Move on stock manipulation
Stock regulators and brokers are looking at measures to curb stock manipulation.
However, if implemented, the measures will apply only on stocks with irregular movements, said Prapan Charoenprawat, president of the Market for Alternative Investment (MAI). There will be no blanket enforcement, he said, declining to disclose further details.
The MAI still uses information disclosure and alerts investors to be prudent in putting money into stocks, which have seen rising substantially without any good reason, he said.
The Stock Exchange of Thailand (SET)'s president Kesara Manchusree recently said the stock regulators were undecided about whether to adopt additional measures to curb stock manipulation as they must tread carefully to prevent damaging the stock market's positive mood.
Worries over a strong rally in share prices of small and medium-cap stocks have mounted after their share prices have rocketed without justified reason.
According to the SET's data, nearly one-third of listed companies in both the SET and MAI are regarded as overvalued based on price to earnings (P/E) ratio and most of them are small to mid-cap stocks.
"We want to see listed companies adhere strictly to rules and regulations. For examples, they must disclose information to comply with regulations. If stock manipulation is detected, regulators will take legal action," he said.
Mr Prapan also referred to the SET's recent move to suspend trading of some stocks after share prices surged significantly on takeover news.
Adamas Incorporation (ADAM)'s shares were suspended from trading on Friday after the company failed to disclose all information related to its planned takeover in Kitha Property worth up to 800 million baht.
In a meantime, Sumeth Lersumitkul, president of the MAI Listed Company Association, said he had asked members to avoid being involved in stock manipulation, observe information disclosure requirements and improve their corporate governance.
Year-to-date, the MAI index has jumped 95.08% to 703.83 points, while the SET has gained 22.58% to 1,600.16. Small-cap stocks in the MAI have surged dramatically over the past one to two months.
The positive market momentum in the stock market may encourage investors to pay more attention on small-cap stocks and several MAI-listed stocks have high growth potential, he said.
However, he noted that prices of some stocks have overshot and investors should be careful before making investment decision.
"Trading in recent months has been overheating and this fans fears that it could damage investors. The association is seeking cooperation, particularly in corporate governance, from members to make them thrive in the long run.
"If their share prices surge too much, recapitalisation in the future will become difficult," said Mr Sumeth.