Bangkok--21 Dec--SET
The Stock Exchange of Thailand (SET)’s Board of Governors met today to consider the effects of the Bank of Thailand (BOT)’s regulation to curb speculation in the baht. The regulation, which initially required financial institutions to withhold 30% of foreign currencies bought or exchanged against Thai baht, adversely affected the stock market on December 19. However, the rule has today been relaxed by excluding foreign inflows intended for direct investment and the stock market. This should allay foreign investors’ concern and support the market, SET President Ms. Patareeya Benjapolchai said.
“The SET board noted that Thai investors displayed confidence in the economic fundamentals, as the net sale of about THB 25 billion by foreign investors was balanced by the net purchase of THB 28 billion by local investors. Furthermore, the circuit breaker system, which halts trading in unusual circumstances, functioned well and efficiently,” Ms. Patareeya stated.
The board also acknowledged the cooperation of organizations such as Securities and Exchange Commission, SET and securities companies in compiling a forceful case demonstrating negative market consequences and influencing the policy review, which will now benefit the whole capital market.
Ms. Patareeya also reported to the board that yesterday SET and securities companies had considered separating foreign investors’ accounts and capital from local ones, so BOT can identify external capital inflows. SET, commercial banks and securities firms have indicated to BOT that the separation will apply to non-residents and will be reported weekly to the Bank. Securities firms will specifically identify inflow accounts investing in equity, derivatives and in initial public offerings, and will liaise with relevant organizations.
“It is believed that exempting stock market inflows from the 30% capital withholding regulation will regain investors’ trust. It is important that they maintain confidence in the Thailand’s economic fundamentals, and in a stock market which is offering attractive returns,” Ms. Patareeya added.
The SET Index closed at 622.14, down 108.41 or 14.84% yesterday. Total trading value amounted to THB 72,132 million (approx. USD 2,003.67 million). Total market capitalization as of Dec. 19 was THB 4.6 trillion (approx. USD 127.78 billion), decreasing about THB 800 billion or 15% from THB 5.4 trillion on the previous day. The Market for Alternative Investment (mai) closed at 177.79, down 20.99 or 10.56%, with total trading value of THB 267.71 million. Foreign investors were net sellers at THB 25,124.97 million, while local retail investors were net buyers at THB 28,029.89 million.
On December 19 the “circuit breaker” system halted trading on SET and mai for 30 minutes as the SET Index plunged to 656.49 points, which was 74.06 points or more than 10% down on the previous day’s close.
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