Bangkok Post – SET index tumbles as uptick rule comes into effect

The Stock Exchange of Thailand (SET) index fell below the psychological support level of 1,300 points on Monday on domestic political uncertainties, while market regulators imposed the uptick rule to increase their supervision of short-selling transactions.

The Thai index finished at 1,299 points by mid-day Monday, slipping further from Friday’s close of 1,300.96 points.

The uptick rule makes it more difficult for investors to profit from short selling, said Globlex Securities.

Aimed at restoring investor confidence regarding short selling, the uptick rule stipulates that all securities can only be short-sold at prices higher than their last traded price in order to curb market volatility and abrupt declines in stock prices.

From July 1, stocks eligible for short selling must have market capitalisation of more than 7.5 billion baht and turnover ratio of higher than 2%.

According to Asia Plus Securities, in the past month the SET index was highly volatile because of political uncertainty. Short selling was high at 13-17% of total trading value, higher than the year-to-date average of 11.4%.

Following reports on the upcoming uptick rule, short selling reduced to 10.2% of trading value on June 28, noted the brokerage.

Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), said investors continue to monitor the Thai political situation in July, starting with the Constitutional Court’s deliberation on the dissolution case against the main opposition Move Forward Party on Wednesday.

On July 10, the court is scheduled for its first hearing of a petition submitted by 40 former senators accusing Prime Minister Srettha Thavisin of violating the constitution by appointing Pichit Chuenban as the PM’s Office Minister.

ASL Securities said although the US personal consumption expenditures index, which measures changes in consumer spending on typical goods and services, matched the consensus, the market has remained under pressure following the first general election debate where both US candidates seemed off, with President Biden halting in his speech patterns.

Investors are concerned about the risk of intensified geopolitics and trade protectionism if Donald Trump wins the election, noted ASL.

CGS International Securities (Thailand) said investors are monitoring stocks in the banking sector, which will gradually start to announce their second-quarter financial statements after July 20.

The net profit of the five big banks that CGS covers is expected to decline 1.8% year-on-year and 7.2% from the previous quarter, while loan growth is projected to remain sluggish in 2024 as banks maintain tight lending criteria.

“We expect the big five banks to post average loan growth of 0.6% year-on-year and 0% quarter-on-quarter for the second quarter,” said analyst Weerapat Wonk-urai.