The Stock Exchange of Thailand yesterday announced it will toughen measures against speculators to help cool share prices.
From March 1, stocks singled out for "abnormal trading patterns" will have to trade using cash balance accounts for six consecutive weeks, double the previous three-week minimum.
Year-to-date, 44 stocks have been singled out for trading restrictions compared with 50 for all of 2012, signalling an increase in trading volume of speculative stocks. The SET index has risen by nearly 10% from January and is up by 23% over the past six months.
In valuation terms, the index is currently trading at 19.6 times earnings, well above historical valuations.
The index yesterday closed at 1,521.52 points, down 5.22, in trade worth 54.5 billion baht.
Market officials have expressed concern that much of the rise in trading liquidity has been driven by small and medium-sized stocks traded by day traders and speculators.
The SET said trade of non-SET50 stocks accounted for more than 50% of the total since January, up from 36% last year, while more than 100 stocks are currently trading with price-to-earnings ratios of over 40 times.
Retail investors account for 62% of total trades, compared with 50% last year.
Kongkiat Opaswongkarn, the chief executive of Asia Plus Securities, welcomed the measures as an effort to help curb overheating in the market.
"Price-to-earnings ratios are very high in some sectors, while large-cap sectors such as energy and banks are trading with P/Es below the market," he said, adding that recent foreign institutional fund flows have gone mostly to the bond market, signalling that the rise in stocks is being driven by local retail investors.