The Investor Confidence Index (ICI) rose to a seven-month high in August as stock investors were hopeful the formation of a new government and likely economic stimulus measures would revive the Thai economy, already backed by a strong tourism recovery.
The Federation of Thai Capital Market Organizations' ICI returned to positive territory last month, surging 69.3% from the previous month to 141.27, said chairman Kobsak Pootrakool yesterday.
The survey was conducted from Aug 21-31 and gauges market conditions over the coming three months.
"Investors believe the formation of a government is the most supportive factor for their confidence, followed by expected economic stimulus measures and the tourism recovery," said Mr Kobsak.
Concerns over China's economy are still the major anchor on investor confidence, followed by the local political situation during the government transition and a decision on the implementation of the financial transaction tax, he said.
Mr Kobsak said the Stock Exchange of Thailand (SET) was highly volatile during the first half of August because of uncertainty over the formation of a government following the general election.
Weaker earnings of listed companies, especially in the energy sector, were exacerbated by a drastic drop in oil prices during the economic recovery, he said.
Sentiment was also damaged by China's slumping economy, dragged down by its real estate sector, said Mr Kobsak, as well as Fitch Rating's downgrade of the US's long-term rating from AAA to AA+.
"However, the SET index bounced back to positive territory during the last two weeks after the parliament voted to confirm a new prime minister, which was seen as a sign of political stability," he said.
At the end of August, the Thai index stood at 1,565 points, up 0.6% from a month earlier.
Foreign investors remained net sellers, accounting for 14.7 billion baht, making August the seventh consecutive month for net selling. Foreign net selling tallied 133 billion baht for the first eight months of 2023.
External factors to monitor include the monetary policy of major central banks in the US and Europe, said Mr Kobsak.
Analysts will also be watching China's economy given the real estate crisis triggered by China Evergrande's bankruptcy, he said.
Locally, Mr Kobsak said investors should monitor government policies that support the economy and capital market, the export contraction amid the global economic slowdown, and Thai household debt, which is at 90.6% of the country's GDP.
"The urgent policies investors want to see this year are short-term economic stimulus measures, including for the resurgent tourism industry, as well as supporting free visas for China tourists," he said.
