SET renewing volatility rules

SET renewing volatility rules

The Stock Exchange of Thailand (SET) is set to extend the revised equity short-selling rule and other regulations for another three months to mitigate the persistent high volatility in the domestic stock market.

The rules initially took effect from March 13 and were scheduled to expire on June 30. They are now poised to be extended until Sept 30.

The planned extension also covers the revised ceiling and floor limits of securities products traded on the SET index, the Market for Alternative Investment index and Thailand Futures Exchange.

Although the SET index year-to-date has recovered from a 28.7% decline in March to a 14.4% fall as of June 24, the bourse is still volatile, logging 5-6% volatility some days, higher than usual, said SET president Pakorn Peetathawatchai.

The high volatility ratio mostly comes from sporadic fluctuations in the US stock market, which has affected bourses across the globe, said Mr Pakorn.

The pandemic is another factor affecting stock market movements as there are concerns looming over new infections, economic recovery momentum and the impact on specific business sectors, he said.

Market participants expect effects from the pandemic to reflect on second-quarter operating results of SET-listed companies as businesses complied with lockdown measures and curfew hours to mitigate the contagion.

"Investors should follow the pandemic closely. Thailand has done very well in controlling domestic outbreaks with measures to separate patients and an efficient state-imposed quarantine," said Mr Pakorn.

"There have been no new infected people in the country except those returning from overseas, resulting in a loosening of lockdown measures and the economy slowly improving."

Compared with the global financial crisis in 2008, when the Thai stock market took 10-11 months to recover, this cycle had a short recovery time of 3-4 months, he said.

The SET index was in the red on Wednesday as the bourse suffered a decline of 23 points or -1.7% to close at 1,333.43 points in turnover worth 60.9 billion baht.

Investors' nerves were rattled by the Bank of Thailand's latest economic forecast of an 8.1% full-year GDP contraction and May exports dropping by 22.5% year-on-year, with plummeting crude prices adding to a growing myriad of downside risks, said Nuttachart Mekmasin, executive director of Trinity Securities.

"The tally for export of goods would be worse if gold was excluded," said Mr Nuttachart.

"This reflects how Thai exports are still being affected by the strong baht and lockdown measures imposed by other countries."

The energy sector was a key factor pressuring upside gains in the stock market on Wednesday as energy and utility stocks make up one-fourth of the bourse's market capitalisation, he said.

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