SET plunges on bubble concerns

Thai stocks plunged 1.9% yesterday, underperforming their regional peers, on anxiety over potential measures to curb lending after the central bank expressed concern about surging property and equities trade.

Heightened political uncertainty also took a toll on the market.

The National Anti-Corruption Commission is set to decide Prime Minister Yingluck Shinawatra's fate for allegedly submitting a false assets declaration involving a 30-million-baht loan to a company linked to her common-law husband, Anusorn Amornchat.

The Stock Exchange of Thailand index fell by 30.02 points to close at 1,520.52 in heavy trade worth 59.2 billion baht.

The property sector is at the centre of the selling spree, with the sector index slumping 5.3%, while some blue-chip banks also suffered in the sell-off.

A 3.8% decline in Advanced Info Service (ADVANC) as it went XD (excluding dividend) exacerbated the market decline.

AIS closed at 230 baht in trade worth 1.68 billion baht.

Chaiyaporn Nompitakcharoen, an executive vice-president of Bualuang Securities, said investors were spooked by potential measures by the central bank to curb property lending and speculation.

The Bank of Thailand has repeatedly hinted that such measures could be imposed, with the market reckoning the central bank will cut the loan amount for purchase of a second home with a price tag below 3 million baht to 85% of appraised value from 90%.

The condominium market can expect to see a greater impact than single detached homes if the measures become reality, said Mr Chaiyaporn.

"The central bank says it is considering measures to control a property bubble, putting pressure on these stocks that have risen a lot so far," he said.

Prices for luxury condo projects are quite exorbitant, although some cannot close sales due to weak demand. But property share prices have climbed as investors bet they will reap the benefits of a low-interest environment.

Construction stocks have also surged in anticipation of huge demand if a bill to authorise the borrowing of 2 trillion baht for infrastructure projects is approved by parliament.

Mr Chaiyaporn said if Ms Yingluck is dismissed, it will have no adverse effect on the Thai stock market since Pheu Thai will remain the ruling party.

Prakit Siriwattanaket, a technical analyst at Asia Plus Securities, said investors took short positions yesterday, betting on more volatility with Ms Yingluck's case to be decided today.

About the author

Writer: Nuntawun Polkuamdee
Position: Business Reporter