market Organizations (FETCO) said this week that Investor Confidence Index (ICI) for the next three months has increased by 21 per cent.
FETCO’s ICI for December stood at 80.75 index points before falling down 56.7 in March.
With the coronavirus outbreak and the performance of the Stock Exchange of Thailand (SET) continuing to improve, the ICI rebounded by 42 per cent to 80.4 in April and is now at 96.93 for May.
“The Investor Confidence Index for the next three months remained neutral as in the previous month, said Paiboon Nalinthrangkurn.
“Investors are encouraged most by the anticipated domestic economic growth followed by government policies and listed company earnings in the second quarter as well as the mitigation of the COVID-19 epidemic situation and the discovery of a vaccine,” he said.
Nevertheless, concerns over the performance of listed companies is still the biggest drag on investor confidence followed by worries about the recovery of the domestic economy and tourism.
Paiboon said during May, the SET index has increased over April following the cabinet approval of the 1.1 trillion baht emergency loans to mitigate the economic impacts from the outbreak on individuals and businesses.
The SET fell from 1,596 points on January 2 to the lowest point of 1,025 on March 23. It has now bounced back up to 1,374 at the closing on Tuesday. Wednesday was a public holiday.
“Economic factors which warrant monitoring include the economic growth of major trading partners, controlling the spread of COVID during the easing of economic activity going forward, the effects of monetary and fiscal measures, and the US–China trade war,” Paiboon said.
Interest rate and bond yield
The results of the latest Interest Rate Expectation Index show that the market is now expecting the Bank of Thailand to maintain the policy interest rate at 0.5 per cent during the Monetary Policy Committee (MPC) meeting in June.
“This is due to the negative economic growth, the trending decline in global interest rates, and the net capital outflow of foreign investments,” said Ariya Tiranaprakij, Deputy Managing Director of the Thai Bond Market Association.
Yields on 5-year government bonds and 10-year government bonds are likely to remain unchanged in the next eleven weeks.
This is because the MPC had just lowered the interest rate at their previous meeting and will likely evaluate economic conditions after the easing of the lockdown.
However, yields may increase in the second half of the year after the issuance of government bonds for use in economic stimulus measures.
“Factors supporting these outlooks include demand in the bond market, the slowdown of the domestic economic growth rate, trends in global interest rates, and the supply of government bonds which may increase from the issuance of bonds to stimulate the economy,” she said.
