Thai stocks have also been given a reduced weighting in the Morgan Stanley Capital International (MSCI) index for regional stock markets, due to the Kingdom's fewer large-capitalisation IPOs.

The brokerage house said the SET Index was likely to fall another 5 per cent to about 650.

"The listing of the Chinese firm with the highest market capitalisation in Asia would boost the weighting of the Hong Kong Stock Exchange in the MSCI. But there have been very few large market-capitalisation stocks to list in the Thai stock market [recently]. This has made the weighting of Thai stocks in the MSCI over the past five years fall from 5 per cent to 3.5 per cent," Siam City Securities said.

The Industrial and Commercial Bank of China (ICBC) will do dual listings on the Hong Kong and Shanghai stock exchanges in hopes of raising the $19 billion, which would make it the highest market-cap stock in Asia.

The IPO will be conducted from October 16-19.

Siam City Securities said in its report last week that ICBC's IPO would lead to foreign investors selling Thai stocks during the first two weeks of this month and ultimately affect the Stock Exchange of Thailand (SET) Index. Bank stocks on the SET have been falling in general, while overall investment sentiment has been "quite fragile", due to the political situation.

The report added that further large IPOs in the region would make the Thai stock market volatile and liable to fall significantly. During 2005 and 2006, the China Cons-truction Bank and the Bank of China raised funds of $7.7 billion and $9.7 billion, respectively, in their IPOs. During the listing of the two banks, the SET Index fell 2.51 per cent and 10.49 per cent, respectively.

In the two weeks before those IPOs, foreign investors sold Thai stocks worth $200 million to $450 million.

Over the past five years, large market-cap IPOs in Asia have boosted market capitalisation in emerging markets like South Korea, Taiwan, China, India and Thailand 233 per cent in total, from about $280 billion to $940 billion.

China has raised funds of about $40 billion, boosting its market capitalisation by as much as 282 per cent, while the Thai market's capitalisation increased only 135 per cent, lower than the average increase of 233 per cent.

The Hong Kong Stock Exchange revealed that ICBC's management has agreed to sell shares with a total value of $3.5 billion to 12 institutional investors. The China Life Group has ex-pressed interest in buying the most ICBC shares, at $847 million, followed by Kuwait Investment with investment value of $719 million and then Hutchison Whampoa

and the Kuwait Investment Authority with investment values of $206 million each.

Siriporn Chanjindamanee

The Nation