Rising geopolitical tensions and the hawkish stance of the US Federal Reserve (Fed) remain major concerns for investors over the next three months, said the Federation of Thai Capital Market Organizations (Fetco).
The Investor Confidence Index (ICI), which predicts market conditions over the next three months, stood at 103.92 in July, up 60.9% from the previous month, hovering back to the neutral zone.
Kobsak Pootrakool, chairman of Fetco, said tourism recovery is the key driver boosting confidence, followed by the Fed's monetary policy and local economic recovery.
Investors are concerned about geopolitical tensions, the Fed's interest rate hike to tame inflation and rising inflation triggered by rising commodities prices in the global market.
The ICI indicates that the most attractive sector to investors is banking, while the least attractive is the fashion sector.
The most influential factor driving the Thai stock market is tourism recovery and the most important factor impeding the Thai stock market is geopolitical concerns.
In July, the SET Index moved in a tight range from 1,533.37 to 1,576.41 on the back of worries over the global recession, especially in the US where inflation spiked to a 40-year high.
The energy crisis in Europe triggered by the supply cut by energy companies in Russia and the rising number of Covid-19 cases also dampened sentiment.
However, the Fed raising its policy rate by 75 basis points, as the market earlier anticipated, helped ease some worries.
The SET Index at the end of July closed at 1,576.41, up 0.5% from the previous month.
Foreign investors returned from last month's net sellers to become net buyers of 4.66 billion baht.
External factors to monitor include geopolitical tensions from both the Russia-Ukraine conflict and tensions in the Taiwan Strait, the efficiency of the Fed's taming inflation approach and how the European Central Bank will solve the energy crisis in Europe.
Thai listed companies' earnings may be impacted by the trend of economic slowdown and currency issues in neighbouring countries such as Myanmar and Laos, he added.
In the meantime, local factors to keep an eye on include clearer signs of tourism recovery as the government eased travel restrictions, which will have an impact on economic recovery.
Also, the Covid-19 situation will continue to be factored in, said Mr Kobsak.
