SET lists stocks for marginal accounts
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SET lists stocks for marginal accounts

Stock market warns investors of risks

The Stock Exchange of Thailand (SET) released a list of stocks yesterday that have been used as collateral in margin accounts, warning investors about risks for stocks that are forcibly sold, as prices can drop drastically and the major shareholders can change.

"The SET talked with the Securities and Exchange Commission [SEC] to find measures to prevent impacts on stock prices and business directions of these stocks. Investors should be careful when investing in those stocks", said Rongrak Phanapavudhikul, senior executive vice-president and head of legal affairs and the corporate social responsibility division of the SET.

A margin account is a type of brokerage account in which the broker-dealer lends the investor cash, using the account as collateral, to purchase securities. While a margin account increases investors' purchasing power, it also exposes investors to the potential for larger losses.

A forced sale happens when the account holder chooses not to meet the margin requirements, or simply cannot pay them, entitling the broker to sell off the current positions.

"There are no requirements for major shareholders and company directors to disclose details about the shares that have been pledged or secured for a loan in the form of share financing," said Mr Rongrak.

The SET can only warn investors to be careful based on the information about stocks that are used as collateral for margin loans that are disclosed in the bourse's system.

"The SEC should come up with stricter regulations to force companies' major shareholders to disclose such information to the public," he said.

According the Mr Rongrak, Yggdrazil Group's (YGG) major shareholders were forced to sell their shares, diluting their ownership from 41.143% to only 4.286%, which occurred during July 2-4.

YGG's shares fell almost 20% yesterday after major shareholders came out to accept and major shareholders have changed over a short period of time.

In addition to Energy Absolute (EA), which saw its shares plunge as a result of a forced sale, other stocks on the list of margin loan accounts include BABA80, Successmore Being (SCM), Thaifoods Group (TFG), Grand Prix International (GPI), Saam Development (SAAM), Siamese Asset (SA), Asset Five Group (A5), Villa Kunalai (KUN) and NR Instant Produce (NRF).

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