Forced selling hits blue chips

Blue-chip stocks have suffered from forced selling after investors received margin calls while the Stock Exchange of Thailand (SET) Index plummeted in the past two days on domestic violence and the global financial crisis.

"The effect has spread to blue chips, while short sells earlier concentrated on small stocks," TSFC Securities president Akarat na Ranong said yesterday.

This year to date, the SET Index has lost 37 per cent and foreign net-sells have reached Bt128 billion, he said.

On Monday, stocks dropped more than 6 per cent, followed by a 4.18-per-cent decline yesterday.

The forced selling is still moderate, but investors were asked to put up more collateral if they did not want to be made to sell off their holdings.

All 10 most-active stocks yesterday ended lower, led by Banpu, which dropped 12.6 per cent. The others were mostly banking and energy stocks.

Investors buying on margin are required by regulations to put up at least 50 per cent of the investment value. A drop in prices will reduce the value of their collateral and the investors will need to come up with additional collateral, or they will have to sell shares to meet the 50-per-cent minimum.

Meanwhile, French-based credit firm Cetelem (Thailand) has closed its lending business in Thailand, leaving only a debt-collection operation and cash-card business with Big C Supercentre, credit-industry sources said. All of Cetelem's credit officers were laid off.

Kasikornbank first senior vice president Chatchai Payuhanaveechai said Cetelem (Thailand) ended its business dealings about a month ago with the bank, which had started in 2001.

Cetelem (Thailand) did not give a reason for the cancellation, he said.