Thai stock market back to normal

THE Thai stock market last week came back from extreme volatility to normal thanks to effective handling of the overall situation by the Thai monetary authorities, the Government and the unity of the Thai people following the official announcement of the demise of His Majesty King Bhumibol Adulyadej on the eve of October 13.

The panic sell on the Stock Exchange of Thailand started on Monday October 10 when institutional investors net sold their holdings by 7,247 million baht causing the SET index to drop by 47 points or 3%. On Tuesday October 11, institutional investors net sold another 3,345 million baht with the index dropping further by almost 15 points. On October 12 history was made with the SET index falling 99 points or 6.87% in the afternoon and trading value, which normally prevailed at around 40 billion baht a day, shot up to a record high of 130,152 million baht, the highest in its history.

On October 13, the market dropped further in the afternoon before rebounding strongly after 3 p.m. with volume again just over 100 billion baht.  The market went up strongly on Friday, October 14, when institutional investors bought back shares with their net buy totaling 7,485 million baht with index being up by 64.79 point.

Earlier in the week the institutional investors also opened long (buy) of over 100,000 contracts on single stock futures on the TFEX market.

With such phenomena, on Thursday (October 13) evening Deputy Finance Minister Somkid Chatusipitak had called financial institutions and fund managers for an urgent meeting early the next day to find out what really had happened and asked all parties concerned to calm down. The central bank also told commercial banks to be well prepared for any unusual movement of funds, if any.

The Government likewise issued announcements including the ones asking for cooperation from the media during the official mourning period.  Government Spokesman Lt-General Sansern Kaewkamnerd, also acting chief of the Public Relations Department, requested broadcasters to suspend their normal programs for 30 days to help simulcast related programs from the government media pool.

Under this guideline, TV programs and advertising must not contain improper scenes such as entertaining, dancing or violent acts. As well, information related to the King’s passing must be approved by authorized bodies. Criticism or analysis is not allowed.

The SET Index rose 157 points last week from the low of 1,343 the week earlier to 1,500.37 on Friday with the main buyers being institutional investors while foreign investors started selling mildly as world oil prices hovered over US$50/barrel. However banking sector’s Q3 operating result came out relatively well above expectation.

Therefore the market is expected to slow down this week as the index is hovering above 1,500 level.

The Bank of Thailand (BOT) will continue to closely monitor economic activities including currency exchange, the financial market and the capital market during the mourning period to help stabilize the market, said central bank Governor Veerathai Santiprabhob.

He added that BOT had not yet seen any unusual movements in the exchange rate or the capital and financial markets, reflecting that the fundamentals of the economy and the financial institutions were strong. However, BOT will closely monitor the situation to ensure this stability continues.
Both local and foreign investors are confident of the Thai economy, as reflected in the Stock Exchange of Thailand, which has been able to rebound quickly, he said.


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By Kowit Sanandang




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