SET’s trade value rising as individual investors start returning

Over the past two months, the average daily trading value has risen to about Bt70 billion, while monthly average trading ratio has risen to 48 per cent against 34 per cent in the beginning of this year.
Montree Sornpaisarn, CEO of Maybank Kim Eng Securities (Thailand), put the rise in trading value down to the sharp drop in the SET index, which encouraged investors, especially individuals, who were previously holding back their cash to start investing again.
“Also, SET’s move to temporarily revise short-selling criteria from March 13 to June 30 has helped alleviate the pressure on the market,” he said.
“The new criteria states that short selling will only be allowed when the stock price is higher than the last trading price.”
He added that the trading ratio of individual investors this month accounted for 47 to 48 per cent, up from 42 per cent in March, 35 per cent in February and 34 per cent in January.
“In my opinion, SET should hold public hearings with investors and listed companies to see if they really want to go back to the original short-selling criteria, because the regulations in place now have helped alleviate the market pressure and attracted individual investors to return,” he said.
“Trading ratio of individual investors in November and December last year was 30 per cent, while some days dropped to just 29 per cent,” Montree said.
He added that individual investors had disappeared from the market for a while, despite positive sentiments, which caused the index to drop.
“Therefore, SET and the Association of Thai Securities Companies [ASCO] decided in the middle of March to ban naked short selling and revise the criteria,” he added. “This made investors who use high-frequency trading [HFT], an automated trading platform that allows users to make many transactions very quickly, unable to take advantage of individual investors.”
Pattera Dilokrungthirapop, chief executive officer of DBS Vickers Securities (Thailand), said that thanks to new regulation, some days the trading ratio of individual investors rises up to 51 per cent.
“This is a good thing because we want to see the proportion of individual investors return to the same level as in the past – an appropriate proportion of 50 per cent,” she said.
“Since the new short-selling criteria is bringing back individual investors, it should be turned into a permanent measure.”
Meanwhile, SET president Pakorn Peetathawatchai said the stock exchange has no immediate plans to revise the short-selling criteria because it in effect until June or at least until market conditions return to normal. He added that the market is still moving abnormally.
“The increase in the proportion of individual investors has come from many factors, such as falling stock prices and volatility in the market, not from the revision of the short-selling criteria,” he said.
“SET revised the short-selling to reduce volatility in the market and we can return to the original criteria without having to hold public hearings.”