Thai Stock Market - Major Rebound Today - Controls Lifted

BANGKOK, Dec 20 (TNA)

Buoyed by clarification on easing stringent government-imposed currency controls, the Thai stock rebounded sharply by the end of the Wednesday morning trading session after a historic fall on Tuesday.

The Stock Exchange of Thailand (SET) composite index surged 66.03 points to close at 688.17, up 10.61 per cent from Tuesday, on turnover of Bt34.8 billion.

The SET index plunged 14.84 per cent on Tuesday as investors sold almost across the board in trading that saw the index close at 622.14 points, down 108.41 points, which was the largest drop since the bourse was

established 31 years ago.

Tuesday's total turnover stood at Bt72.1 billion. Heavy buying on Wednesday morning came after Pridiyathorn Devakula, deputy prime minister and finance minister, said Tuesday night on television that effective Wednesday, both stocks and foreign direct investment (FDI) would be exempted from the new Bank of Thailand (BoT) rule, announced late Monday.

He said the 30 per cent capital reserve requirement would remain intact on funds brought into the country for investing in financial instruments, as well as for borrowing.

The new rule issued by the BoT is aimed at slowing the sharp appreciation of the Thai baht. Earlier this month, the central bank imposed several measures limiting foreign investment in short-term debt instruments to help slow the strengthening of the baht after it gained nearly 15 per cent against the dollar since January.

Foreign investors became less worried after the clarification was made and entered the market Wednesday morning which would benefit the capital market, according to SET president Patareeya Benjapolchai.

Mrs. Patareeya said the SET, securities firms and custodians had agreed at a Wednesday morning meeting to separate accounts and investment by foreign investors in the bourse which would enable the central bank to know the types of foreign money being invested in each business.

The planned separation of accounts will cover investment by foreign investors on the SET, derivative and on initial public offerings.

Touching on the over Bt800 billion liquidity which was wiped out from the stock market due to the sharp decline of market capitalisation, Mrs. Patareeya said it would take a while for a recovery.

She said she was optimistic that foreign investors would return to the Thai bourse due to strong fundamentals and the fall of P/E ratio which slipped to 7.3 Tuesday from 8.68 on Monday, considered the lowest among Asia's regional markets.

Admitting that she was worried concerned about new measures which might be issued in future, Mrs. Patareeya said she believed that the concerned authorities would more carefully consider before introducing any new measure following the historic fall of the market on Tuesday.

(TNA)-E111