Stock swings alert watchdogs
Amid mounting concern over a strong rally in share prices of small and medium-cap stocks, stock regulators are undecided about whether to adopt additional measures to curb stock manipulation.
Regulators must tread carefully to prevent damaging the stock market's positive mood, said Kesara Manchusree, president of the Stock Exchange of Thailand (SET).
Some stocks have been buoyed by the improving economic outlook, while others have been red hot without any fundamental support.
"Some stocks have risen irregularly compared with sector peers, but we'll act very carefully, as we must balance market momentum and investors' protection, so we cannot say whether we will have more measures to control share manipulation," said Mrs Kesara.
"We jointly consider the issue with other market participants and continue to use current measures to flag warnings about red-hot stocks. Those measures include a weekly turnover list to alert investors about trading prudently."
Tougher measures have been discussed by the SET, Securities and Exchange Commission and the Association of Thai Securities Companies after several stock prices showed signs of overheating.
The sharp increase in daily turnover and the wild swings of the Thai bourse also point to potential stock manipulation.
Mrs Kesara warned that institutional investors' influence in cushioning selling pressure from other types of investors could be reduced if tax incentives for long-term equity fund (LTF) investment expired in 2016.
Institutional investors' trading ratio is about 10% of the SET's daily turnover, doubling from 5% in the past decade.
Mrs Kesara said retail investors accounted for 60% of the market and institutional and foreign investors and brokers the rest — the opposite of markets in Malaysia and Singapore.
The SET supports the renewal of tax allowances for LTF investment to help increase long-term savings as Thai society ages.
Voravan Tarapoom, chairwoman of the Association of Investment Management Companies, said she would try to convince the Finance Ministry of the benefits of LTFs.