The Stock Exchange of Thailand's trading alerts to curb stock speculation have paid off with fewer red-hot stocks, while the bourse stands ready to revise the measures if they become less effective.
Since the measures were announced in December, speculative activities have decreased, said president Kesara Manchusree.
The SET's trading alert list, which came into force on Monday, requires alerted stocks to be restricted to trading in cash for three weeks. If a second alert is issued, another three-week restriction is imposed and the stock is excluded as collateral from trading account calculations. For a third alert, the stock is prohibited from net settlement trade.
The requirements are also applied to the turnover list, which covers securities with unusually high turnover ratios.
The measures were launched after a number of small and mid-cap stocks surged substantially without fundamental support. With juicy returns, retail investors were jumping on the bandwagon to scoop up such stocks, compelling the SET to cool down rampant stock speculation.
Mrs Kesara said the measure related to net settlement trade was expected to be implemented in the next two months as the SET needed time to reset the system with its broker members.
"If the new measures have been used for a while and do not work, the SET will consider other measures to stem the problems. Those measures include halting and suspending trading, but they need to seek approval from the SET's board," she said.
Montree Sornpaisarn, chief executive at Maybank Kim Eng Securities (Thailand), said the measures had cooled down speculation to some extent, but the SET should take time to evaluate their effectiveness before tightening measures.
"Some stocks still challenge the new measures," he said.
Mrs Kesara said the SET had asked stock analysts to research the impact of falling oil prices to help investors before they make investment decisions.
The oil price slump has depressed the bourse as energy-related stocks comprise about 20% of the SET index, she said.
The SET index yesterday snapped a four-day losing streak, surging 1.57% to close at 1,500.75 points in heavy trade worth 47.99 billion baht.