The year 2007 looks like being another year in which Thai stock market regulators will continue their efforts to stop stock manipulation after failing to penalise any stock manipulators in 2006.

The problem looked so serious this past year that the Justice Ministry floated the idea of imposing a tax on speculative investors, but it was opposed by parties related to the stock market out of concern for the difficulty of discerning speculative activities from reduction of trading liquidity.

This year, the Stock Exchange of Thailand (SET) prohibited intra-day and margin loan trading for certain periods in six stocks, following irregularities in their share prices and trading volumes.

International Engineering (IEC) shares suffered two such bans for 60 trading days each, one from December 29, to March 21 and the other from March 22 to June 22.

Agripure Holdings was also banned twice, for 60 trading days each, from January 11 to April 5 and again from April 7 to September 7.

Stocks in Eastern Wire and EMC were both barred from intra-day and margin loan trading for 30 trading days between September 11 and September 22, Everland shares were similarly banned for 30 trading days between September 26 and November 7, while Navanakorn shares are currently banned for 30-days from November 21 to January 5.

International Engineering shares were suspended from trading for five days from January 16-20, due to irregularities in share prices and volumes.

During the year, International Engineering's share price peaked intra-day at Bt7.65, while its trough was Bt1.26, Agripure's stock rose to Bt9.10 after being as low as Bt1.71, and EMC's peaked at Bt3.86, with a lowest level of Bt1.04.

Eastern Wire's share price peaked at Bt21.40 and fell to Bt4.80, Everland rose to Bt12.80 and dropped to Bt2.98, and Navanakorn jumped to Bt4.96 and fell to just Bt0.89.

Apart from these six stocks, three others had irregular share prices and volumes in 2006, but were not banned from intra-day and margin loan trades.

Adkinson Securities shares rose to Bt15.50 while their trough was Bt6, Bliss-Tel surged to Bt10.50 and fell to Bt2.86, and Power-P (Power) recorded a peak of Bt10.70 and a trough of Bt1.75.

Although the SET imposed a number of bans on intra-day and margin-loan trading, the prices and volumes of the stocks concerned did not return to normal until the Securities and Exchange Commission (SEC) instructed brokers to tighten their customers' credit lines and increase their efficiency in preventing the spread of rumours.

SEC secretary-general Thirachai Phuvanatnaranubala said the commission has been unable to penalise any stock manipulators, despite in-depth investigations. This is because manipulators' techniques are so sophisticated that the regulator cannot find any obvious evidence that transactions are made for purposes of manipulation, or are simply stock speculation.

Transactions causing irregularities in share prices and volumes are made through a number of brokers and their size is not significant, he said. Most importantly, investigators have been unable to prove that they come from the same source of funds.

Thirachai said stock regulators will have to be more prudent in adopting measures to stop stock manipulation, following the recent IEC lawsuit against the SET.

IEC took legal action against the SET after the exchange banned intra-day and margin-loan trading in the stock. The Central Administrative Court originally ruled in favour of IEC's petition against the SET, but this decision was later reversed by the Supreme Administrative Court.

Thirachai said stock manipulation is not a problem unique to the Thai stock market. Malaysian authorities also have headaches trying to stop the practice.

SET senior vice president for market regulation, Supakit Jirapraditkul, said investors are able to speculate on stocks as long as their transactions are not considered to be manipulation.

He said the SET has never used double standards with regard to any particular stock, as its computer system alerts staff in cases where stock prices and volumes are moving irregularly. The staff will try to find reasons for the abnormal movements and the SET will ask the companies to explain.

Supakit said the SET acts like a referee. Spectators will become bored with a game if it is often stopped by the referee. On the other hand, the fairness of the game might be seriously affected if the referee lets it go on without interruption.

Siriporn Chanjindamanee

The Nation