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Capital inflow: Stock & real estate bubble?

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As foreign investment money flows into Thailand, fears of speculation, high stock & real estate prices & burst bubbles worry experts. 

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Economics
ECONOMY

Quick fixes urged to prevent bubble

Brokers see clear signs in stock, property trade
15 Feb 2013
Nuntawun Polkuamdee

Leading stock brokers called for authorities to take action to avert damage to the stock and property markets caused by massive inflows, but the finance minister insists the current market situation is no cause for concern.

Kongkiat Opaswongkarn, CEO of Asia Plus Securities, on Thursday said the SET index rose past 1,500 points driven mainly by small stocks, while large stocks did not see large gains.

This indicated speculation in small stocks, some of which are trading at a price-to-earnings ratio of more than 100 times.

The speculation could harm the markets in the long term, said Mr Kongkiat.

"Some measures should be taken quickly to screen these speculative stocks out of fundamental stocks so we can treat them differently when considering margin loans for their trading. For these hot stocks, we should reduce margin loans or demand more assets as collateral," he said

Pakhawat Kovithvathanapong, the chief executive of Trinity Watthana, a major shareholder of Trinity Securities, said he agreed with the regulators' plan to double the period of cash advance trading for some stocks to six weeks as well as plans to demand more collateral for margin loans and to lower overall margin loans.

Margin loans are currently set at 40 billion baht, up from 30 billion early last year.

'The SET index has increased sharply so far, and investors should be very cautious," warned Mr Pakhawat.

I think the market will see a correction followed by a gradual rebound.

However, Finance Minister Kittiratt Na-Ranong said the index was driven largely by strong growth economic projections.

"I don't think the stock market is a concern. I see it as natural, given the domestic economic growth," he said.

As a former SET president, I think I know the capital market quite well. Regulators have effective tools to control fraud and manipulation in the market, and stock manipulators should be very afraid," said Mr Kittiratt

Meanwhile, Mr Kongkiat said a bubble in the property market is clearly forming due to a sharp rise in land prices in Bangkok and major provinces.

"Speculation in land prices is booming on the Asean Economic Community theme," he said

Mr Kongkiat said the Bank of Thailand, the Finance Ministry and commercial banks should lay down measures to control inflated prices without real demand.

There have been indicators of a bubble as some projects cannot close sales.

'It's not my place to say whether the current low policy interest rate is right or wrong, but there's high speculation in some areas. Shouldn't we find measures to stop the bubble?" questioned Mr Kongkiat.

He suggested soft measures including demanding higher collateral for second-hand housing or reducing loans.

"If speculation is rife in the property sector, then the income gap between rich and poor will be wider. The poor will not be able to buy houses, and that will become a burden for the government in the long term," said Mr Kongkiat

He added that in light of the vast foreign capital inflows, most of it has gone to government bonds, while a smaller portion has entered the stock market.

(Source: Bangkok Post, ECONOMY, Quick fixes urged to prevent bubble, Brokers see clear signs in stock, property trade, 15 Feb 2013, Nuntawun Polkuamdee, link


Asset Bubble Vocabulary

asset bubble - when assets (such as stocks or real estate) are bought and sold in large amounts far above their long-term true value, as they are bought and sold the value jumps to even higher unreasonable levels, also called speculative bubble, market bubble, price bubble, financial bubble, speculative mania,economic bubble (See Wikipedia)

asset bubble in the local stock market
prevent a bubble

real estate bubble -
when the value of buildings and houses increase fast in a short time to high levels and then falls suddenly which causes many to lose money (See Wikipedia)

stock bubble -
when speculators drive the price of stocks up for a short time and then prices fall suddenly and many people lose money (See Wikipedia)

a fix - a solution to a problem การแก้ปัญหา
a quick fix - a fast solution to a problem

urged - advise or request someone very strongly about what action should be taken วิงวอน
quick fixes urged to prevent bubble

stock market - 1. the business of buying and selling shares in companies and the place where this happens; 2. a stock exchange ตลาดหุ้น (See Wikipedia)

stock - all the shares of a company which represent part ownership of the company's by "shareholders" หุ้น (See Wikipedia)
stock shares

stock 
index - stock share index, a list of the average price of a particular set of shares, that can be easily compared with the average price on a previous date and used to show whether the value of shares in general is rising or falling (See Wikipedia)

broker - someone who buys and sells things for other people  นายหน้า
stock broker - a person who buys and sells shares for other people (See Wikipedia)

leading
- the most important
leading stock brokers

clear - easy to understand
clear signs - easy to understand things that show something is true

trade - the buying and selling of things การค้าขาย
stock trade - the buying and selling of the stock shares of companies
property trade - the buying and selling of real estate

brokers see clear signs in stock, property trade

authorities - government officials; the police or people in official organisations who have the legal power to make people obey laws or rules เจ้าหน้าที่ (ตำรวจ หรือผู้มีอำนาจ)

authorities take action
call for authorities to take action
leading stock brokers called for authorities to take action

avert - stop and prevent (something bad from happening)
avert damage - stop and prevent damage to something

massive - very large in size, amount or numberใหญ่โต, มหาศาล
massive inflows - large amounts of money coming into the country (for investment)

take action to avert damage to the stock and property markets caused by massive inflows

current
- of the present time ปัจจุบัน
the current market situation

concern - a worry ความกังวล
no cause for concern

the finance minister insists the current market situation is no cause for concern

stock - all the shares of a company which represent part ownership of the company's by "shareholders" หุ้น (See Wikipedia)
stock shares
small stocks
large stocks

X driven by Y- changes in X caused by Y 
the SET index rose past 1,500 points driven mainly by small stocks, while large stocks did not see large gains

stock 
index - stock share index, a list of the average price of a particular set of shares, that can be easily compared with the average price on a previous date and used to show whether the value of shares in general is rising or falling (See Wikipedia)
the SET index

speculation - buying an asset hoping that its price will go up and you will make money, it could go down with a loss of money, assuming the risk of loss in return for the uncertain possibility of a reward (See Wikipedia)
speculative (adjective)

speculation in land prices
speculation in land prices is booming

price-to-earnings ratio - the relationship between the present market price of a company's stock shares and the earnings per share used to measure a company's performance over time and compare it with other companies, P/E ratio (See Wikipedia)

trading at a price-to-earnings ratio of more than 100 times

This indicated speculation in small stocks, some of which are trading at a price-to-earnings ratio of more than 100 times.

harm - damage ความเสียหาย
speculation could harm the markets in the long term

measures
- actions taken to solve a problem มาตรการ
take measures
some measures should be taken quickly

speculative stocks - stocks that people buy for a short time to profit from a short-term change in price

fundamental - very important and essential พื้นฐาน รากฐานที่สำคัญ
fundamental stocks - stocks that people buy and hold for a long time because the company is good and will increase in value along with its stock  over a long period of time

treat - do something in a certain way to someone (example: treat them specially)
treat them differently

margin trading - when an investor buys shares, futures, etc. with money that they borrow using a margin account (See Wikipedia)

margin loans - the money that an investor borrows for investments from a stock broker  
margin loans are currently set at 40 billion baht, up from 30 billion early last year

margin account - the arrangement that an investor has with a broker in which the investor can borrow money for investments but must leave a particular amount of money, shares, etc. in their account

margin - money, shares, bonds, etc. that an investor must leave with a broker to cover any possible losses

collateral - things of value that can be taken by the lender if the borrower fails to repay the loan ทรัพย์สินผูกพันตนเพื่อเอาไว้หักชำระหนี้หากไม่ชำระหนี้นั้น
demand more collateral for margin loans

assets - things of value with an owner, especially property and money สินทรัพย์
demand more assets as collateral

screen - to check something to see if something is acceptable

Some measures should be taken quickly to screen these speculative stocks out of fundamental stocks so we can treat them differently when considering margin loans for their trading.

For these hot stocks, we should reduce margin loans or demand more assets as collateral.

Pakhawat Kovithvathanapong, the chief executive of Trinity Watthana, a major shareholder of Trinity Securities, said he agreed with regulators' plan to double the period of cash advance trading for some stocks to six weeks as well as plans to demand more collateral for margin loans and to lower overall margin loans.

double - to become twice as big, twice as much or twice as many เพิ่มเป็นสองเท่า
cash - money เงินสด

cautious - careful to avoid danger ระมัดระวังไม่ให้เกิดขึ้น
the SET index has increased sharply so far, and investors should be very cautious.

gradual - moving slowly
rebound - rise again after falling เพิ่มขึ้นอีกครั้ง หลังจากมีการปรับลดราคาไป; การฟื้นตัวของเศรษฐกิจ
gradual rebound - rising again slowly after falling

a correction -
a change in prices, for example on a stock market, especially a sudden temporary fall after they have been too high
the market will see a correction

I think the market will see a correction followed by a gradual rebound.

economic growth - the increase in economic activity over time  
economic growth projections

domestic - within the country ภายในประเทศ
domestic economic growth

projections - what is expected to happen in the future
strong growth economic projections

strong economic growth projections
the index was driven largely by strong economic growth projections

natural - what is expected and reasonable in a situation เป็นเรื่องปกติ ธรรมดา
I see it as natural

I don't think the stock market is a concern. I see it as natural, given the domestic economic growth.

capital - the money of owners invested in a business
capital market

As a former SET president, I think I know the capital market quite well.

regulators

effective - works well, gets the job done; producing the result that was intended ได้ผลดี
effective tools - tools that get the job done (that really help you in your work) 

fraud - the crime of tricking and lieing people in order to get money การปลอมแปลง การฉ้อโกง การหลอกลวง เล่ห์เพทุบาย (See Wikipedia)
manipulation - controlling or influencing something for personal gain (illegal or immoral)

effective tools to control fraud and manipulation in the market
stock manipulators


Regulators have effective tools to control fraud and manipulation in the market, and stock manipulators should be very afraid.

sharp - strong ที่รุนแรง
sharp rise
sharp rise in land prices in Bangkok

a bubble in the property market is clearly forming due to a sharp rise in land prices in Bangkok and major provinces

theme - the main subject of something ใจความสำคัญ, ประเด็นหลัก
the Asean Economic Community theme

Speculation in land prices is booming on the Asean Economic Community theme.

commercial banks
lay down measures

inflated - (of a price) higher than it should be ซึ่งเฟ้อ
inflated prices
inflated prices without real demand
control inflated prices without real demand

Mr Kongkiat said the Bank of Thailand, the Finance Ministry and commercial banks should lay down measures to control inflated prices without real demand.

indicators 

indicators of the bubble

There have been indicators of the bubble as some projects cannot close sales.

policy - a plan of action to guide decisions and achieve outcomes นโยบาย (See Wikipedia)
interest rate 
policy interest rate

'It's not my place to say whether the current low policy interest rate is right or wrong, but there's high speculation in some areas. Shouldn't we find measures to stop the bubble?" questioned Mr Kongkiat.

soft - not strict; weak ไร้น้ำหนัก อ่อนด้วยเหตุผล
soft measures

second-hand - used, not new (has already had one owner) มือสอง
second-hand housing

He suggested soft measures including demanding higher collateral for second-hand housing or reducing loans.

sector - a part of a country's economy or business activity ภาคเศรษฐกิจของประเทศ (See Wikipedia)
property sector

rife - very common or frequent มีอยู่ทั่วไป,แพร่หลาย
if speculation is rife in the property sector, then the income gap between rich and poor will be wider.

burden - a responsibility, a difficult thing that must be done, a heavy load to carry ภาระ
will become a burden for the government

The poor will not be able to buy houses, and that will become a burden for the government in the long term.

income - money that people receive from work or some other source, used for household consumption and savings
gap - the distance or difference between two things ช่องว่าง
income gap - a big difference in income (between rich and poor) 

X in light of Y - X considered using facts or information Y 
vast foreign capital inflows

bonds - an agreement by a government or an organization to pay back the money an investor has lent plus a fixed amount of interest on a particular date; a document containing this agreement พันธบัตร (See Wikipedia)
government bonds

portion - a part of something ส่วน
most of the foreign capital inflows have gone to government bonds, while a smaller portion has entered the stock market

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