The investor confidence index (ICI) measured by the Federation of Thai Capital Market Organizations (Fetco) retreated to the bearish zone in February from neutral a month earlier as international conflicts, inflation and the local economic slowdown weigh on sentiment.
The February ICI, which anticipates market conditions over the next three months, was 66.1.
The confidence of retail investors, proprietary investors and foreign investors was in the bearish zone, with only institutional investors having neutral sentiment.
The government's stimulus package was the most supportive factor, followed by fund inflows and the policy rate cut by the Bank of Thailand's Monetary Policy Committee (MPC).
The most important factor impeding the Thai stock market was international conflicts, said Fetco chairman Kobsak Pootrakool.
The confidence of retail investors was down 37.9% to 50 and that of foreign investors decreased 33.3% to 66.7.
The confidence of proprietary investors rose 25% to 75, while that of institutional investors edged up 3.8% to 115.4.
The banking sector appealed to investors the most, while automotive was the least attractive sector.
"In February, the Stock Exchange of Thailand [SET] index continued to retreat, hurt by several factors, such as anticipation of an intensifying trade war as a result of US President Donald Trump's tariffs imposed on Canada, Mexico and China," said Mr Kobsak.
MSCI stock portfolio adjustment in the Thai equities market, selling pressure from long-term equity funds redemption and lower earnings than expected for listed companies weighed on the index, despite positive sentiment from the MPC's rate cut by 25 basis points to 2%, he said.
At the end of February, the SET index closed at 1,203.72 points, down 8.4% from the previous month, with an average daily trading volume of 52 billion baht.
Foreign investors were net sellers of 6.62 billion baht and have cashed out some 18.1 billion this year.
External factors to monitor include the trade war and its impact on Asia, and the Russia-Ukraine ceasefire agreement, according to Fetco.
Locally, investors should monitor fiscal policies aimed at lifting the economy as well as the capital market, said Mr Kobsak.