Thai Stock Exchange Suspends Trading After Index Dives

[Jai Dee]

Thai stock exchange suspends trading after index dives 10 pct

BANGKOK (XFN-ASIA) - The Stock Exchange of Thailand (SET) said it has suspended trading for 30 minutes after the benchmark index fell over 10 pct following the introduction of sharp curbs on foreign fund inflows.

The SET composite index plunged 73.80 points to 656.75 around 11:30 am, the biggest one day drop since mid-1997 when the nation was engulfed by the Asian financial crisis.

Since the opening, investors dumped shares after the Bank of Thailand late last night ordered banks to lock up 30 pct of any new foreign currency deposits above 20,000 usd for a year in a bid to curb the baht's rise.

The central bank's move was the most stringent of recently imposed measures made in an attempt to control its currency which has risen sharply to a nine-year high, levels not seen since before the Asian financial crisis erupted.

Source: XFN-Asia - 19 December 2006

[Jai Dee]

Thai Stocks Slide the Most in 16 Years on Investment Controls

Dec. 19 (Bloomberg) -- Thailand's SET Index tumbled the most in 16 years, a slide that triggered an exchange-imposed trading halt. PTT Pcl and Bangkok Bank Pcl led declines after the central bank said overseas investors will have to pay a 10 percent penalty on funds withdrawn within a year.

"With this capital control that's been placed, you will be seeing a lot of people trying to rush to sell down,'' said Edgar Chuan, who manages about $300 million including Thai stocks at Descartes Investment Management in Hong Kong. This will cause "huge damage'' to the economy and investor confidence, he said.

The SET Index slid 85.89, or 12 percent, to 644.66 at the 12:30 p.m. break in Bangkok. The measure is heading for its biggest percentage drop since Aug. 7, 1990. Just four of its 458 constituents advanced today.

The exchange halted trading between 11:29 a.m. and 11.59 a.m. after the SET fell more than 10 percent. A slide of more than 20 percent will trigger a one-hour suspension, a statement from the exchange said.

Shares of PTT, Thailand's biggest energy company, fell 18 baht, or 8 percent to 206. Bangkok Bank, the country's biggest lender, tumbled 17 baht, or 14 percent, to 106. Krung Thai Bank Pcl, Thailand's second-largest bank by assets, plunged 2.9 baht, or 21 percent, to 11.

The new rules, announced yesterday by Bank of Thailand Governor Tarisa Watanagase after the market closed, are aimed at stemming the baht's gain against the dollar. The currency has climbed 15 percent this year, making it Asia's best performer. It today slumped as much as 1.5 percent, the most in more than three years.

No Interest

Overseas investors buying baht from today will only be able to invest 70 percent of what they transfer, and only recoup all of their funds if they keep the money in Thailand for more than a year, Watanagase told reporters yesterday. Those who withdraw the reserved amount in less than a year will be penalized 33 percent of that 30 percent portion, she said.

The new rule exempts currency transactions related to trades in goods and services, or repatriations of investments abroad by residents. The 30 percent locked up won't earn any interest.

"The issue is for new money coming into the market,'' said Adrian Mowat, JPMorgan Chase & Co.'s Hong Kong-based regional equities strategist. "It's very difficult to buy today because we're not quite sure what the procedures are in order to buy Thai equities. What investors are going to do is wait for some clarification from the Bank of Thailand.''

Siam Cement Pcl, Asia's second-largest cement maker by value, declined 28 baht, or 11 percent, to 228. Land & Houses Pcl, Thailand's biggest house builder, slumped 1.35 baht, or 19 percent, to 5.90.

Overseas Buying

Shares of Thai companies have benefited from rising purchases by fund managers outside Thailand. Fund managers had been seeking to benefit from economic growth in Southeast Asia's second-largest economy and from the end of a political stalemate after a military coup on Sept. 19 that ousted Prime Minister Thaksin Shinawatra.

Overseas investors have bought $587 million more Thai stocks than they sold this quarter, the second straight three- month period of net purchases, according to stock-exchange data.

The Thai economy may expand 5 percent this year, exceeding an earlier estimate of as much as 4.7 percent and last year's pace of 4.5 percent, the government said Dec. 4.

Gains in the baht have benefited overseas investors. The SET Index this year through yesterday climbed 19 percent in dollar terms, more than the Morgan Stanley Capital International Asia-Pacific Index's 13 percent advance. In local currency terms, the SET Index was up just 2.4 percent.

With the prospect of the local currency's gains slowing, investors may start to think about bailing out, traders said.

"Most investors we have been speaking to think that this is a bad move that will hurt Thailand in the long term,'' said Christian Kielland, head of trading at ETrade Securities (HK) Ltd. "They are ultimately giving up liquidity. Even long-term investors will be a bit timid considering Thailand is run by a military junta that makes decisions like this.''

Source: Bloomberg - 19 December 2006

[Jai Dee]

Thai Stocks, Baht Slide as Investors Withdraw on Currency Curbs

Dec. 19 (Bloomberg) -- Thai stocks plunged after regulators yesterday told banks to lock up 30 percent of new foreign- currency deposits for a year to curb speculation. The baht dropped the most in three years.

The benchmark Stock Exchange of Thailand index slid as much as 8.9 percent, the heaviest in more than three years, and the baht almost doubled yesterday's 0.8 percent drop after central bank Governor Tarisa Watanagase said she was ``confident'' the measures will reduce inflows. The currency, Asia-Pacific's best performer, had surged 16 percent this year before yesterday as overseas investors bought the nation's stocks.

``Foreign investors will rush to take money out as they're afraid the baht may weaken further,'' said Visit Tantisuthorn, Secretary General of the Government Pension Fund, the country' biggest fund with more than $7.8 billion in assets. ``It'll help exporters and the country's trade balance.''

The baht climbed this year to a nine-year high yesterday amid optimism the economy will accelerate after a Sept. 19 coup ended a political deadlock that curbed spending and confidence. Exporters including Thai Union Frozen Products Pcl, the world's second-biggest tuna canner, on Nov. 16 asked the central bank to stem baht gains that are undermining their competitiveness.

The baht lost as much as 1.5 percent, the biggest fluctuation of any currency today, to 36.08 against the dollar. It traded at 35.66 at 10:03 a.m. in Bangkok. It last fell more on Sept. 14, 2003. The Stock Exchange of Thailand index slid the most since February 2003.

Lock Up

Starting today, overseas investors buying the baht will only be able to invest 70 percent of what they transfer and recoup all of their funds if they keep the money in Thailand for more than a year. Those who withdraw the reserved amount in less than a year will be fined 33 percent of that 30 percent portion.

A stronger baht hands overseas investors greater capital returns when they convert proceeds from sales back to dollars or their own currencies. China's yuan has added 3.1 percent against the dollar this year, Malaysia's ringgit has gained 6.3 percent and Singapore's dollar has climbed 7.9 percent.

``It's basically as if they're putting a tax on any trades less than a year,'' said Magnus Prim, a senior foreign-exchange strategist at Skandinaviska Enskilda Banken in Singapore. ``It's going to stop any buying pressure and with the stock market likely to be hit, we could see the baht falling some more.''

A rising baht hurts exporters by cutting the value of their local currency-denominated profits and making their products more expensive compared with those of Asian rivals.

A military coup on Sept. 19 ousted prime Minister Thaksin Shinawatra and ended seven months of political turmoil. Prime Minister Surayud Chulanont, installed by the military junta after the coup, is planning record spending on roads, subways and other infrastructure projects.

Source: Bloomberg - 19 December 2006

[Jai Dee]

Stock index still plunge after SET resume trading

The SET resumes stock trading at noon. The SET index fell further by 13.74 per cent or 100.37 points to 630.18 at 12.12pm. Bank of Thailand has asked all brokerage companies to discuss about the issue on 1.30pm.

Key Democrat Party member Korn Chatikavanij urged the Bank of Thailand to immediately reverse the recently-introduced measure to intervene the currency, saying that it would cause the damages to the capital market for years.

Today, Thai share prices plunged by 10 per cent at 11:30 am after the central bank took the most stringent measures since the 1997 Asian financial crisis to curb the baht's rise.

The Stock Exchange of Thailand implemented the circuit breaker measure for the first time in history to deal with the drop by suspending the trading for 30 minutes at 11:30 hours.

At 11:30, the SET nosedived to 656.49, the lowest point of the day so far. The Stock Exchange of Thailand (SET) composite index nosedived 64.62 points or 8.85 per cent to 665.93 in the first minutes of trading and the bluechip SET 50 index fell 53.10 points to 458.90.

Korn said: "The measure causes the damage to the capital market. The Bank of Thailand should immediately reverse this policy, because no investors who will want to spend Bt100 just to have Bt30 withheld. And if they will get only Bt90 if they want to remit the money in less than one year."

Starting from Tuesday, financial institutions would be required to withhold 30 per cent of foreign currencies bought or exchanged against the baht, except those related to exports, said BOT governor Tarisa Watanagase.

Korn said that the damage caused by the measures could be overwhelming. Besides, there's rule from the financial institutions that they cannot invest in countries with capital control. He said the capital market in Chile for instance was damaged by 10 years while Malaysia was damaged by 3 to 4 years.

He said Bank of Thailand should implement the separate measures to deal with money and financial capital markets. Speculators are mostly in the bond markets. Bank of Thailand should separate the measurement in money and capital markets speculators are mostly bond market.

Source: The Nation - 19 December 2006

[Jai Dee]

SET plunges after central bank acts to curb rising baht

Thai share prices plunged on Tuesday after the central bank took the most stringent measures since the 1997 Asian financial crisis to curb the baht's rise, dealers said.

The Stock Exchange of Thailand (SET) composite index nosedived 64.62 points or 8.85 per cent to 665.93 in the first minutes of trading and the bluechip SET 50 index fell 53.10 points to 458.90.

At 11:00 am, the SET index rose slightly to 678.85 point, a drop by 51.70 point from the previous close. The volume was Bt74.78 million.

The Thai currency, which hit a new nineyear high of 35.12 to the dollar Monday, fell to 35.6570 early Tuesday.

The Bank of Thailand on Monday ordered banks to lock up 30 per cent of any new foreign currency deposits above 20,000 dollars for a year in an effort to curb inflows of funds pushing up the local currency.

Such deposits would carry no interest and a third of the funds would be forfeit if they were withdrawn before the one year was up.

"The new measure really dampened sentiment. It (makes) the Thai stock market less attractive for shortterm foreign investors," said Sukit Udomsirikul, a senior market analyst at Siam City Securities.

Since the beginning of the year, the Thai baht has jumped about 14 per cent against the dollar, putting pressure on the country's key exporting companies.

Analysts said the central bank's latest move was aimed at protecting Thai exports.

The strong baht makes Thai exports less competitive in overseas markets and slashes the value of companies' repatriated profits.

Source: The Nation - 19 December 2006

[Old Man River]

I don't know how much foreign investment there is in the SET, but unless Dr. Tarisa amends the BOT's capital controls to give stock market investors breathing room, we will soon find out.

For those of us that are residents of Thailand, it may be a good buying opportunity, depending on your view.

[Jai Dee]

Thai markets tumble as baht rules scare foreigners

BANGKOK, Dec 19 (Reuters) - Trading on the Thai stock market was halted on Tuesday after share prices plunged more than 10 percent to a five-month low when foreign investors took fright at drastic central bank measures to rein in the baht.

The authorities, worried that the baht's strength would hurt exporters, slapped controls on short-term speculative inflows with effect from Tuesday. In reaction, the currency dropped some 2 percent from a 9-1/2-year high hit on Monday.

The main bourse index (SET) lost 10.1 percent, threatening the biggest one-day fall since the Asian economic crisis of 1997/98, which was caused in part by massive international speculation on the baht.

That reaction was far more severe than the impact of the bloodless Sept. 19 coup that ousted Prime Minister Thaksin Shinawatra after a long political crisis. The stock index fell only 4 percent the following day and recovered quickly.

Reaction in the bond markets was equally severe as foreign investors starting rushing for the exit, forcing bond prices sharply lower and pushing yields up 20-30 basis points for all maturities.

"Please call an ambulance, there is a bloodbath," a dealer at a domestic brokerage said.

"Foreign players seem to be selling all maturities today, but I think it's only the first round. There is a lot of money already in the Thai markets. If they are pulling out, we are dead," he said.

"I'm not sure if we're going to get a bonus this year."

In an unprecedented move, bourse officials said they would activate a circuit-breaker to halt trading for half an hour if the index slipped 10 percent, which they did.

It was the first use of the circuit breaker since the Bangkok stock market opened in 1975.

If the index dropped further when trade resumed, the bourse would suspend trading again, an exchange official said.

"There's heavy selling from foreign investors because the new measures are quite aggressive towards foreign fund flows," Tisco Securities strategist Viwat Techapoonpol said. "It is hard to forecast how many percent the SET will fall."

"DRACONIAN"

The baht (THB), the fastest-rising Asian currency against the dollar this year, was trading around 35.70 per dollar at 0402 GMT, down from 35.06 early on Monday before the central bank announced its latest attempt to halt currency speculation.

Under the measures, which one analyst described as "draconian", short-term investors in Thailand will have to keep their money in the country for at least a year or face stiff financial penalties.

The new regulations affect all sums over $20,000 not linked to trade or foreign direct investment.

However, some analysts said the central bank had left questions unanswered, causing several foreign banks to stop quoting the baht.

"The message from the Bank of Thailand wasn't entirely clear so it may take a few days for things to settle down," said ABN AMRO currency strategist Shahab Jalinoos.

"People are trying to work out what the measures mean and it is wide ranging. Even equity analysts do not know to what extent this will affect their market."

Exporters in Thailand, who have long been complaining that the strength of the baht was making them uncompetitive, rejoiced at the baht's reaction to the central bank's move.

"People in industries such as garments and textiles were already looking at countries such as the Philippines, Vietnam and China for relocating simply because their products were not competitive due to such a high baht," said Greg Watkins, executive director of the British Chambers of Commerce.

Before Tuesday, foreign investors in the stock market had sold shares worth a net 942 million baht ($26.7 million) in December, which pales in comparison beside the net 114 billion baht of stocks bought this year.

Source: Reuters - 19 December 2006

[Barney_the_Dinosaur]

I for one continue to have full confidence in our overlords.

Some may say "Such a collapse in economic confidence would never have happened under the old lot,"

Not me.

[cdnvic]

Will pension income to retirees in Thailand from their home countries be subject to the witholding?

[mouse]

Will pension income to retirees in Thailand from their home countries be subject to the witholding?

If you receive more than $20,000 in monthly pension payment, please adopt me!

[Soju]

Will pension income to retirees in Thailand from their home countries be subject to the witholding?

If you receive more than $20,000 in monthly pension payment, please adopt me!

In the first post in this thread, it says "20,000 usd for a year", not in a month. If that is accurate, I think $20K per year will affect a lot of people. However I don't really expect this new measure will remain in place for long. But who knows, after all it is Thailand.

[pumpuiman]

Will pension income to retirees in Thailand from their home countries be subject to the witholding?

If you receive more than $20,000 in monthly pension payment, please adopt me!

In the first post in this thread, it says "20,000 usd for a year", not in a month. If that is accurate, I think $20K per year will affect a lot of people. However I don't really expect this new measure will remain in place for long. But who knows, after all it is Thailand.

re-read the OP. Your assumption is incorrect.

[alexth]

This is purely insane. This can't be happening. If the continue with this decision they can kiss good bye foreign investors for a very long time...

[Soju]

Will pension income to retirees in Thailand from their home countries be subject to the witholding?

If you receive more than $20,000 in monthly pension payment, please adopt me!

In the first post in this thread, it says "20,000 usd for a year", not in a month. If that is accurate, I think $20K per year will affect a lot of people. However I don't really expect this new measure will remain in place for long. But who knows, after all it is Thailand.

re-read the OP. Your assumption is incorrect.

Ok, so I guess it must mean the lockup is for a year for any one transfer of more than $20K, but you can make as many transfers under $20K as you want without being affected. That wouldn't be so bad I suppose for those needing to bring in funds to live on, provided it's implemented that way.

[Barney_the_Dinosaur]

Stock market has re-opened and is falling like a knife in the afternoon session.

[monty]

SET's website looks like having a hard time, at least I can't get trough...

You van follow what's going on here

And the blue chips (set 50)

[Old Man River]

This is purely insane. This can't be happening. If the continue with this decision they can kiss good bye foreign investors for a very long time...

It will hold for a little while as the BOT cannot be seen as reversing a policy so quickly. They need some time to figure out how to amend the reserve requirements so it only impacts speculators, not all short term investors.

With THB being sold and FX purchased, I wonder if the exporters are now happy?

[Jai Dee]

Panicked Thai market selling prompts emergency meetings

Thailand's most senior financial figures are holding emergency meetings with foreign investment firms after panic selling at one stage forced the stock exchange down almost 14 per cent.

So far today, more than $200 million in value has been lost at the Stock Exchange of Thailand after foreign investors pulled out of the equities market.

They were reacting to limitations place on currency trading yesterday by the Bank of Thailand.

The central bank has threatened to fine investors 10 per cent of their currency holdings unless they keep their funds in Thailand for more than a year.

The measures are designed to control the flow of international capital, in order to prevent further speculation on the baht which has risen more than 10 per cent in value against the US dollar this year.

The events of the past day are a stark reminder of the 1997 Asian Economic Crisis which was blamed on currency speculators playing the baht and other regional currencies.

Source: ABC Online - 19 December 2006

[Jai Dee]

Asian stocks punished as Thai junta spooks investors with capital controls

HONG KONG - Asian stocks were broadly lower Tuesday, with investors spooked by the worst ever losses in Bangkok where the military government imposed capital controls reminiscent of the 1997 Asian financial crisis.

The controls, aimed at curbing a massive appreciation in the local currency, stunned the region, prompting heavy stock sales in Thailand and undermining sentiment elsewhere.

The Thai baht has been a standout unit in the region after rising to a nine-year high against the greenback, putting pressure on the key exporters and prompting complaints by powerful union and business lobby groups.

The junta, however, may have overstepped the mark by seeking to rein in the baht with the Thai benchmark index plunging more than 10 per cent at the open and forcing the Stock Exchange of Thailand (SET) to suspend trading.

On the resumption of trade, the SET 50 crashed 85.89 points or 11.76 per cent to close the morning session at 644.66, off a low of 630.16. It was the biggest one day fall in the 31-history of the SET.

Among Thailand's closest neighbours, Kuala Lumpur was down 2.91 per cent in early afternoon trade, Jakarta slumped 1.93 per cent, Singapore was off 1.76 per cent while Hong Kong was down 1.24 per cent.

Under new rules announced by the Bank of Thailand (BoT) late Monday, 30 per cent of all foreign capital inflows above 20,000 dollars will be held by banks for 12 months in a bid to curb a sharp appreciation of the baht.

This means for every 100,000 dollars invested in stocks, for example, the banks will hold back 30,000 dollars. No interest will be paid on that money and it would be lost if the investment is pulled out of the country within one year.

Central bank figures showed that as much as 950 million dollars of foreign capital flew into Thailand in the first week of December, rising sharply from the average of 300 million dollars per week last month.

"The new measure really dampened sentiment. It (makes) the Thai stock market less attractive for short-term foreign investors," said Sukit Udomsirikul, a senior market analyst at Siam City Securities.

Asian stocks have been primed for a correction with benchmarks trading at or near record and multi-year highs and dealers said that just with three business days before Christmas, investors might feel compelled to sell.

"It's the contagion effect of the capital controls imposed by the Thai government," chief economist with RAM Consultancy Services, Yeah Kim Leng, told AFP in Malaysia. "It has affected foreign investor sentiment and confidence."

Tokyo fell 1.09 per cent, Manila was down 0.98 per cent and Seoul shed 0.38 per cent with dealers saying turbulence in Bangkok had probably dashed hopes for a year-end rally.

However, losses were modest in Sydney, Taipei and Wellington where local factors outweighed the impact of the chaos in Thailand.

"This is in a way reminiscent to the pre-1997-98 crisis. Of course capital controls are frowned upon, especially (by) portfolio investors, so as a result, it's a knee-jerk reaction on the regional markets," Yeah said.

The Asian financial crisis had its roots in Bangkok when excessive borrowings in US dollars coupled with high interest rates forced the government to float the currency, which then promptly collapsed along with the economy.

Over late 1997 and 1998, the contagion spread across the region. Currencies and stock markets failed as businesses went bankrupt and recessions followed, with governments frantic to shore-up their economies.

Yeah said, however, that a repeat of that crisis was unlikely.

"The monetary authorities have learnt their lessons so there is now less foreign currency exposure but nevertheless it signals a pre-emptive strike on hot or speculative short-term capital inflows," he said.

Source: The Nation - 19 December 2006

[Barney_the_Dinosaur]

Its currently down 24.5%

Edited December 19, 2006 by Barney_the_Dinosaur

[oxymoron]

$US20,000 plus equals 800,000 Baht equals required funds for a "retirement visa".

Does this now mean new applicants need to transfer around $US30,000 ( 30% withheld) to achieve the Immigration Depts requirements??????

[Old Man River]

Has anyone heard on estimates of how much of the selling on the stock market relates to foreigners vis a vis locals? The SET is a trading market (short term) and although locals don't have to worry about the new reserve requirements, they will be selling as well so as to cut their losses.

[Jai Dee]

Pridyathorn, Kosit back measures despite SET plunge

Finance Minister MR Pridiyathorn Devakula as well as Commerce Minister Kosit Panpiemras gave a full support the Bank of Thailand's antispeculation measure saying it is a good measure, although the measure may bring about significant shortterm impact to the stock market.

Pridiyathorn said the authorities need to consider the impact of the new measure particular on how much baht value would react to the measure. The stock market would be affected in short term, he said.

However, so far, there were huge amount of foreign capital inflows particular in shortterm commercial papers as large as Bt100 billion so far. The central bank has launched the new measure because most exporters urged the BOT to help stabilise the baht.

Kosit said that there is a need to consider the impact of the measure particular on business operators. The central bank would like to stabilise the baht without the government's intervention, he said.

Kosit believes the volatility from the measure impact would be temporary.

Source: The Nation - 19 December 2006

[alexth]

Hmmm...Are they trying to back off? Is this how it's starting to turn this into a no go by tomorrow morning?

[Old Man River]

Pridyathorn, Kosit back measures despite SET plunge

Finance Minister MR Pridiyathorn Devakula as well as Commerce Minister Kosit Panpiemras gave a full support the Bank of Thailand's antispeculation measure saying it is a good measure, although the measure may bring about significant shortterm impact to the stock market.

Kosit believes the volatility from the measure impact would be temporary.

Source: The Nation - 19 December 2006

Could be we will see (or not be able to see) government buying of shares to prop up the local market and stabilize it.

[cclub75]

Has anyone heard on estimates of how much of the selling on the stock market relates to foreigners vis a vis locals? The SET is a trading market (short term) and although locals don't have to worry about the new reserve requirements, they will be selling as well so as to cut their losses.

http://www.set.or.th/en/index.html

Last graphic, on the left side.

Usually, I would say that foreigners count for 40 % on a "normal" trading day.

Of course, today is likely to be... slightly different.

[HenryB]

Its currently down 22.5%

This is like 10 years ago I was in Bangkok and the feeling was the same.

If the English Market. went down 20 per cent in day everyone will say England is in trouble at least. I now known all of you are lossing the little money you have. I have never meet a rich person who invested in the SET.

I think you all of you dreamers are going to lose big.

Maybe you should buy more now

[mouse]

$US20,000 plus equals 800,000 Baht equals required funds for a "retirement visa".

Does this now mean new applicants need to transfer around $US30,000 ( 30% withheld) to achieve the Immigration Depts requirements??????

Look at number three on this notice. I would not worry too much as this will be reversed within a short period.

They are after people that are doing large speculation and turning around large sums in seconds. They will surely try to avoid shooting themselves in the foot a second time with the same bullet.

Edited December 19, 2006 by mouse

[alexth]

$US20,000 plus equals 800,000 Baht equals required funds for a "retirement visa".

Does this now mean new applicants need to transfer around $US30,000 ( 30% withheld) to achieve the Immigration Depts requirements??????

Look at number three on this notice. I would not worry too much as this will be reversed within a short period.

They are after people that are doing large speculation and turning around large sums in seconds. They will surely try to avoid shooting themselves in the foot a second time with the same bullet.

I wouldn't bet on it. They're very good at it...

[Jai Dee]

Baht depreciates to Bt35.92-Bt35.97

The Bank of Thailand (BOT)'s measure to withhold 30 per cent of capital inflows in order to curb baht speculation Tuesday prompted the baht value to depreciate from Monday's peak of Bt35.06, fresh nine-year high, to Bt35.92 to Bt35.97 per dollar at 3 pm.

Source: The Nation - 19 December 2006