Govt in bid to stop short sales of shares, create support fund to boost Thai bourse

[rooster59]

Govt in bid to stop short sales of shares, create support fund to boost Thai bourse

By The Nation

 

 

Deputy Prime Minister Somkid Jausripitak has urged the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC) to issue measures to prohibit short sales and delay forced sales of stocks, even as the government plans the establishment of a stock support fund.

 

 

He explained that the decline in stock market indexes this week has occurred worldwide due to uncertainty following the Covid-19 pandemic.

 

“Investors in the US were concerned about this situation, causing the Dow Jones Index and other global indexes to fell sharply,” he said.

 

“The Thai stock market still has good fundamentals, so we have to create confidence and set appropriate rules and tools to look after the index.”

 

He said that he had instructed SET President Pakorn Peetathawatchai to discuss with the SEC rules to prohibit short sales in stocks.

 

"For investors who buy stocks by using margin, the SET and SEC will consider extending the duration or limit of the investment to delay forced sale as well," he said.

 

He said that he would propose to Prime Minister Prayut Chan-o-cha the establishment of a stock support fund on March 16.

 

"Also, we will establish a committee to supervise and manage the fund, with representatives from the Ministry of Finance, SET, SEC, and Bank of Thailand," he said.

 

"This fund will not use budget but will use funds from the cooperation between government agencies, state banks, and the private sector.

 

"We are still not able to determine the fund size, but it would be large enough to create confidence among investors that we have a certain amount of money to look after our capital market."

 

He said that in 1997, a stock support fund was established with a fund size of around Bt30 billion, which was able to calm down the market. "At this moment, we would need more money because our market has a large market capitalisation of about Bt16-17 trillion," he said.

 

He added that once the fund was established, investors must consider the appropriate time to buy stocks as well.

 

Source: https://www.nationthailand.com/business/30384096

 

-- © Copyright The Nation Thailand 2020-03-15

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[cornishcarlos]

9 minutes ago, rooster59 said:

Also, we will establish a committee

 

And there it is.... Boom

[legend49]

Contradiction as usual. One minute all is sound then we will ban short selling which is a government tool when in recession. SET fell 11% on one day last week, recovered only 1.6% which they classify as a rebound. So happy they dont manage my assets.

 

 

“The Thai stock market still has good fundamentals, so we have to create confidence and set appropriate rules and tools to look after the index.”

 

He said that he had instructed SET President Pakorn Peetathawatchai to discuss with the SEC rules to prohibit short sales in stocks.

[phil2407]

Surely any stock market is buy & sell when you want. Buy low sell high unless long term with dividends 

Wonder if he got the idea from the overvalued Baht lot? 

[lkn]

9 hours ago, rooster59 said:

“The Thai stock market still has good fundamentals, so we have to create confidence and set appropriate rules and tools to look after the index.”

If the fundamentals are good, who cares if people short stocks? In the long run, those people will just lose money.

 

Likewise, if the market drops 10-25%, sure, it sucks, and it would be nicer if it didn’t, but either it was overvalued, so it was a needed correction, or people are overreacting, and the market will recover.

 

Remember that buying stocks are buying shares in actual physical businesses, businesses that have revenue and (hopefully) profit.

 

I’m not investing in any SET traded stocks, but just a quick example: Siam Commercial Bank (SCB) trades at 66.50 baht per stock. There are a total of 3.4B shares, so the total price for buying this bank is 66.50 baht × 3.4B = 226.1B baht.

 

So what do you get for 226.1B baht? A bank that had net profit of 40B in 2019, and the same in 2018. Profit may take a hit in 2020 because of COVID-19, but in theory you’re buying a machine that gives you 40B baht per year, and this machine costs you 226.1B baht, so in 5-6 years, the machine has paid for itself.

 

Sure, the profit in 2020 is likely to take a hit because of COVID-19, but even if they only have profit of 20B (50% decline) and it continues for 10 years, it still sounds like a bargain to me!

 

If anyone wants to short SCB at the current price, I think they should be allowed to do that ????