global market meltdown

Global stock markets tumbled yesterday in panic selling over fears of a widespread meltdown.

Thai authorities activated a "circuit breaker" to halt trading after the Stock Exchange of Thailand (SET) Index plunged more than 10 per cent, while other markets also went into a steep nosedive on Wall Street sell-offs.

The SET Index yesterday suspended trading for 30 minutes, from 2.35-3.05pm, after the benchmark index plummeted past the 10-per-cent limit, triggering a temporary suspension of trading on the Thailand Futures Exchange, too.

The SET Index yesterday slumped 9.62 per cent to 451.96 points at the market close, a six-year low. Turnover was moderate at Bt16.29 billion.

It was only the second time in the SET's 33-year history that the first-level circuit breaker, a measure that halts trading for 30 minutes when the stock market plunges past the trigger level of 10 per cent, was activated. The first time was on December 19, 2006, when the central bank announced its 30-per-cent capital-reserve requirement.

Yesterday, PTT fell 11.46 per cent to Bt170, Bank of Ayudhya plunged 19.11 per cent to Bt9.95, Siam Commercial Bank slumped 15.87 per cent to Bt53, Kasikornbank fell 11.5 per cent to Bt50, Banpu dropped 16.98 per cent to Bt176 and PTT Exploration and Production dove 9.81 per cent to Bt96.50.

So far this year, the SET Index has sunk 47.33 per cent, with more than Bt2 trillion in market capitalisation lost.

Japanese stocks plunged, dragging the Nikkei 225 Average to its worst weekly drop ever and triggering a suspension of futures trading as the deepening credit crisis stoked concerns that more companies would fail.

The Osaka Securities Exchange and Tokyo Stock Exchange halted trading in Nikkei 225 Stock Average and Topix futures for 15 minutes after the plunge triggered a stop-loss on each bourse. Futures were suspended because of a decline of more than 1,000 points and because the value of the underlying Nikkei Average differed from the futures' value by more than 200 points.

The Nikkei 225 Stock Average yesterday fell 881.06 points, or 9.6 per cent, to close at 8,276.43.

Also yesterday, Indonesia halted stock-market trading for a second full day. Philippine stocks posted their biggest loss since the 1997 Asian financial crisis, with the Philippine Stock Exchange Index dropping 8.3 per cent to close at 2,097.8 points. Hong Kong share prices closed down 7.2 per cent.

US stocks tumbled on Thursday, with the Dow Jones Industrial Average closing below 9,000 points for the first time since 2003. In Europe yesterday, London and Frankfurt erased more than 10 per cent and Paris more than 9 per cent shortly after their markets opened.

London's FTSE 100 Index of leading shares nosedived 10.2 per cent to as low as 3,873.99 points, the first time it fell below 4,000 points since July 3, 2002.

Germany's benchmark DAX Index dropped 387.72 points, or 7.9 percent, to 4,499.28 late yesterday morning in Frankfurt. A close at this level would mark the steepest drop since the 8.5-per-cent slump after 9/11 terror attacks in the US.

Iceland's stock market suspended trading from yesterday until Monday after the government seized Kaupthing, the country's biggest bank.

The Vienna Stock Exchange delayed its opening until noon local time.

Russia's Micex and RTS stock exchanges indefinitely delayed the opening of trading yesterday. Ukraine's stock market also suspended trading indefinitely.

In Thailand, Association of Securities Companies president Kampanart Lohacharoenvanich yesterday rushed to allay market jitters by saying the SET would not plunge below 400 points.

He said the association late this month would discuss with the Securities and Exchange Commission (SEC) the postponement of full deregulation of the brokerage industry scheduled for next year out of fear that heightened competition in the industry would batter brokerage houses.

SEC deputy secretary-general Prasong Vinaiphat said the securities watchdog was ready to introduce any measure to prop up the Thai stock market.

Share prices of 344 securities, representing 65 per cent of the companies listed on the SET and the Market for Alternative Investment, were below their book value, while half of those had greater than 10-per-cent return on equity and dividend yields of more than 5 per cent.

The SET said in a statement that margin loans in the Thai stock market amounted to only Bt27 billion and that it would not adversely hurt the Thai bourse if they were forced to sell.

Also, the SET is prepared to consider enlarging the size of its matching funds, which has been set at Bt2 billion.

Bank of Thailand Deputy Governor Bandid Nijathaworn said the Kingdom's money market had not been adversely affected by the sharp fall in the stock market these past few days. Liquidity, short-term interest rates and the baht remained on track.

He said the Monetary Policy Committee was continuously monitoring the rapid changes in the global financial market. It is ready to introduce additional measures if the global impact on Thailand escalates.