Keep eye on EU woes: SET chief

The SET Index suffered another blow yesterday, plummeting 46.90 points, or 5.12 per cent, to 869.31 on concerns over Greece’s likely default on its debt repayments. Turnover was Bt26.64 billion.
With a Greek default becoming more and more likely amid reports the country will not meet its deficit-reduction targets, markets are being driven down worldwide.
SET president Charamporn Jotikasthira said the Thai exchange had fallen in line with other markets due to the continued uncertainty over a permanent resolution to the euro-zone debt crisis, with the absence of such a development souring the region’s recovery.
He urged investors to closely and continuously monitor the situation in the European Union (EU), as the extent of the damage to stock markets remains unclear until a means can be found to end the EU’s sovereign-debt crisis.
“Now, investors should be very careful about investment and keep a close watch on information. There’s no clear resolution [in sight] to the crisis,” Charamporn said.
Capital could flow out of the Thai stock market in the short term, as investors are still concerned over the euro-zone economy, which remains at high risk, said Sombat Narewuttichai, secretary-general of the Securities Analysts Association.
However, Thai economic fundamentals remain strong and investors should wait for the right time for stock accumulation, he said.
“It is quite difficult to make short-term profits. However, dividend stocks and gradual LTF [long-term fund] accumulation are suggested for the long term as Thai economic fundamentals are still strong,” he said.
Meanwhile, Charamporn conceded that the SET demutualisation plan had been postponed indefinitely on the instructions of Deputy Prime Minister Kittiratt Na-Ranong three weeks ago.
The postponement will also affect legal amendments concerning securities and demutualisation, due to be forwarded to the Capital Market Supervisory Board, which is expected to be established soon.
“Certainly, demutualisation is aimed at increasing the SET’s competitiveness but, even if it is postponed, we do not think competitiveness will be reduced as the SET has a proactive plan for information technology, expansion of the investor base and an increase in its products.
 “This [postponement] will not affect trading under Asean linkage, which will materialise next year. However, a likely impact is a slower rate of enlivening market sentiment than under the previous plan,” the bourse chief said.
 Pattera Dilokrungthirapop, chairperson of the Association of Securities Companies, said she had proposed that the authorities postpone the full liberalisation of commission fees, in line with the deferment of demutualisation, when meeting Kittiratt and Finance Minister Thirachai Phuvanatnaranubala.
 Full liberalisation is currently slated for January 1 next year.
 Using a sliding-scale system for commission fees is similar to liberalisation and all securities companies could run operations on such a basis, she said, adding that if demutualisation did not materialise, full liberalisation as planned could damage securities companies due to limited competition