SEC, SET rule out support fund

Thailand has no need to establish a fund to support the stock market after the massive capital outflows from concerns over the tapering of the United States’ quantitative-easing programme, regulators say.  

Executives of the Securities and Exchange Commission and the Stock Exchange of Thailand yesterday discussed the possibility of setting up such a fund.

Vorapol Socatiyanurak, secretary-general of the SEC, said after the meeting that the current volatility resulted from external factors. The meeting concluded that the country had no need for a market-support fund as participants believed that when the financial market gets back to normal, foreign investors will again put their money in Thai stocks, which are backed by strong fundamentals.

He said the correction in the SET Index was due to investors’ concern over QE tapering.

Thai economic fundamentals are still good as the level of public debt is low and international reserves are high, while listed companies continually grow with a low debt-to-equity (D/E) ratio of 1.17 times, so the fluctuation is short-term, he said. However, the SEC is ready to support the establishment of new funds to deal with the market volatility. 

SET president Charamporn Jotikasthira said the current market situation did not call for special measures because the bourse already had tools to manage fluctuations.  

“The QE tapering is a good sign ensuring economic improvement in the US, which will benefit Thai exporters and several businesses, including tourism from a greater number of inbound tourists,” he said.

The weakening baht will also benefit the Thai economy in the second half of this year, during which the SET anticipates that the export sector will recover, he said.

Charamporn noted that Thailand had been one of three countries in the region that had witnessed heavy outflows from their stock markets, the other two being Indonesia and the Philippines. But while the latter two may still be doubtful in the eyes of investors, Thailand’s economic fundamentals are strong.  

Therefore, the SET plans to promote this reality to foreign investors at roadshows in the belief that once they understand the Kingdom’s potential for growth, they will put their money back into Thai stocks, he added. 

Thai composite stocks index (SET) yesterday closed at 1,294.30, up 1.77 point, or 0.14 per cent amid Bt32.34 billion turnover in line with most regional shares.

Net buying by foreign investors totalled Bt60.23 million.