The president of the Stock Exchange of Thailand (SET) has rushed to calm investors’ concerns regarding the troubles of Credit Suisse and global anxiety about banks in general.
However, Pakorn Peetathawatchai warned that trade would continue to be volatile on the local bourse in the short term until investors get a clearer idea about the health of the banking system in some countries.
The Thai stock exchange, following a significant rebound on Wednesday in line with other regional markets, was down by nearly 1% in Thursday’s morning session before making a modest recovery in the afternoon.
The SET closed on Thursday at 1,554.65, down 10.35 points or 0.7% from the day before. The index moved in a wide range between 1,538.10 and 1,558.67 on the day.
“We insist that the plunge of the SET index is caused by external factors, not internal issues,” Mr Pakorn said at a press briefing on Thursday.
“The situation with Credit Suisse won’t affect the Thai stock market and we believe Swiss authorities in charge can deal with the issue. So far, they have stepped in to provide liquidity to the bank already,” he added.
Credit Suisse shares rebounded sharply in early trade on Thursday in Europe, after it announced that it had reached an agreement to borrow from the country’s central bank to shore up its finances.
Mr Pakorn pointed out that the Thai stock market would remain highly volatile in light of the banking woes in the United States and Europe, but said the SET had prepared additional measures in case the index falls sharply.
“Although there are some equities in the Thai market that belong to Credit Suisse, they are held by custodians or the bank holds them on behalf of its customers. Credit Suisse does not directly invest in the Thai market,” he noted.
The Thai unit of the Zurich-based investment bank has maintained normal operations to date, with enough reserves according to Bank of Thailand requirements and without any sign of possible problems, he explained.
However, Bloomberg has reported that Pornchai “Chris” Prasertsintanah, head of equities for South Asia and country manager for Thailand, has decided to leave to pursue opportunities outside the bank.
The Thai Bankers’ Association also said on Thursday that local banks would see little impact from the global bank rout as they had minimal exposure to Credit Suisse and troubled US lenders.
Mr Pakorn urged investors to remain calm while being aware of risks in the near term.
“We have prepared measures if the market worries are exaggerated and the public panics. In that case, we have to launch the measures to curb market volatility,” he said.
“Nonetheless, we don’t think we will have to do anything at this stage but instead we should focus on communicating with the public in consultation with investors and related regulators.
“The measures the SET has the capacity to introduce worked effectively to cope with market volatility in the past but now we don’t see anything that could lead to that point.”