Thai stock market faces volatility as seven stocks hit floor; forced selling suspected
SET Index drops 4.85 points as seven stocks plunge to floor levels, driven by high-margin accounts and forced selling, analysts say.
The Thai stock market continued to face volatility on Monday (June 23), with the SET Index closing down 4.85 points at 1,062.78. Intraday, the index fell as much as 13.84 points, with a trading value of 32.5 billion baht. While the overall drop was not drastic—despite escalating tensions in the Middle East—analysts observed an unusual event: seven individual stocks plummeted to their floor price limit.
Seven stocks hit floor level on June 23:
- XPG: -15.49%
- DOHOME: -15.44%
- BEC: -15.30%
- TPS: -15.24%
- NEX: -15.22%
- KTC: -15.11%
- EA: -15.11%
Notably, four of these stocks—BEC, KTC, XPG, and TPS—have a common major shareholder, Mongkol Prakitchaiwatthana, who holds 4.58%, 12.70%, 6.09%, and 16.60% in the respective companies.
The sharp drop occurred following new regulatory measures by the Stock Exchange of Thailand (SET), which reduced the ceiling and floor limits to 15%, and introduced a dynamic price band to curb short-term volatility. These measures, combined with weakening market sentiment, caused stock values in high-margin accounts to decline. For some investors, especially large ones using margin financing, the fall triggered forced selling when they were unable to top up their collateral in time.
Wijit Arayapisit, an investment strategist at Liberator Securities, told Krungthep Turakij that many stocks hit the floor primarily due to forced selling, driven by high margin levels.
"If we look at margin accounts, many of the stocks involved had relatively high margin usage. When stock prices fall continuously in a weak market, these high-margin stocks face a much higher risk of being forcibly sold," he explained.
He noted that in many cases, the shareholding structures of these companies are similar, suggesting that forced selling may have occurred in specific individuals’ portfolios or across particular accounts.
"Forced selling is triggered at the account level, not by individual stocks. When someone's portfolio falls below a certain threshold and they can't cover the margin, brokers begin liquidating positions. This leads to a sharp 15% drop across multiple holdings," he added.
Despite the sell-off, Wijit noted that the fundamentals of many of these stocks remain sound, and short-term inquiries with the listed companies revealed no operational issues or irregularities.
Kitpon Praipaisarnkit, Executive Vice President at UOB Kay Hian Securities (Thailand) Plc, offered further insight into the recent sharp decline of several stocks on Monday. He suggested that the drops may have been triggered by forced selling, as several stocks that fell more than 10%—nearing the 15% floor—were linked to a single major shareholder.
“There are about 3–4 stocks with the same major shareholder that experienced steep declines. If these shares were held in a margin account and reached a trigger point, simultaneous forced sales across the portfolio could have occurred. However, this cannot yet be confirmed as the definitive cause,” he said.
Stocks that hit their floor limit included KTC, BEC, XPG, EA, NEX, and DOHOME. Notably, one major investor is known to hold stakes in XPG, KTC, BEC, and TPS—raising market speculation about the possibility of forced selling within this individual’s portfolio, especially given the steep declines relative to overall market conditions.
As for DOHOME, the sharp drop was attributed to stock-specific issues, particularly after a report revealed non-standard products in its steel and electrical plug inventories—some of which lacked Thai Industrial Standards (TIS) certification. Though this issue was found in a single branch, it affected investor confidence amid already weak market sentiment, causing the stock to plummet.
Additionally, the company has been impacted by the broader weakness in the real estate sector this year.
Meanwhile, the sharp declines in EA, NEX, and several smaller-cap stocks have yet to be clearly explained, with no definitive reasons provided so far for their steep corrections.
