Thai Stock Exchange Suspends Trading After Index Dives

[jumnien]

Reversing this boneheaded decision won't fix what is probably worrying most investors. That the Thai leadership has no real idea of how to handle the economy, and they're prone to erratic and poorly considered decisions.

Yeah, I agree. Why can't the Thais elect people (I mean coup-appoint people) who have the breadth of knowledge and wisdom and experience to handle the job. Can't they follow our lead and find candidates (or appointees) with the brilliance of George W. Bush or Tony Blair, we're really talking quality there, for sure.

[merlin1]

This is not sitting well with the int'l capitalist crowd. No surprise, but it may cause some more political instabilty down the line.

http://www.bangkokpost.com/Business/20Dec2006_biz35.php

[Plus]

Oh, sure they need to punish someone, find a scapegoat, ruin his reputation.

Ten years ago they assigned George Soros to play that role and it worked.

If they don't blame someone else, people would turn their anger on the government itself.

Pridiyatorn needs to resign, quickly, along with Tarisa and everyone else responsible for introducing this disastrous "solution".

The military government trusted Pridiyatorn's competence as he was the only man left after purging Thaksin. How did he let them down!

[brazil]

the finance ministry and bot allow this one day lunatic decision.

but allow 30% budget increase in the milliatry and 1.5 Billion baht expenses for the coup.

umm

its going to be an very interesting next 6 months in thailand

[Jai Dee]

Securities Analysts Association believes SET index to return to normal level within 1 week

The secretary of the Securities Analysts Association is confident that the SET index would return to normal levels within 1 week due to investor information on BOT regulatory policies on the Thai bahts value.

The secretary of the Securities Analysts Association, Mr. Sombut Narawuthichai (สมบัติ นราวุฒิชัย), believed that the Stock Exchange of Thailand index would return to normal within 1 week amidst plunging index values at the SET on Dec 19. Investors had expressed worry over BOT regulations levied on the SET in order to control short term profit trading. Mr. Sombut said that after investors understood the Bank of Thailands trade control measures, they would develop renewed confidence. Mr. Sombut said that the massive stock liquidation was a normal occurence following the issuance of new regulations.

The secretary of the Securities Analysts Association is also confident that the Bank of Thailand would have other measures in place to assist investors, such as a decrease in policy interest rates in order to control the bahts value to acceptable levels.

Source: Thai National News Bureau Public Relations Department - 20 December 2006

[cclub75]

Reversing this boneheaded decision won't fix what is probably worrying most investors. That the Thai leadership has no real idea of how to handle the economy, and they're prone to erratic and poorly considered decisions.

It's an euphemism...

Incompetence, mismanagement... The reactions in the world are unanimous.

One fact is striking : Miss Tarisa is on... holidays. Another proof that shows how disconnected from reality they are.

The boss of BOT left for 1 week holidays, after a huge decision monday that has set off an amazing market meltdown the day after...

Mai pen rai attitude ? Or just plain stupidity from thai officials ?

''The move by the central bank has sent Thailand to never, never land.'' said the president of Templeton Emerging Markets Fund.

A good comment.

[Jai Dee]

Economist believes lift of capital control can regain investor confidence

Economist believes that the government’s lift of deduction of 30 percent of financial reserves in the Stock Exchange of Thailand (SET), which takes effect today (December, 20), will regain investor confidence.

Deputy Chairman of the National Economic and Social Advisory Council Woraphol Sokatiyanurak (วรพล โสคติยานุรักษ์) said the lift of deduction of SET’s reserves will benefit investment in SET and prevent the baht currency from affecting the capital market. He also expressed his confidence that foreign investors will understand the situation and come back to invest in SET soon.

Yesterday, SET closed at 622.14 points, down 108.41, after the Bank of Thailand (BoT) had slapped the 30 percent reserve measure on SET.

Source: Thai National News Bureau Public Relations Department - 20 December 2006

[Barney_the_Dinosaur]

I honestly doubt the SET is going to re-coup its tuesday losses swiftly. (irrespective of how many Thai dignitaries are rolled out saying precisely the opposite in reassuring tones). I hope i'm wrong, but I don't think the foreigners that sold yesterday will be in any hurry to return.

Someone made a lot of money though. Someone who knew that this volte face would occur and placed 'buy' orders in the afternoon session.

Edited December 20, 2006 by Barney_the_Dinosaur

[Jai Dee]

Asian stocks rebound from Thai-induced turmoil

SINGAPORE: Asian stocks were trading higher early Wednesday after sharp falls on Tuesday caused by the sinking of Thai shares.

Singapore's Straits Times Index rose 35.64 points to 2,932.94 within half an hour of trade.

Across the Causeway the Kuala Lumpur Composite Index also rebounded, rising 0.9% to 1,069.72 points, following the government's assurance that Malaysia will not impose capital curbs.

Japanese share prices opened higher on Wednesday too, with the benchmark Nikkei-225 index rising 52.70 points or 0.31 percent to 16,829.58 in the first minutes of trading.

On Tuesday Thailand's SET composite index plummeted 108.41 points - the biggest one-day drop in the 31-year history of the bourse - shedding 14.84 percent to close at 622.14 after being down nearly 20 percent at one stage.

The rout in Thai shares followed tough anti-speculator rules requiring overseas investors to pay a 10 percent penalty, unless they keep funds in Thailand for a year.

Source: ChannelNewsAsia - 20 December 2006

[Jai Dee]

ANALYSIS- Rest of Asia FX may benefit from Thai baht woes

The Bank of Thailand's capital controls, introduced on Monday to prevent speculators from pushing the country's currency up further, could end up strengthening other Asian currencies instead.

Analysts are confident that other regional currencies, such as the Malaysian ringgit and the Singapore dollar, will hold up in the face of a wholesale rush for the exit from Thai assets, reflecting the extent to which emerging markets have matured as an asset class since the Asian economic crisis of 1997.

On Tuesday Thailand's central bank was forced to rescind the part of the new capital controls that applied to stock market investments after Thai stocks plunged nearly 15 percent, the largest daily decline in 16 years.

However, pressure on the Thai currency, the baht, will likely continue, diverting investors who still want to maintain exposure to the region into other currencies.

"Once things stabilize, other Asian currencies are set to recover, even with the baht remaining under pressure," said Marios Maratheftis and Gavin Redknap, currency market strategist and economist respectively with Standard Chartered in London.

"Indonesia, Korea and Malaysia have already stated that they will not introduce similar measures and once the dust settles, there should be attractive opportunities for the markets to buy the rupiah, the ringgit, and the Korean won," they said in a note to clients.

That would be in stark contrast to the events of almost a decade ago when a financial meltdown in Thailand sparked a collapse in the baht and a full blown economic crisis that spread across the region from Indonesia to South Korea.

The Bank of Thailand's new rules force foreign speculators in Thai baht to deposit 30 percent of non-trade related investments with the central bank for at least a year interest free. However, the measures do not affect net foreign direct investment flows and equity investments.

Net inflows to Thai stocks and bonds have picked up this year, helping the baht to hit a nine-year high against the dollar prior to this week. In the last 12 months, the dollar's depreciation against the baht has been highly correlated with inflows to Thailand, which were at their heaviest at the beginning of November, according to The Bank of New York's iPFM tool.

The market reaction so far has been swift and merciless, with the shadow of 1997's Asian financial crisis lingering, and memory of Thailand's most recent military coup in September this year, still fresh in investors minds.

The baht which is still the best performing Asian currency against the dollar this year, has been sharply sold off, pushing the greenback up 1.8 percent so far this week to 35.85 baht <THB=>.

Despite assurances from central banks in other Asian "tigers" that they would not also enact similar measures, the Malaysian ringgit, Philippine peso, Korean won, and Indonesian rupiah all fell around a half a percent against the dollar on Tuesday.

"It's plausible that people may be hanging back for the chance to see how this plays out in the longer run, but at first blush, I don't think there's anything to recommend central banks following Thailand's lead," said Alan Ruskin, chief international strategist with RBS Greenwich Capital.

Portfolio managers with strict investment mandates may switch out of baht to the best of what's around in the region, JPMorgan analysts say.

"Due to investment mandates based on underlying market liquidity and capital convertibility, foreign investors may shift Southeast Asia investment allocations from THB into MYR, IDR and SGD," the investment bank said in a note.

Emerging markets in general have had a stellar year, providing a boost to yield-starved portfolios. Year-to-date net inflows to emerging market equity funds have already surpassed last year's, at $20.8 billion, according to Emerging Portfolio Fund Research.

Funds investing in Asia, excluding Japan, in particular have performed well, posting 13 consecutive weeks of inflows in the week to December 13, EPFR said.

The steep selloff in Thai stocks and the weakness in Asian currencies were a not so subtle reminder to investors that low volatility and penchant for risk, hallmarks of this year, are not eternal.

"Even in emerging markets as sophisticated as Thailand, you can get sideswiped by unanticipated events," said Ruskin at RBS Greenwich. "Risks in emerging market economies are difficult to anticipate," he said.

Source: Reuters - 20 December 2006

[brahmburgers]

Tommy Smothers once said, "never gamble more than you can afford to lose" I put it less nicely and say that all currency speculators and, to lesser extent sotck market speculators are pseudo gamblers who primarily care about the bulge in their wallets. They are self-centered and only give lip-service to helping the 'little guys.' In contrast are the unsung heroes who devote time and resources to tangibly assisting those in need and/or environmental issues. People who lose in the stock market have no hard place to fall - whether individuals or groups. Indeed, if they're from a big enough conglomeration and have lost big-time, they're likely to get bailed out by government or the World Bank. On the opposite side of the spectrum is the charcoal maker who works an 80 hour week to make 300 baht, and gives 250 of it to needy kids in his neighborhood. Fat cat speculators might make a million baht in five minutes and stuff it all in their pockets and tax sheltred bank accounts.

[merlin1]

The SET is on he way back. Up to 677 (+10%) so far. Orchestrated buying perhaps? Will be interesting to see if these early gains hold.

[CMguy]

In any market with a lot of volitility there is a lot of money to be made if you have a good idea about the direction of cash flows. Who better than the Thai Government and those connected to have profited from this....I would like to see the stock/currency trades done by those in power in the last few days.

[Jai Dee]

Finance Ministry lifts controls on stock market inflows

BANGKOK, Dec 20 (TNA) - Pressed by strong criticism over a mandatory reserve on short-term capital inflows that caused an unexpected plunge in the Stock Exchange of Thailand composite index on Tuesday, the Finance Ministry has agreed to ease the measure by lifting the withholding of a 30 per cent portion of foreign currencies bought or exchanged for investment in SET and direct investment.

Speaking after a meeting with top officials of the Bank of Thailand, Securities and Exchange Commission, SET, local and foreign commercial banks, fund managers, and stock brokers, Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula said the reserve requirement on the short-term capital inflows was raised for discussion.

All parties conceded the mandatory reserve had caused an unexpectedly harsh impact on the stock investment as the SET index plummeted more than 100 points upon the introduction of the measure.

So, they determined the measure should be relaxed by lifting the deduction of 30 per cent of foreign currencies brought for stock and direct investments.

But for short-term capital inflows considered as baht speculation, financial institutions are still required to withhold 30 per cent for the reserve requirement.

Commercial banks and brokers are required to report foreign exchange transactions to the central bank on a weekly basis.

While the adjustment of the measure is expected to make the SET index rebound, it would help weaken the baht as well.

He conceded the SET index had plunged on the introduction of the reserve requirement.

The adjustment was needed to assure foreign investors that the government is still paying attention to supervising investment in the stock market.

The country's overall economy would not be adversely affected once investment confidence in the stock market is restored, he said.

He projected that the Bank of Thailand will allow foreign investors to deposit money in baht denomination with financial institutions in amounts exceeding Bt300 million in support of relaxing the reserve requirement.

Source: TNA - 20 December 2006

[Jai Dee]

Live from the SET:

SET Index

SET100 Index

SET50 Index

mai Index

[PREM-R]

So the "ultra rich" Chinese-Thai will make a killing

[fxm88]

Hmmmm.... I seem to be having trouble accessing http://www.set.or.th/ -- the connection times out. Anyone know the scoop?

[Jai Dee]

Hmmmm.... I seem to be having trouble accessing http://www.set.or.th/ -- the connection times out. Anyone know the scoop?

Try this link.

[Jai Dee]

Press awaits result of SET meeting

Since 8.00 hours, press members from news agencies were seen pouring into the SEC to wait for the result of the SET meeting held at 8.45 hours. The President of the Securities and Exchange Commission (SEC), Mr. Vijit Supinit (วิจิตร สุพินิจ), and SEC Vice President Mr. Kumpanat Lohachareonwanich (กัมปนาท โลหะเจริญวานิช) reportedly arrived at SET office.

Press members were awaiting results from the new measure announced by Bank of Thailand (BOT) to prevent baht speculation. BOT’s announcement has caused the stocks to fall sharply yesterday.

The meeting today is expected to find further solutions and follow up the situation.

Source: Thai National News Bureau Public Relations Department - 20 December 2006

[lopburi3]

Up 9.1% currently - peaked at about 10% in first 30 minutes.

[Jai Dee]

Thai stocks open higher

Thai share prices opened sharply higher on Wednesday after the army-installed government backtracked on draconian currency measures which caused a 15-percent plunge on Tuesday, dealers said.

The Stock Exchange of Thailand (SET) composite index jumped 36.12 points or 5.8 per cent to 658.26 in the first minutes of trading.

On Tuesday, investors reacted with panic to stringent currency rules aimed at halting the Thai baht's rise, causing the SET to nosedive 108.41 points or 14.84 percent for the biggest one day drop in the 31-year history of the bourse.

Losses on the day amounted to a staggering 816 billion baht (23 billion dollars), according to the SET.

Just hours after the debacle, Finance Minister Pridiyathorn Devakula was forced into an abrupt and embarrassing policy U-turn, saying the currency measures no longer applied to stockmarket investments.

Pridiyathorn, formerly central bank government, said the change in the rules would reassure foreign investors, who account for about 40 percent of the Thai stock market.

The Thai baht, which hit a new nine-year high of 35.12 to the dollar on Monday, was at 35.65-68 in early Wednesday trade.

Source: The Nation - 20 December 2006

[thedude]

this is a great time to be buying stocks, especially blue chips and sector performers. i been picking up stocks all day.

Never, ever invest in a mrket that does not allow short selling. Short selling acts as a natural braking mechanism for markets and supplies buyers to mark market lows. Emerging markets can be like Roach Motels, you can get in but you can't get out. They can open limit down for days on end. Doesn't mean you can't make money, even a lot of money, but it requires more attention than many other passive investments.

Just did a quick check, I see they do allow shorting now, but it is limited to SET 50 stocks and delivery of borrowed shares must be arranged through a broker.

er....yeah, thanks for the advice.

[Jai Dee]

IMF Welcomes Partial Rollback of Thai Capital Controls

AP Dow Jones reports from Singapore that the International Monetary Fund has welcomed Thailand's decision to partly roll back its capital controls.

The wire agency also quoted the IMF as saying that the initial measures announced Monday were "too strong and far-reaching".

It quoted the IMF as stating that it expects "growth will remain resilient" despite a sharp slide in share prices in Thailand Tuesday and weaker Asian currencies.

AP Dow Jones said the IMF expects little impact on the rest of the region from Thailand's measures.

"Thailand's underlying economic fundamentals remain solid, and we believe that growth will remain resilient in the face of the financial market turbulence this week," an IMF spokesman was quoted by AP Dow Jones as saying Tuesday in a statement issued from Washington.

"Also, while financial markets in many other Asian countries weakened yesterday, the impact on the region is expected to be limited, and we would note that the authorities in a number of countries have announced that they do not expect to introduce controls on foreign capital flows."

Source: The Nation - 20 December 2006

[PeaceBlondie]

Would it be fair to attribute most of this week's debacle to XENOPHOBIA? Have the Thai leadership once again showed fear of foreign intervention? "We don't like you, and we don't want you in Thailand"?

[LivinLOS]

But they sure as shit got a lesson in how much they need that nasty foreign capital..

Love the loss of face...

[Plus]

No, they were not driven by xenopobia, and the lesson wasn't about how much they need foreigners either. Driving out foreign investors wasn't in the plan.

The lesson was they completely misjudged it. No matter how good or bad were their intentions, they have shown incompetence to the highest degree.

[Jai Dee]

SET closes at 688.17 this afternoon

Trading at the Stock Exchange of Thailand today (Dec 20) closed for the afternoon at 688.17 points, up 66.03 points from the day before.

The SET gained 66.03 points to stand at 688.17 points during the afternoon recess; the index increased 10.61% with total trade value at 34.850 billion baht. The 5 top performing stocks were in the PTT company, which closed at 214 baht, up 28 baht, the Siam Commercial Bank which closed at 61.50 baht, an increase of 8 baht, the Bangkok Bank which closed at 113 baht, up 10 baht, the Kasikorn Bank which closed at 64.50 baht, up 7 baht, and the Krung Thai Bank which closed at 12.70 baht, an increase of 12 baht.

The SET 100 index closed this afternoon at 1,050.11 points, up 108.82, and increase of 11.56%, with total trade valued at 26.836 billion baht. Meanwhile the MAI index closed this afternoon at 190.54 points, up 12.75, an increase of 7.17%, with total trade valued at 136.11 million baht.

Source: Thai National News Bureau Public Relations Department - 20 December 2006

[Jai Dee]

Mr. Banharn believes bourse plunge not related to political matters

Mr. Banharn Silpa-archa (บรรหาร ศิลปอาชา), Chart Thai Leader, believes that the stock market free fall has nothing to do with political speculation.

Mr. Banharn said that one of the main reasons behind the plunge is because the foreign investors do not want to take risks in the new 30 percent withholding requirement set by the Bank of Thailand (BOT). BOT today is considering to seperate non-resident account for stock investment from the others, according to the central bank's officials.

The SET index closed the morning session at 688.17 points, up 10.61 per cent as the local investors scooped up the shares. Earlier SET index rose by 9.62 per cent to 682.02 points at 11:30 am. after the government backtracked on draconian currency measures which caused a 15-percent plunge yesterday.

Source: Thai National News Bureau Public Relations Department - 20 December 2006

[samtam]

What % of the condo property market if driven by foreign investment? Surely there must be a substantial impact on an already oversupplied market that is in the doldrums? (I know the exchange controls only affect investments less that 1 year, but it's the sentiment that is difficult to quantify, especially when the goal posts are moving.)

[jumnien]

Was today's gain for the SET of 10.6% the biggest one-day gain ever? What is the biggest one-day gain ever for the DOW? Any stock history experts out there?