STOCK MARKET WOES

[Braveheart]

Extracted from The Nation: The Nation

 

Foreigners' input sought on how to put confidence on a stronger footing

 

The Stock Exchange of Thailand has invited 10 brokerages - both foreign as well as local ones with a strong foreign customer base - to discuss their concerns about the spate of negative news hammering the stock market over the past several weeks.

 

The chief shocks were the central bank's draconian measure to curb baht speculation and the bloody Bangkok bombings.

 

SET president Patareeya Benjapolchai said yesterday that the SET would invite the foreign brokerage houses to meet with the Federation of Thai Capital Market Organisations in order to find out what foreigners want to know to improve their understanding of the recent developments.

 

The feedback gleaned from the meeting will be used to prepare for a meeting of foreign brokerages later this quarter.

 

"After I talked to Dr Kongkiat Opaswongkarn, CEO of Asia Plus Securities, we agreed to urge all concerned associations to evaluate the situation and impacts. Then, they should give their suggestions for customer safety to help restore confidence," Patareeya said.

 

Some foreign brokerages plan to propose discussion on the Bank of Thailand's 30-per-cent reserve requirement on foreign capital inflows that has hamstrung the stock market.

 

The stock market plunged sharply after the harsh measure was announced on December 19, although the central bank later said foreign players investing in the bourse would be exempted.

 

"I don't agree with the capital control measure. Foreign investors don't like it either. The measure shouldn't be reversed back and forward. People will get confused. So, we will focus on this matter (in the meeting)," ML Thongmakut Thongyai, director and head of equities at Citicorp Securities (Thailand), was quoted by Reuters as saying.

 

Besides Citicorp and Asia Plus, the other eight brokerages meeting with the SET on Monday are Tisco Securities, TMB Macquarie Securities (Thailand), CLSA Securities (Thailand), Credit Suisse Securities (Thailand), SCB Securities, Phatra Securities, JP Morgan Securities (Thailand) and UBS Securities (Thailand).

 

Last year, foreigners increased their Thai stock portfolio by about Bt80 billion.

 

Thongmakut said the political situation was another worrisome factor for foreign investors.

 

Phaiboon Nalinthrangkurn, managing director of Tisco Securities, said the SET and the government should conduct more road shows for foreign investors so they can get information on the political situation here.

 

Patareeya said stock market sentiment had taken a big blow from the recent bombings in the capital, but credit-rating agencies including Standard and Poor's would likely not downgrade Thailand's sovereign rating anytime soon.

 

She urged the government to solve the security problem as soon as possible to restore investor confidence.

 

With the tax incentive for newly listed companies recently extended, the bourse is expected to add 64 firms in line with its target, with 40 companies listing on the SET and 24 on the Market for Alternative Investment (MAI).

 

She is confident the target will be reached because the Finance Ministry extended the tax breaks for listed companies to the end of this year. Companies that are approved for listing on the SET or MAI by this year-end will enjoy the tax privileges for three years, starting from this year.

 

Since the uncertainty over whether the tax measure would be continued or allowed to expire has been cleared up, companies are expected to accelerate their listing plans.

 

She expects that Thai Tap Water - which filed its listing plan with the Securities and Exchange Commission (SEC) last year - could list on the SET this quarter.

 

Thai Tap Water's managing director, Sompho Sriphum, was reported as saying the initial public offering could be kicked off in March.

 

The company's IPO plan to sell one billion shares or 25 per cent of its newly registered shares now awaits SEC approval. The IPO would bring its capital up to Bt3.99 billion.

 

Ch Karnchang is now its major shareholder, with 46 per cent.