The Stock Exchange of Thailand (SET) has warned investors to be cautious when trading Delta Electronics (DELTA) shares after its price spiked 33%, from 560 baht to 746 baht, over the past trading week.
In response to the price increase, the company clarified via the SET's electronic system on Sept 2 that no important development or changes in its fundamentals have taken place that would affect the volume and price of its stock.
Pakorn Peetathawatchai, the SET president, urged investors to carefully study risks before trading DELTA as its price and trading volumes had posted unusual increases.
DELTA's share price surged 33.2% from 560 baht on Aug 26 to close at 746 baht in the morning trading session on Sept 3, with a high price-to-earnings ratio of 122 times, while its trading value has continued to rise.
During Friday's morning trading session, DELTA ranked second among listed companies with a trading value of 2.37 billion baht.
With the surge in trading value, the company's market capitalisation rose to 931 billion baht during the same period, suggesting these are unusual movements without any changes in fundamentals.
"To prevent losses, investors should carefully study the risks associated with the stock before making an investment," Mr Pakorn said.
Asia Plus Securities (ASPS) said the SET Index has risen sharply during the past nine trading days by 94.6 points, or 6.1%, and exceeded the key resistance level of 1,643 to 1,647.75 points.
The main driving force was speculation on 12 large stocks with low free-float shares including DELTA, Siam Makro (MAKRO), Bank of Ayudhya (BAY), Intouch Holdings (INTUCH), and Gulf Energy Development (GULF) which rose 33%, 25%, 12%, 9%, and 6.5%, respectively, said the brokerage.
Increases in these share prices pumped up the SET Index by 36 of the 94.6 points. With every 1% increase in these stocks, the SET Index rose 3.8 points.
According to ASPS, there are less than 30% of free-float shares from these 12 companies with a market cap of over 100 billion baht.
However, the broker warned that while speculating on large stocks with low liquidity gives investors a chance to earn good returns in the short term, it also carries the risk of sharp and rapid decline. ASPS said it is preferred to speculate on safer, more liquid stocks such as Advanced Info Service (ADVANC), Siam Cement (SCC) or Airports of Thailand (AOT).