A Justice Ministry plan to tax speculative investors has angered the Stock Exchange of Thailand (SET), brokers and listed companies.

SET President Patareeya Benjapolchai said it was difficult to define which transactions were speculative because each investor was different.

The tax will reduce stock-trading liquidity and discourage new companies from listing on the exchange, she said.

"The stock exchange has already imposed measures to prevent stock-price manipulation and we have laws to penalise manipulators," Patareeya added.

There has been no prosecution this year for price manipulation.

Intra-day and margin-loan trades were prohibited in the shares of several companies in 2006 following suspected irregularities in prices and trade volume.

These trades were prohibited for the shares of International Engineering twice in 2006 for 60 trading days each - between December 29, 2005 and March 21, 2006 and between March 22 and 22.

Similar action was taken twice against Agripure Holdings - the first from January 11 to April 5 and again on April 7 to September 7.

Eastern Wire and EMC were barred from intra-day and margin-loan trades for 30 trading days between September 11 and September 22, Everland for 30 trading days between September 26 and November 7 and Navanakorn for the same duration starting on November 21.

According to Globex Securities vice president Warut Siwasariyanon, the Justice Ministry plan would reduce trading liquidity.

Speculative investors help generate trading volume when foreign investors are not active in the local stock market, he said.

"What State agencies should do is tighten law enforcement on companies which leak information. If we have good surveillance, stock speculation will disappear," he said.

International Engineering chief executive officer Sumit Champrasit said the tax would have a "psychological effect" on the exchange.

He encouraged lawmakers to look to overseas markets for ways to end speculation. If the tax is imposed all companies must be treated equally.

"Our stock market has to compete with overseas markets. If our costs are high and returns are low, foreign investors will avoid parking money in our country because other countries offer better returns.

"Impact on IEC stock will be limited. Company executives and I have never encouraged investors to invest in a way that speculates on share prices.

"If the Justice Ministry thinks the SET's intra-day and margin-loan trade bans don't work then it should abolish them, not impose a tax," he added.

Siriporn Chanjindamanee

The Nation