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Investor confidence in the Stock Exchange of Thailand (SET) over the next three months dipped into a “bearish” zone for the first time in 11 months due to recession fears, according to a capital market group’s survey.
The investor confidence index in June tumbled by 23 per cent from the previous month to 64.57, the Federation of Thai Capital Market Organizations (Fetco) said on Thursday.
In the survey, any level below 79 is considered bearish, or downward, while a level above 120 suggests a bullish trend and the middle indicates a neutral zone. The index stood in the neutral zone in the past five months.
Fetco chairman Kobsak Pootrakool said the key factor which dragged investor confidence down was the tightening of the US monetary policy to curb growing inflation by hiking interest rates, which could result in recession.
Other factors include rising global commodity prices and worries about the Covid-19 outbreak, especially the subvariant BA.4 and BA.5.
According to the survey, foreign investors sold a net of 30 billion baht in June, which is the first net selling since December 2021. The SET index as of June also shed 5.7 per cent from the previous month to 1,568.33.
However, expectations on Thailand’s tourism recovery remain the key supporting factor to attract foreign fund flow to the country.
Kobsak said external factors to watch out for are the Fed’s interest rate hikes, the fallout from the Russia-Ukraine war, and the outbreak situation in China. Meanwhile, internal factors are the Bank of Thailand’s monetary policy meeting in August, as well as the local outbreak situation.
“Currently, the capital market is highly volatile,” Kobsak said, advising investors to exercise caution before trading.