The Stock Exchange of Thailand (SET), the Securities and Exchange Commission (SEC) and the Association of Thai Securities Companies (Asco) are in talks about whether additional measures to curb stock manipulation are needed after a dramatic surge in the share prices of small- and medium-cap stocks.
An investor checks out an electronic share-price indicator board. Thailand’s stock exchange is considering further measures to curb manipulation activity. PATIPAT JANTHONG
Both the bourse and Asco are concerned about the volatile price movements of such stocks, said SET president Kesara Manchusree.
She previously warned that some small-cap stocks were showing signs of overheating after a rally in share prices.
The rising frequency of notices, market alerts and suspensions in recent weeks underscores the suspicion that some small-cap stocks are overvalued.
High trade value accompanied by wild swings in share price, particularly among small- and medium-cap stocks, is a telltale sign of stock speculation.
The SET recently said existing measures such as trading alerts, notices, suspensions and putting overheating stocks on cash balance account were sufficient to cope with overblown share price movements.
Kesara: Wild swings in small-cap stocks
The suspension of trade in shares of Asset Bright (ABC), a sock maker turned property developer, by the SET last month — its share price had soared more than three-fold over the course of a few weeks to a closing peak of 8.20 baht — is one case of a stock suspected of manipulation.
ABC shares closed yesterday on the SET at 4.66 baht, down 34 satang, in trade worth 26.6 million baht.
SEC secretary-general Vorapol Socatiyanurak said he expected a conclusion on new measures to be reached soon.
He cautioned retail investors to be prudent about putting money into small-cap stocks, as they could suffer big losses when deep-pocketed investors decided to take profits.
“Initially we'd like retail investors to tread carefully in investing in stocks on a list of securities with a high turnover ratio,” Mr Vorapol said.
“The SET and SEC are investigating those suspected of involvement in stock manipulation.”
The turnover list will be updated each week to alert investors.
“This is the hot issue that we have discussed,” said Asco chairwoman Pattera Dilokrungthirapop.
“Some shares have jumped drastically without fundamental support. Small- and medium-cap shares are at the centre of our concern. Their trading is liquid and they are easily targeted for manipulation.”
Regulators will work with Asco to review whether current measures are sufficient.
“In fact, the market can support speculative activity, but it should not be so much that it distorts market prices,” Ms Pattera said.
She said margin loans were immaterial to Asco, as brokers themselves shunned providing margin loans for small- and medium-cap stocks that showed signs of manipulation.