Bangkok Post

Investors monitor prices on an electronic display board at a brokerage in Bangkok on Friday. (Photo by Thanarak Khoonton)

The banking crisis in Cyprus also weighed on investor sentiment as the Stock Exchange of Thailand had its worst week since October 2008 when the global financial crisis rocked markets worldwide.

The SET Index fell 50.55 points on Friday to close at 1,478.97, a decrease of 7.5% from the previous Friday's close of 1,598.13. Turnover was heavy at 101.36 billion baht, 30 billion above the daily average of recent weeks, with 35.62 billion shares traded.

This week was only the third losing week for the exchange this year. The SET Index is still up 6.5% from the end of 2012.

Foreign investors were net buyers on Friday of 73.55 million baht worth of Thai shares. Local institutions were net sellers of 1 billion baht and brokers sold 222 million. Individual investors were net buyers of 1.2 billion baht. 

For the year to date, foreign investors have bought 2.75 billion baht more in Thai shares than they have sold. They are net buyers in March of 5.1 billion baht. Local retail investors have been net sellers of 10.9 billion baht so far this month.

The SET's market capitalisation has fallen this week by around one trillion baht to 12.58 trillion.

Market regulators are considering increasing the level of collateral that customers must maintain in their trading accounts to 20% of their credit line, from 15%, the SET said on Thursday.

The rule change, to be discussed on Tuesday with the Association of Securities Companies (Asco), could help reduce risks and volatility, the SET said.

"Some brokers are asking their clients to sell ahead of the proposed change," said Padon Vannarat, an investment strategist at Maybank Kim Eng Securities.

"They are worried about this and sold today. When someone starts selling, everyone follows. The market reacted too much to the news."

Kongkiat Opaswongkarn, the CEO of Asia Plus Securities, said small investors were getting out of speculative stocks in advance of any new curbs.
 
"Many small stocks' share prices had risen hundreds of percent and were trading with high price-earnings ratios, so many investors wanted to take profits. That was the reason for the selling today," he said.

The developer Natural Park, which is currently trading around 20 satang a share and has traded as low as two satang, topped the volume table on Friday with 13.23 billion shares changing hands.

"I agree with ... increasing assets in cash accounts to reduce risk, to increase market stability," said Dr Kongkiat. "Safe, fundamentally sound large stocks have not fallen much compared with small stocks that are very sensitive to any news."
 
Pattera Dilokrungthirapop, the Asco chairwoman, stressed that the SET and Asco had not taken any action yet but conceded that some investors might have panicked.

Bank of Thailand Governor Prasarn Trairatvorakul, meanwhile, said foreign fund inflows had nothing to do with Friday's plunge. Foreign investors took a net buying position on Friday morning and remained net buyers for the day of about 73 million baht.

Those making net sales were Thai investors, Dr Prasarn said, although retail investors ended the day with a small net-buy position.

He said the Thai equity market had gained more than regional peers recently, and was now consolidating.

Asian markets mostly fell on Friday after the European Central Bank told Cyprus it would cut off funding to its banks if it did not agree on a new bailout deal soon.

Tokyo tumbled 2.35% to 12,338.53, while Seoul fell 0.11% to 1,948.71 and Hong Kong fell 0.50% to 22,225.30. But Sydney rose 0.16% to 4,967.3, although it is down 3% for the week, while Shanghai rose 0.17%, or 4.04 points, to 2,328.28.

In Bangkok, the SET50 index of blue chips ended on Friday at 977.04 points, down 31.10 points, with total trade value of 57.1 billion baht. The SETHD index of high-dividend shares fell 45.03 points to 1,211.14, with turnover of 20.57 billion baht. The Market for Alternative Investment lost 34.15 points to 436.42, with transaction value of 4.2 billion baht.

The five most active shares by value were the Skytrain operator BTS, declining 40 satang to 8.80 baht; TRUE, down 40 satang to 7.40 baht; PTT, down 16 baht to 320; the developer Natural park (N-PARK), down 2 satang to 20 satang; and Advanced Info Service (ADVANC), down 10 baht to 223.

In the currency markets, the baht retreated slightly on Friday after climbing earlier in the week to the highest level since 1997. The currency continued to be in heavy demand as foreign portfolio investment in Thai stocks and bonds.

The baht was trading late Friday in Bangkok around 29.28/31 per dollar, compared with 29.20/23 on Thursday and 29.51/54 a week earlier. The currency had touched 29.06 on Wednesday.

"Cash is flowing into Thai assets as global investors shun Malaysia, which is close to an election, and Indonesia owing to its current-account deficit," Dr Prasarn said on Wednesday, adding that special measures to stem the inflows were not needed yet.

Global funds so far this month have purchased $2.5 billion more in sovereign debt than they have sold, Thai Bond Market Association data show.

Increased infrastructure investment and consumer spending have lured foreign fund inflows that have driven the SET Index up 24% in the past year and boosted the baht by 5.3% versus the dollar, making it the second-best performer among emerging markets.

Special measures to stem the baht's rapid appreciation aren't needed at the moment, Finance Minister Kittiratt Na-Ranong said this week.

"There is a concern among investors that maybe the governor of the Bank of Thailand may do something to interrupt or intervene in the strengthening of the Thai baht," said Prapas Tonpibulsak, chief investment officer at Krungsri Asset Management. "In spite of official denials, there are still concerns."