The Investor Confidence Index (ICI) remained in bullish territory for the third consecutive month in February as investors bet on a brighter Covid-19 outlook after vaccine distribution began and more fund inflows headed to emerging markets, driving old economy stocks to outperform new normal stocks this year.
However, the rising number of Covid-19 cases tarnished investors' confidence the most, followed by worries over international conflicts and a local economic retreat.
Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organizations (Fetco), said the ICI for the next three months rose to 152.19, a 14.8% increase from the previous month, hovering in the bullish zone for the third consecutive month.
The roll-out of the first vaccine batch is the strongest supporting factor, followed by the prospect of foreign fund inflows and the country's economic recovery.
The most attractive sectors were tourism and leisure, followed by banking and energy. Steel, fashion and property development were the least attractive sectors.
"For the first time since the start of the pandemic, investors have chosen tourism as the most attractive sector. This demonstrates growing confidence in investment after vaccination. I expect a stronger economic recovery will happen in second half of this year and many industries will return to normal next year," Mr Paiboon said.
Investors are keen on the prospect of lockdown easing in several European countries and the US as the vaccination roll-out has prompted positive change in economies.
Investors are also monitoring the US economic stimulus package, while the bond yield increases in several markets.
Local factors to watch include vaccine distribution, the government's continued stimulus packages and the tourism recovery outlook.
The result of the third reading of the proposed constitutional amendment is also crucial as it could trigger more political turmoil.
Asia Plus Securities (ASPS) believes funds will continue to move away from secure assets towards risky assets such as stocks in Asia, including Thailand, and begin to shift from tech stocks to cyclical stocks.
Ariya Tiranaprakij, deputy managing director of the Thai Bond Market Association, said the interest rate expectation index in March for the Monetary Policy Committee's (MPC) policy rate rose to 47 from the previous survey, remaining in the unchanged zone.
This suggests the MPC is keeping its policy rate unchanged at 0.5% at its meeting in March, she said.
Thai long-term bond yields also rose about 50 basis points following the rise in the US bond yields. However, this is expected to last for a short period because Thailand's economic recovery remains sluggish.
Corporate bond issuance is projected to be 800-900 billion baht this year, said Ms Ariya.