Analysts on edge after KTC surges
Allegation involves mystery group
Analysts are urging stock and capital market regulators to protect investor interests and tame the investment climate by implementing additional risk-assessment practices to deal with unusually volatile trading of large-cap stocks with low free float.
The request was made after Krungthai Card (KTC) shares experienced an unusual surge in price.
KTC shares gained 14.72% to close at 76 baht yesterday. At its peak of 79.25 baht, the subsidiary actually exceeded the market cap of its parent company Krungthai Bank (KTB) when it touched 200 billion baht.
KTC has 35.63% free float and its price increased 50.6% in 2020. KTC's market cap closed last year at 153.4 billion baht.
Many stocks seem to be controlled recently by an unknown group of shareholders with the objective to push up the SET Index, said an analyst who requested anonymity.
He said the strategy behind the alleged price manipulation is to pick big market-cap stocks that have a "good image", in terms of having strong fundamentals in sectors such as energy, electronics and finance.
Stocks with fewer available shares and high demand from buyers can increase the price, especially if it has strong fundamentals and many strategic partners who will not sell their shares.
The equities must have low free float, but the manipulators must have enough volume to "control" the price direction because they know "strategic shareholders" will not sell shares, said the source.
"At this time we don't know if foreign or domestic professionals are behind these manipulations," the source said.
Energy Absolute (EA), AEON Thana Sinsap Thailand (AEONTS), Delta Electronics Thailand (DELTA) and KTC are stocks commonly recommended by analysts, but their prices have been greatly exaggerated beyond analysts' projections and investors should be concerned about the risk, the source said.
The source said KTC is a good stock reporting a healthy profit. However, the price has been inflated to exceed the fundamental price by nearly 100%, bringing up other stocks with it from the finance and banking sector such as AEONTS and Kasikornbank (KBANK), said the source.
Analysts can only warn investors about accurate valuations for these listed firms, said the source. The Securities and Exchange Commission and the Stock Exchange of Thailand must do something beyond today's common measures of trading alerts and cash balances, said the source.