In the stock market, emotions often take over, and recent events that have affected the Thai bourse exemplify this.
Retail investors, disillusioned by a prolonged downturn in the stock index, announced they would halt trading from today. This unprecedented move is in protest at the "short selling" and high frequency trading facilitated by robots or AI orchestrated by both foreign and institutional players.
While the discontent is palpable, their actions suggest a certain immaturity in how they navigate the ebbs and flows of the market. At its core, the stock market is an ecosystem fuelled by market mechanisms. It is true that there might be instances of manipulation, typically confined to specific stocks rather than the entire market.
The planned suspension of trading by retail investors, while symbolising their frustration, is but a minuscule blip that cannot meddle with the intricate mechanisms guiding the market's tides. One of the fundamental tenets of stock trading is understanding the inherent risks. Market fluctuations are an inevitable facet of this landscape.
Retail investors must acknowledge and are prepared to deal with the innate volatility and, while making profit from it, remind themselves that stock trading is one of the riskiest investments.
Moreover, there exists an asymmetric playing field between retail investors and institutional players. The latter have bigger trading volume, expertise, and access to advanced innovation. That means retail investors must exercise caution.
Unfortunately, many base their decisions on hearsay, speculation, and a skin-deep interpretation of the market. Not many strive to understand a stock's fundamentals and economics. Many simply "sell" because the price surges, regardless of potential manipulation of some big players.
Interestingly, when the market is on an upward trajectory, no one queries the behaviour of foreign and institutional players, nor high frequency trading or the use of AI or robots. The soaring stock prices tend to overshadow any critiques. It's only when the market takes a nosedive that fingers are pointed and grievances aired.
The stock market doldrums are a complex symphony conducted by various factors, primarily rooted in fundamental elements.
The sluggish global economy, geopolitical tensions, a slower-than-expected Chinese economic recovery, and the looming spectre of global economic risks in the coming year all contribute. Retail investors must weigh these factors rather than attributing their losses to external scapegoats.
Regulators like the SET and the Securities Securities And Exchange Commission (SEC) bear responsibility for ensuring market transparency and fairness, particularly in vetting companies for IPOs and scrutinising listed entities.
Regulators must step up their efficiency in addressing issues of governance and transparency, especially in cases like More Return Plc and Stark Corp Plc. These companies have recently caused damage to investors and lenders, highlighting the need for more efficient regulatory intervention.
However, it is unjust to only blame regulators.
Investors should look at their own vague investing decisions. Make no mistake, investors have raised valid questions about transparency. As such, it's crucial for them to better understand how the market moves and to trade more cautiously.